Human resources slide 1

MANAGEMENT
BY OBJECTIVES
ENGINEERING MANAGEMENT
RMMC-BSCE
Human
TOPICS resources slide 2

What is Management By Objectives?

The formal MBO System

Evaluation of MBO

Strengths of MBO

Weaknesses of MBO

Making MBO Effective

 What is Management By
Human resources Objectives?
slide 6
 Management by Objectives (MBO) is a strategic approach to enhance
the performance of an organization. It is a process where the goals of
the organization are defined and conveyed by the management to the
members of the organization with the intention to achieve each
objective.

 The term management by Objectives was popularized as and approach

to planning by PETER DRUCKER in 1954 in his book The Practice
of Management.

 According to Drucker it is the relationship of each individual’s

objectives to the common goal. It is also the efficient operation of the
total organization through the efficient operation and integration of its
parts.

 It was based on THEORY Y : People want and are eager to work,

derive a great deal of satisfaction from work under the right
circumstances and can do a good job of it, too.
The
Formal
HumanMBO
resources slide 3
System
Common Elements in effective
MBO Systems:
Commitment to the Program
At every organizational level, managers’
commitment to achieving personal and
organizational objectives.
Managers must meet with subordinates
first to set objectives and then to review
progress toward these objectives.
If objectives are set but not reviewed
Periodically, they are not likely to be
achieved. If subordinates’ progress is
reviewed in an overly judgmental way,
resentment and impaired functioning
will result.
Top- Level goal Setting
Effective Planning usually starts with top
managers, who set preliminary goals after
consulting with other organization members.
Goals should be stated in specific,
measurable terms.
Individual goals
Setting objectives in a specific terms at every
level to help employees understand clearly
what they are expected to accomplish. This
helps each individual plan effectively to
achieve his or her targeted goals
Participation
The greater the participation of both
mangers and subordinates in the setting of
goals, the more likely it is that the goals will
be achieved.
Autonomy in Implementation of Plans
Within the normal constraints of
organizations policies, mangers should be
free to develop and implement programs to
achieve their goals without being second-
guessed by their immediate superiors. This
aspect of MBO programs is particularly
appreciated by managers.
Review of Performance
Managers and subordinates periodically
meet to review progress toward the
objectives. During the review, the decide
what problems, if any, exist and what they
can each do to resolve them.
To be fair & meaningful, review should be
based on measurable performance results
rather than on subjective criterial, such as
attitude or ability.

Human resources slide 4
GOAL SETTING
When it comes to goal setting,
nothing succeeded like success.
Individuals who determine their own
goals tend to aim for an improvement
on past performance. If they achieve
this improvement, they again set them
selves a higher goal. If they fail to
reach their target, however, they ten
to set more conservative levels of
aspirations for the next period.
EVALUATION of MBO
FEEDBACK ON PERFORMANCE
Providing feedback on performance
of employees generally led to better
performance.
The more specific and timely the
feedback, the more positive the
effects. The manner in which the PARTICIPATION
feedback is provided also affects
Research suggest that there are at
performance. The feedback should be
least two ways in which participating
given in a tactful manner,
in setting goals can lead to higher
particularly if it conveys failure to
performance:
meet objectives.
1. Participation can lead to a great
likelihood that goals will be
accepted and accepted goals are
more likely to be achieved.
2. Participation can lead to the
setting of higher goals, and
higher goals lead to higher
performance.
Human resources
Strengths of MBO
slide 8
MBO has major advantages to offer individual as well as to the
organization.

Major Advantages of MBO Programs

1. It lets individuals know what is expected of them.

2. It aids in planning by making managers establish goals &
target days.
3. It improves communication between mangers &
subordinates.
4. It makes individuals more aware of the organization’s goals.
5. It makes the evaluation process more equitable by focusing
on specific accomplishments. It also lets subordinates know
how well they are doing in relation top the organization’s
goals.
 WEAKNESSES OF MBO
Human resources slide 5
Several key problems that must be controlled if the program is to be
successful:
1. Management style and support.
If top managers prefer a strong
authoritarian approach and
centralized decision making, they
will require considerable
reeducation before they can
implement an MBO program.
2. Adaption and change.
MBO may require many changes in
an organizational structure,
authority patterns and control
procedures. Managers must
support these changes. Those who
participate only because they’re
forced to go along with the
organization may easily doom the
program to failure
3.Interpersonal Skills.
The manager-subordinate goal-
setting and review process requires
a high level of skill in
interpersonal relations. Many
managers have neither previous
experience nor natural ability in
these areas. Training in counseling
and interviewing may be required.
4. Job Descriptions.
Framing a specific list of
individual objectives and
responsibilities is difficult and
time-consuming. In addition, job
descriptions must be reviewed and
revised as conditions within the
organization change.
5. Setting and coordinating objectives
Setting challenging, yet realistic objectives is
frequently a source of confusion for managers.
There may be problems in making the
objectives measurable, in finding a happy
medium between targets that are too easy and
those that are impossible, and in describing
the objectives clearly and precisely.
6. Control of goal achievement methods.
Considerable frustrations can result if one
manager’s efforts to achieve goals are
dependent on the achievement of others within
the organization.
7. Conflict between creativity and MBO.
Trying performance evaluation promotion,
and compensation to the achievement of
objectives mat be counter productive if it tends
to discourage innovation. Commitment to
innovation and change should be part of the
process establishing goals to avoid this
danger.
Making MBO
Effective
Human resources
Key steps required of the highest
involved in the program:
1. Demonstrate continuing top-level
commitment. Initial acceptance and
enthusiasm among employees for an
MBO program may quickly disappear
unless top management makes concerted
efforts to keep the system alive and fully
functioning.
2. Educate & train managers. For MBO to 5. Encourage participation. Managers must realize that participation by
succeed, managers must understand it and
have the appropriate skill. They must be
educated concerning the procedures and
advantages of the system, the skill
required, and the benefits MBO provides
to the organization and their own careers.
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3. Formulate objectives clearly. Mangers and subordinates must be
satisfied that objectives are realistic and clearly understood, and that
they will be use to evaluate performance.
4. Make feedback effective. An MBO system depends on participants
who know where they stand in relation to their objectives. Setting
goals Is not sufficient incentive; regular performance review and
feedback results are necessary.
subordinates in goal setting may imply some reallocation of power.
Managers must be willing to relinquish some direct control over their
subordinates to take more active roles in defining and achieving their
own objectives.
Human resources slide 10

THE END
Thank you.