Chapter-3
OBJECTIVES
Objectives
• Objectives is a specific result that a person or
organization aims to achieve with in a time frame
and with available resources for the successful of
goals.
• Some examples of business objectives
include minimizing expenses by 10%,
expanding internationally, or making a profit
of 5%.
The Differences between Goals and Objectives
Goals are statements you make about the future
for your business. They represent your aspirations
for it. A goal is a broad aim you establish to start
the business planning process. For example,
growing sales revenue in North America can be
considered a goal.
An objective is a specific milestone that you reach
on the way to achieving your goal. For example,
expanding your distribution network is an
objective used to reach the goal of raising company
revenue
Examples of Goals and Objectives
• Goals ‘“I want to be a better ball player. I want
to learn more about Chinese history. I want to
maximize my professional performance.
• Objectives ‘“I want to memorize the periodic
table before my next quiz. I want to increase my
sales by 10% this month.
Measuring Goals and Objectives
• Goals ‘“unfortunately, there is no set way in which
to measure the accomplishment of your goals. You
may feel that you are closer, but since goals are de
facto nebulous, you can never say for sure that you
have definitively achieved them.
• Objectives ‘“can be measured. Simply phrase your
objective in the form of a question. For example, ‘I
want to accomplish x in y amount of time’ becomes
‘Did I accomplish x in y amount of time?’ This can
easily be answered in a yes or no form.
Management by Objectives (MBO)
• Management by Objectives (MBO) is the
collaborative goal setting by a manager and
subordinate, the extent to which goals are
accomplished is a major factor in evaluating and
rewarding the subordinates’ performance.
• The technique was first championed by
management expert Peter Drucker and became
commonly used in the 1960s. . It suggests that
objectives should not be imposed on subordinates
but should be decided collectively by a concerned
with the management.
Steps In Management By Objectives Planning
• Goal setting: The first phase in the MBO process is to define
the organizational objectives. These are determined by the top
management and usually in consultation with other managers.
Once these goals are established, they should be made known
to all the members. In setting objectives, it is necessary to
identify "Key-Result Areas' (KRA).
• Manager-Subordinate involvement: After the organizational
goals are defined, the subordinates work with the managers to
determine their individual goals. In this way, everyone gets
involved in the goal setting.
• Matching goals and resources: Management must ensure that
the subordinates are provided with necessary tools and
materials to achieve these goals. Allocation of resources
should also be done in consultation with the subordinates.
Steps In Management By Objectives Planning
• Implementation of plan: After objectives are
established and resources are allocated, the
subordinates can implement the plan. If any guidance
or clarification is required, they can contact their
superiors.
• Review and appraisal of performance: This step
involves periodic review of progress between manager
and the subordinates. Such reviews would determine if
the progress is satisfactory or the subordinate is facing
some problems. Performance appraisal at these
reviews should be conducted, based on fair and
measurable standards.
Features Of Management By Objectives MBO
• Superior-subordinate participation
• Joint goal-setting
• Joint decision on methodology
• Makes way to attain maximum result:
• Support from superior
Advantages of Management by Objectives
1 . Since Management by objectives (MBO) is a result-oriented
process and focuses on setting and controlling goals, if encourages
managers to do detailed planning.
2. Both the manager and the subordinates know what is expected of
them and hence there is no role ambiguity or confusion.
3. The managers are required to establish measurable targets and
standards of performance and priorities for these targets. In
addition, the responsibilities and authority of the personnel is
clearly established.
4. It makes individuals more aware of the company goals. Most
often the subordinates are concerned with their own objectives
and the environment surrounding them. But with MBO, the
subordinates feel proud of being involved in the organizational
goals. This improves their morale and commitment.
Advantages of Management by Objectives
5. Management by objectives (MBO) often highlights the
area in which the employees need further training,
leading to career development.
6. The system of periodic evaluation lets the subordinates
know how well they are doing. Since MBO puts strong
emphasis on quantifiable objectives, the measurement
and appraisal can be more objective, specific and
equitable.
7. It improves communication between management and
subordinates.
Disadvantages
• Management by Objectives (MBO) may be resented by subordinates.
They may be under pressure to get along with the management when
setting goals and objectives and these goals may be set unrealistically
high. This may lower their morale and they may become suspicious
about the philosophy behind MBO.
• The development of objectives can be time consuming, leaving both
managers and employees less time in which to do their actual work.
This is the problem for some employees, especially new one’s who
may require more guide lines.
• The elaborate written goals, careful communication of goals, and
detailed performance evaluation required in an MBO program
increase the volume of paperwork.
• Sometimes managers thought that employee participation in goal
setting robs them of their authority. The top level management is not
satisfied with this.
Management by Exception (MBE)
• A management system where business results are
compared against the result that were either
budgeted or planned.
• Management by exception is a concept that
managers use to focus on key areas of business
performance instead of looking at the business as
a whole. Managers only look at the areas that
have large variances from the standard or
budgeted projections.MBE usually is most
effective when managers have control over the
problem areas.
Management by Walking Around/Wandering
Around (MBWA)
• The management by wandering around
(MBWA), also management by walking
around, refers to a style of business
management which involves managers
wandering around, in an unstructured
manner, through the workplace(s), at random,
to check with employees, equipment, or on
the status of ongoing work
