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Published by: Ssk Kumar on Sep 05, 2012
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Management by Objectives

Ideally. employees get strong input to identify their objectives. MBO includes ongoing tracking and feedback in the process to reach objectives.What is MBO?  Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. . etc. time lines for completion.

To foster the increasing competence and growth of the subordinates. To clarify both the job to be done and the expectations of accomplishment. To stimulate the subordinates motivation and To serve as a device for organizational control and integration. To relate individual performance to organizational goals. To enhance communications between superior and subordinates. .Objectives of MBO         To measure and judge performance. To serve as a basis for judgments about salary and promotion.

Unit managers collaboratively set specific objectives for their units with their managers. 8. 2. defining how objectives are to be achieved. Action plans. Successful achievement of objectives is reinforced by performancebased rewards. 4. Progress toward objectives is periodically reviewed. The organization’s overall objectives and strategies are formulated. 6. 3.Steps in a Typical MBO Program 1. The action plans are implemented. . Specific objectives are collaboratively set with all department members. Major objectives are allocated among divisional and departmental units. 7. 5. and feedback is provided. are specified and agreed upon by managers and employees.

Clear goals and action plans generate concrete thinking and lead to result-oriented and forward planning.  . MBO clarifies the job assignment and responsibility of each individual. There is effective matching of goals and resources. The whole management team is actively involved in goal setting.Advantages of MBO  Improved Planning: MBO produces clear and measurable performance goals. MBO forces managers to plan for results rather than plan for work. Different individuals are fused into a co-operative team. Team Work: MBO results in better communication between superior and subordinates which reduces conflict. It ensures that goals of each department are consistent with the overall objectives of the organization. There is integration of lower level goals with organizational goals. A network of goals is created and appropriate action plans are formulated for goal achievement.

Participative goal setting and two-way communication improve the commitment and morale of employees. Under MBO the superior does not evaluate the subordinate but his performance.  . This results in innovation and creativity on the part of subordinate managers. The performance of every individual is evaluated in terms of the mutually agreed targets. Superior managers assume a supportive role and subordinates are allowed to exercise self-direction and self-control.Advantages of MBO  Objective Appraisal: MBO permits impartial appraisal because employee performance is evaluated against verifiable and mutually agreed criteria. MBO also allows employees to monitor and control their own performance. It provides greater opportunities to make personal contribution and to accept more responsibility. Motivation and Morale: MBO leads to better interpersonal relations through involvement and recognition of people at all levels. Such selfappraisal facilitates personal development. MBO helps to develop managers who have potential for growth.

over-emphasis on short-term goals may be at the cost of long-term goals. instruction booklets. Similarly. training manuals etc. Increased Paperwork: MBO results in a plethora of newsletters.Limitations of MBO  Goal-setting Problems: Very often it is very difficult to set truly verifiable and measurable goals. Subordinates have to fill in forms and submit detailed reports on their performance. Time Consuming: MBO requires a great deal of time in setting measurable goals through consensus. Goals once set may be followed rigidly leading to inflexibility in the organization. Over-emphasis on quantifiable and easily measurable goals may result in neglect of crucial qualitative goals like job satisfaction.   . The formal periodic reviews and final appraisal sessions also consume a lot of time. In the initial stage several meetings may have to be held to bring confidence in subordinates.

Inflexibility: MBO may introduce inflexibility in the organization. In many cases.Limitations of MBO  Participation Problem: MBO requires mutual goal-setting by the superior and the subordinate. the goals are set by the superior because he has no time to discuss it with the subordinate or he is not willing to share power with the subordinate. the subordinate may not be willing to set goals for himself because he is incompetent or he fears criticism from the superior. In other cases. Once goals are set down.  . the superior may not like to modify them due to fear of resistance from the subordinates.

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