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Management by objectives (MBO ) is a process of defining objectives, within an organization, so that management and employees agree to the objectives and understand what they need to do in order to achieve them.
The term Management by Objectives" was first popularized by Peter Druker in his book The Practice of Management in 1954.
Goals:
Broad statements of intent, direction & purpose.
Objectives:
Statements that describe specific things to Be accomplished to achieve the goals Foundation of Management by Objectives
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Concept of MBO
The KEY to MBO is that it
is a participative process, actively involving of members at every organizational level. When employees themselves are involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities focuses on What to achieve, not How to achieve.
Other Names 'Management by Results' (MBR) 'Goal Management' 'Planning by Objectives' (PBO) 'Results Management' 'Joint Target Setting' 'Work Planning and Review'
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Features of MBO
MBO is a Philosophy Reflects a Proactive way of managing that is, More than a set of techniques Results oriented Emphasizes accomplishments rather than inputs rests on a concept of human action, behaviour, and motivation MBO is an Approach
Approach refers to various tools or techniques used in order to achieve the objectives. So, its a sophisticated tool which works in an integrated way.
MBO Process
A process consisting of a series of
Formation of clear, concise statements of objectives The development of realistic action plans for their attainment The systematic monitoring and measuring of performance and achievement, and The taking of corrective actions necessary to achieve the planned results. The employee is rewarded on the basis of goal attainment.
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MBO Process
Starting the MBO Program Establishment of Organizational Goals and Plans Collaborative Goal Setting and Planning Communicting Organizational Goals and Plans
Periodic Review Evaluation
Meeting
Verifiable Goals and Clear Plans
Reward
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Limitations of MBO
Incomplete Understanding of MBO Philosophy MBO appears to be simple to teach but it is not so easy to put in practice. Difficulty in Setting Objectives Quantitative Bias trying to measure non quantifiable objectives and emphasizing numbers only leads to downgrade important goals that are difficult to state in quantitative terms or end-results. Poor Planning and Lack of Guidelines Inflexibility goal that has been made obsolete by revised corporate objectives, changed premises, or modified policies.
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Limitations of MBO
Increases Pressure and Frustration on the Subordinates It leads to a tug-of-war in which the subordinate tries to set the lowest possible targets and superior the highest Short Term Nature of Goals Strategic goals are displaced by operational goals. Time Consuming Plenty of time is required to carefully set objectives at all levels of the organization. formal, periodic progress and final review sessions also consume time Increases Paperwork circulars, instruction booklets, training manuals, questionnaires, performance data, and reports. Lack of Follow up Timely follow-up is must.
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Conclusion
MBO has achieved considerable acceptance, even though it requires a great deal of time and energy, because it appears to result in improved performance and higher degree of morale. Today, MBO is used not only as a technique of goal setting but also as a total system of planning, motivation, performance appraisal and self-control.
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