Y/ 7 /// Management By Objectives (MBO) /- Management by objectives is a new éon 1cept ceptee wt field. It is both a philosophy and a ‘technique of defined as a process by which the man jement in the best results through the active participation ‘of 2 (Under MBO superiors and subordinates jointly d letermine the “objectives. They also set the results to be achieved by the sube; »» through their active participation. oe ve oma "In the words of Koontz and Weihrich “ Management is a comprehensive managerial system that int2grates ma managerial activities in a systematic manner and that is cg directed toward the effective and efficient achievement of orgar and individual objectives.” Management by objectives is also known as ma results. It is an approach to management planning and which specific targets are fixed for each manager for a y end of the year, the actual results achieved are measured original target. Objectives of MBO MBO is intended primarily: J. To measure and judge performance; To relate individual performance to organisational To clarify both the job to be done and the expect accomplishment; ~ To foster the competence and growth of subordinates; To enhance communication between superiors and subord To serve as a basis for judgements about salary and prom To stimulate the motivation of the subordinates; and oO a Se To serve as a device for organisational control and inte Features of MBO MBO has the following features: _1. MBO focuses attention on what must be accomplished than on how it is to be accomplished (methods). goal-oriented rather than work- oriented approach.Planning OE ensures participation of subordinatewin the goal-setting process. MBO stresses measurable and verifiable goals in key it ae MBO is a dynam system which integrates the « : to achieve its objectives with the manager’ company’s need and develop himself. netd to contribute ‘0 is a philosophy of management that allows management to 5. MB! Vv attain maximum results from available resources. : 6. Itisa continuous process of goal setting, periodic appraisal and : modification of goals and performance. Benefits of MBO Benefits of MBO may be discussed as follows: 7: Improved planning and measurable performance goals. Appropriate MBO sets clear ulated for the achievement of these goals. b action plans are form’ 2. Better management he, hy ve MBO results in improved and better management of the organisation. Managers are well aware of Oe goals of the organisation aot ; sbyecli ved Pl and invidual targets. Gite. ctancty ek tga itll Oh bale’ ic {ecg balls [eee ange pao unication between superiors flicts. The whole management team t b valle - « 4. Better Personnel commitment Ye {o7 Taperely setting the objectives of the © achieve its goals. 3 Team work It results in better comm subordinates which reduces con is actively involved in the achievement of targets. & a ve fe «we Every employee participates in organisation. So, he will try his best te 5. Effective controls In MBO, verifiable stand, what is expected from him and these stand controls. 6. Objective Appraisal MBO permits impartial and objective appraisal of the performance s the subo a every employee. This appraisal assists is performance. ards are set. Everybody is clear about ards act as clear cuta. eee eo UL tm 7... Motivation and Morale _ — MBO promotes better interpersonal relations b employees. This helps to improve their motivation and More managers assume & supportive role. This results in in; 4 creativity on the part of subordinates. Limitations of MBO tess The following are the limitations of MBO: 1, Difficulty in setting goals It is very difficult to set verifiable and measurable » \& =Emphasis on short-term goals Under MBO, goals are set only for a short period. It does. for long-range goals. Be Time Consuming and costly } Setting goals through consensus of superior and subordi time consuming and costly. Several meetings may have to be instill confidence in subordinates. GOUrces ail 4 Increased paper work q MBO requires the preparation of a number of n instruction booklets, training manuals, performance reports 5. Pressure-Oriented & Achange is required in the thinking and acting style ofm This is not so eas 6. Rigidity It may introduce inflexibility in the organization. \y Participation problem MBO requires the Very often, the su subordinates, Steps in MBO MBO consists of the following steps: 4; Setting Objectives of the organisation “3 The first step in MBO process is to lay down the over all ob of the organisation, This is done at the top level. These obj set by Considering company’s strengths and weaknesses. X goal-setting by the superior and subo perior sets the goals without the partiPlanning: 2, Clarifying Organisational Roles “ gometimes organisational roles are not should be clear cut assignment of tasks and The responsibility of a manager for a task 3. Setting subordinates’ objectives to In setting objectives for subordinates, their re _ ee should be duly considered. Their objectives must alate ea with them. : c 4. Recycling Objectives Under MBO goal-setting is a joint and interactive process. There should be proper consultations and interactions at various levels. Recycling of objectives helps in their easy achievement. 5. Action Planning Once goals are established, action programmes are developed for ; led procedures are set up for the achievement their achievement. Detail of pre-determined targets. 6. Periodic Performance Reviews eee ¥ Progress towards the achievement of goals is reviewed at specified intervals. Such reviews help to identify short comings and to take timely steps to improve results. 7. Final Appraisal The organisation makes a thorough evaluation of performance at the end of the year. Achievements are anlaysed in the light of established goals and standards. Rewards are decided on the basis of such appraisal. Measures for making MBO effective d for the successful The following conditions are require implementation of MBO: 1, Purpose nom MBO may be used for different purposes, eg. Long-range peormaniie appraisal, ete, So, the purpose must be cles efore installing MBO programme. 2. Top Management Support * : It cannot be implemented successfully without complete supper an ‘ id commitment of top management.very sensitive to handle such problems. Aly 66 BUSINESS MANAG| 3. Orientation and Training MBO requires a fundamental change in the attitude of the exec 4 Therefore, proper training must be provided to people at all level 4. Adequate Time and Resources MBO programme cannot be installed all on a sudden. must be provided adequate time an d resources for its insta operation. 5. Decentralisation It reauires active participation of subordinates in goal setting performance appraisal. So, the subordinates should be given ade u authority to accomplish their goals. 6. Timely Feedback Periodic review, counselling and control are essential for success of MBO programme. Feedback on performance ™ 2 provided to every individual to ena ple him to improve himself. 7. Wandling of problems MBO may redistribute power and alter the status of em) This may generate hostile reactions from them. Managers ™ | REVIEW QUESTIONS |