Management By Objectives

MBO


Management By Objectives (MBO) is defined as a program that encompasses specific goals , participatively set ,for an explicit time period, with feedback on goal progress. A comprehensive management system based on measurable anticipatively set objectives that leverages the motivational power of objectives.

MBO


Management By Objectives (MBO) is defined as a program that encompasses specific goals , participatively set ,for an explicit time period, with feedback on goal progress. A comprehensive management system based on measurable anticipatively set objectives that leverages the motivational power of objectives.

Management By Objectives (MBO)



MBO is a motivational program based on goal setting. The goal(s) should:

be mutually agreed upon. be difficult, but achievable (realistic). have a defined time frame be measurable (objective and budgeted). provide means for feedback.

Management By Objectives (MBO)



In an MBO program, good goals are SMART goals:

Specific Measurable Attainable Results-oriented Time-related

Management by objectives (MBO).

Subordinates work with their supervisor to establish specific task-related objectives. MBO is the most individualized appraisal method . MBO works well with counseling, provided the goals focus on important activities. MBO is not highly subjective to rating errors.

Key elements of MBO

   

Goal specificity participative decision making an explicit performance/evaluation period feedback

Management By Objectives (MBO)

Is a four-step process in which
1.

2. 3.

4.

Managers and employees jointly set objectives for the employee Managers develop action plans Managers and employees periodically review the employees performance The manager makes a performance appraisal and rewards the employee according to the results

Three Types of Objectives Used in MBO

Improvement Objective
Increase sport-utility sales by 10%

Personal Development Objective

Attend five days of leadership training

Maintenance Objective
Continue to meet the increased sales goals specified last quarter

MBO Requirements
For MBO to be successful, three things have to happen:
1.

2. 3.

The Commitment of Top Management is Essential It Must Be Applied Organization-wide OrganizationObjectives Must be down through the
organization; that is, objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization

Steps in a Typical MBO Program

1. 2.

3.

4.

5.

6. 7.

8.

The organizations overall objectives and strategies are formulated. Major objectives are allocated among divisional and departmental units. Unit managers collaboratively set specific objectives for their units with their managers. Specific objectives are collaboratively set with all department members. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. The action plans are implemented. Progress toward objectives is periodically reviewed, and feedback is provided. Successful achievement of objectives is reinforced by performance-based rewards.

The Strengths & Limitations of MBO

Strengths
     

Limitations
     

It can improve performance at all levels It emphasizes getting results It motivates employees to do better Top management commitment and involvement MBO forces and aids in planning . MBO reduces role conflicts and ambiguity.

It can take too much time and energy MBO requires considerable training of managers It wont work in rigid, authoritarian organizations Specific objectives can distract from strategic goals MBO can be misused by zealous or punitive managers Not as effective in dynamic environments that require constant resetting of goals Overemphasis on individual accomplishment may create problems with teamwork Allowing the MBO program to become an annual paperwork shuffle.

Overall organizational objectives

company

Divisional objectives

Consumer products division

Industrial products division

Departmental objectives

production

sales

Customer marketing service

research development

Individual objectives