Management by Objectives and

Planning in Management

Discover how Management by Objectives can enhance your organization's

performance and learn the key elements of effective planning in management.
Made By : Ashish
Aditya Singh
Divyansh Khattar
Sarthak Bahl
 Management by Objectives
Management by Objectives (MBO) is a management approach that involves setting specific, measurable,
achievable, relevant, and time-bound (SMART) objectives within an organization.

Origin and Definition MBO Principles

Management by Objectives (MBO) is a results-
oriented management approach introduced by
Peter Drucker in the 1950s. It emphasizes the
importance of setting clear, measurable, and
achievable goals within an organization.
MBO focuses on goal specificity, participative
decision-making, and continuous performance
evaluation to align individual and team objectives
with the organization's overall mission.
Key Components of Management by
Objectives

Goals setting Team collaboration Define Metrics

Establish clearly defined and Managers and employees Establish measurable criteria to
measurable objectives at the collaborate to define goals evaluate progress and success of
organizational, departmental, together, boosting ownership and objectives.
team, and individual levels. commitment
Establishing Checkpoints
It involves regular reviews
between superiors and
subordinates to assess progress by
setting clear standards, seeking
regular progress reports,
addressing challenges, and
adjusting targets as needed for
effective control.
Monitoring and Feedback
Managers provide timely
feedback to employees,
acknowledging achievements and
addressing any deviations from
the planned course of action. This
facilitates continuous
improvement and course
correction.
Adaptability
Adapting goals to fit the changing
business landscape, being flexible
in response to dynamic
environments. This involves being
proactive in recognizing shifts,
making strategic adjustments, and
ensuring goals remain relevant
and effective in the face of
evolving challenges.
Benefits of MBO
1 Improved Planning:
MBO involves collaborative goal-
setting, enhancing goal clarity and
resulting in realistic plans with active
participation from both superiors and
subordinates..
2 Increased Productivity:
With a focus on important tasks such
as cost reduction and seizing
opportunities, MBO contributes to
higher productivity by concentrating
management efforts on strategic
matters.
3 Better Organization:
Individual goal-setting in MBO
prompts reevaluation of job
descriptions and organizational
structures. This process enhances
clarity, accountability, and
responsiveness within the
organization, fostering an
environment conducive to effective
goal achievement
4 Enhanced Performance Appraisal:
Defining expected results establishes clear
criteria for performance appraisal, intensifying
accountability. MBO provides an objective
measuring instrument for evaluating actual
performance.
5 Executive Development:
MBO emphasizes a long-term and
comprehensive viewpoint, encouraging
executives to acquire knowledge and skills on
the job as a by-product of meeting performance
requirements. It serves as a tool for self-
development through learning and
experimenting in the goal-setting process.
Implementing Management by Objectives
Top-level
Commitment:
Sustained top management
commitment is crucial to
prevent the loss of enthusiasm
among employees. Managers
should integrate MBO into
organizational procedures to
ensure its continuous vitality.
Training of Managers:
Successful MBO
implementation requires
managers to be well-trained in
its procedures and benefits.
Lack of proper training can
lead to program failure.
Clarity of Purpose:
Clearly define the purpose of
MBO, whether for long-range
planning, performance
appraisal, or productivity
improvement. Tailor the
program details accordingly
to align with its intended
purpose.
Encouragement of
Participation:
Managers must actively
encourage subordinates'
participation in goal setting
for increased commitment.
This involves relinquishing
some control and empowering
subordinates in defining and
achieving their objectives.
Delegation of
Adequate Authority:
Subordinates accepting
challenging assignments need
sufficient authority to
accomplish goals. MBO's
success depends on managers'
willingness to delegate
authority, ensuring
subordinates' acceptance of
responsibilities..
Overall Integration:
MBO should not be isolated;
it must be integrated across
organizational programs,
including human resource
planning, development,
product planning, production
control, and financial
planning. This ensures a
holistic and effective
implementation.
Challenges of Implementing MBO
While MBO offers numerous benefits, it is not without its challenges. Overcoming these hurdles is crucial to
maximize the potential of this approach.
1 Resistance to
Change:
MBO necessitates
significant shifts in
traditional thinking and
practices, such as
hierarchical structures and
unilateral goal setting.
Overcoming resistance
requires continuous
education and patience
among managers.
2 Lack of
Preparation:
Poor planning prior to
MBO implementation is a
common weakness.
Adequate training and
involvement of all
management levels are
crucial for successful
execution.
3 Imposition of Goals:
Superiors often impose
goals without input from
subordinates, hindering
two-way communication.
Unrealistic goals and
disregard for external
factors beyond subordinate
control can undermine
effectiveness.
4 Non-quantifiable
Targets:
MBO's emphasis on
quantitative, measurable
objectives faces challenges
in areas where output
quality matters more than
volume. Examples include
legal, design, and research
departments, making
traditional measurement
ineffective.
5 Unnecessary 6 Lengthy Process:
Paperwork:
MBO results in excessive
paperwork, including
newsletters, manuals, and
performance reports. This
paperwork, including
detailed performance
reports, can lead to time
and effort wastage.
Setting measurable goals
through consensus and
conducting periodic
reviews in MBO requires
substantial time. The time-
intensive nature of the
process may test the
patience of those
responsible for
implementation.
Planning in Management
• Effective planning is a cornerstone of successful
management, providing a roadmap to achieve desired
outcomes and navigate uncertainties. Planning involves
the systematic process of setting goals, developing
strategies, and outlining actions to achieve organizational
success.
• It is crucial for guiding decision-making, optimizing
resources, and aligning efforts towards common goals.
Benefits of Effective Planning
Improved Decision
Making:
Well-thought-out plans provide a
roadmap for decision-makers.
They help in foreseeing potential
outcomes, evaluating risks, and
considering various alternatives
before making decisions.
Resource Optimization:
Planning ensures that resources,
including human capital, finances,
and materials, are utilized
optimally. It involves allocating
resources based on priority,
avoiding overallocation or
underutilization, and preventing
unnecessary waste.
Risk Mitigation:
Effective planning involves
anticipating potential risks and
developing strategies to mitigate
them. By identifying and
addressing risks in advance,
organizations can minimize the
impact of unforeseen events.
Improved Adaptability to
Change:
Planning involves scenario
analysis and flexibility to adapt to
changing circumstances.
Organizations with effective
planning processes are better
equipped to respond to unexpected
changes in the internal and
external environment.
Enhanced
Communication and
Collaboration:
The planning process encourages
communication and collaboration
among team members. It ensures
that everyone is on the same page
regarding goals, responsibilities,
and timelines
Goal Alignment:
Effective planning aligns
individual and team goals with the
broader organizational mission
and objectives. It ensures that
everyone understands how their
efforts contribute to the overall
success of the organization.
Steps in the Planning Process
• Environmental Analysis:
• Assess Internal and External Factors: Examine the organization's strengths, weaknesses,
opportunities, and threats. Consider the impact of economic, technological, social, political, and
legal factors.
• Goal Setting:
• Define Specific and Measurable Objectives: Clearly articulate goals with specific criteria for
success. Ensure they are relevant to the organization's mission and time-bound to create a sense of
urgency.
• Developing Alternatives:
• Identify Strategies and Approaches: Encourage creative thinking to generate a range of potential
strategies. Seek input from diverse perspectives and assess risks and benefits associated with each
alternative.
 • Evaluating Alternatives:
• Assess Feasibility and Effectiveness: Conduct cost-benefit analysis, evaluate risks, and ensure
alignment with defined objectives. Assess the financial implications and potential risks of each
alternative.
• Implementation of Plans:
• Execute the Chosen Plan: Clearly outline action steps, allocate necessary resources, and develop a
realistic timeline. Initiate the plan with a focus on effective resource utilization.
• Monitoring and Adjusting Plans:
• Review Progress and Make Adjustments: Establish key performance indicators (KPIs) to measure
progress. Conduct regular reviews, remain flexible, and be open to adjustments based on changing
circumstances.

In summary, the planning process comprises a thorough analysis of internal and external factors, establishing clear
goals, exploring diverse alternatives, evaluating feasibility, implementing the chosen plan, and continuous
monitoring with adaptability. This systematic approach enables organizations to navigate uncertainties and strive
for desired outcomes.
THANK YOU!
Made by:
Ashish
Sarthak Bahl
Divyansh Khattar
Aditya Singh