Management By Objectives (MBO).pptx

Management by Objectives

1. Management By Objectives (MBO)

2. Term conceptualized by Peter F Drucker in his 1954 book ‘The Practice of Management’ Earlier in most organizations, top management sets goals and objectives that were common to the whole organization . Plans and objectives were passed down from one managerial level to another, and subordinates were told what to do and what they will be held responsible for . But MBO approach brings an element of dialogue into the process of passing plans and objectives from one organizational level to another.

3. Definition Process whereby the superior and the subordinate managers of an organisation jointly identify its common goals , define each individual’s major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members

4. Objectives To measure and judge performance To relate individual performance to organizational goals To clarify what is to be achieved To foster the increasing competence and growth of the subordinates To serve as a basis for judgements about salary and promotion To stimulate the subordinates ’ motivation To serve as a device for organizational control and integration

5. Features MBO is a dynamic system Continuous process Goal oriented rather than work oriented Linkage between organizational goals and individual goals Involves participation of subordinate managers in goal setting MBO stresses measurable and verifiable goals Maximum utilization of resources is the overall philosophy It sets an evaluative mechanism

6. Steps in MBO process Preliminary goal setting Setting subordinates’ goals Recycling objectives Action planning Periodic performance reviews Final appraisal

7. Benefits of MBO Improved planning Team work Effective self control Objective appraisal Motivation and morale

8. Limitations of MBO Goal setting problems Time consuming Increased paper work Pressure oriented Undermining leadership Participation problem