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3/24/2009

what is Management by Objectives



MBOManagement by Objectives
MANAGEMENT STYLE or SYSTEM that relates organizational goals to individual performance & development through INVOLVEMENT OF ALL LEVELS OF MANAGEMENT

SYSTEM in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of that progress.
NATURE & PURPOSE OF MBO
MBO is concerned with goal setting and planning for individual managers and their units.
It is a process of joint goal setting between a supervisor and a subordinate.
Managers work with their subordinates to establish performance goals that are consistent with higher organizational objectives.
MBO helps clarify the hierarchy of objectives as a series of well-defined means-ends chains.
Essential Steps for MBO
Set Goals
– The most difficult step.
– Concrete
– Specific target and timeframe
– Assign responsibility
Develop Action Plan
– Course of action
– For both workgroups and individuals
Review Progress
– Periodicity
– Course corrections
Appraise Overall Performance.
– How are we doing?
– Do we need to restate our goals?

Characteristics of Well-Designed Goals
Written in terms of outcomes, not actions
Ø Focuses on the ends, not the means.
Measurable and quantifiable
Ø Specifically defines how the outcome is to be measured and how much is expected.
Clear as to time frame
Ø How long before measuring accomplishment.
Challenging yet attainable
Ø Low goals do not motivate.
Ø High goals motivate if they can be achieved.
Written down
Ø Focuses, defines, and makes goals visible.
Communicated to all necessary organizational members
Ø Puts everybody “on the same page.”
Problems with MBO
Efforts directed primarily toward output
Encourage individual rather than team efforts
Goals may discourage efforts for continuous improvement
Employees tend to focus on the goals by which they will be judged.
Specific goals may have a tendency to limit employees’ potential and discourage efforts for continuous improvement
Too much paperwork
There may be too much emphasis on the short term
Superiors are not trained in the MBO process
Original objectives are never modified
It is used as a rigid control device that intimidates rather than motivates
Benefits
Manager and employee efforts are focused on activities that will lead to goal attainment.
Performance can be improved at all company levels.
Employees are motivated.
Departmental and individual goals are aligned with company goals.
Manager and employee efforts are focused on activities that will lead to goal attainment.
Performance can be improved at all company levels.
Employees are motivated.
Departmental and individual goals are aligned with company goals.
MBO advantages & constraints
Provides the opportunity for staff to accept greater responsibility & make higher level of personal contribution
Modern form of scientific management
Places too much emphasis on individual job definition & management authority structure
Assumes no conflict between individual & organisational goals
Not always easy to set specific targets or figures for senior jobs


Student of Rai Business School- New Delhi

Sanjeev Kumar Singh

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