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    Management by Objectives

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    Varun Vanchinathan
    Management by Objectives (MBO) is a process defined in 1954 by Peter Drucker whereby managers and subordinates jointly set specific, measurable goals for an explicit timeframe and periodically review progress. The goals should be mutually agreed upon, difficult but achievable, measurable, and provide feedback. MBO utilizes SMART goals (Specific, Measurable, Attainable, Results-oriented, Time-related) and involves subordinates setting task-related objectives with supervisors. For MBO to be successful, top management commitment, organization-wide application, and cascading objectives down through levels of the organization are required.

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    Management by Objectives

    Uploaded by

    Varun Vanchinathan
    80 views13 pages
    Management by Objectives (MBO) is a process defined in 1954 by Peter Drucker whereby managers and subordinates jointly set specific, measurable goals for an explicit timeframe and periodically review progress. The goals should be mutually agreed upon, difficult but achievable, measurable, and provide feedback. MBO utilizes SMART goals (Specific, Measurable, Attainable, Results-oriented, Time-related) and involves subordinates setting task-related objectives with supervisors. For MBO to be successful, top management commitment, organization-wide application, and cascading objectives down through levels of the organization are required.

    Original Description:

    MANAGEMENT BY OBJECTIVE

    Original Title

    MBO

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    Management by Objectives (MBO) is a process defined in 1954 by Peter Drucker whereby managers and subordinates jointly set specific, measurable goals for an explicit timeframe and periodically review progress. The goals should be mutually agreed upon, difficult but achievable, measurable, and provide feedback. MBO utilizes SMART goals (Specific, Measurable, Attainable, Results-oriented, Time-related) and involves subordinates setting task-related objectives with supervisors. For MBO to be successful, top management commitment, organization-wide application, and cascading objectives down through levels of the organization are required.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    80 views13 pages

    Management by Objectives

    Uploaded by

    Varun Vanchinathan
    Management by Objectives (MBO) is a process defined in 1954 by Peter Drucker whereby managers and subordinates jointly set specific, measurable goals for an explicit timeframe and periodically review progress. The goals should be mutually agreed upon, difficult but achievable, measurable, and provide feedback. MBO utilizes SMART goals (Specific, Measurable, Attainable, Results-oriented, Time-related) and involves subordinates setting task-related objectives with supervisors. For MBO to be successful, top management commitment, organization-wide application, and cascading objectives down through levels of the organization are required.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 13

    Management By Objectives

    The term "Management by Objectives" was


    introduced in 1954 by Peter Drucker in his book
    "The Practice of Management"


    Management By Objectives (MBO)

    o A process of joint objective setting between superior and
    subordinate
    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.

    Management By Objectives (MBO)
    MBO is a motivational program based on goal
    setting. The goal(s) should:
    o be mutually agreed upon.
    o be difficult, but achievable (realistic).
    o have a defined time frame
    o be measurable (objective and budgeted).
    o provide means for feedback.

    Management By Objectives (MBO)
    In an MBO program, good goals are
    SMART goals:

    o Specific
    o Measurable
    o Attainable
    o Results-oriented
    o 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.Managers and employees jointly set
    objectives for the employee
    2.Managers develop action plans
    3.Managers and employees periodically review
    the employees performance
    4.The manager makes a performance appraisal
    and rewards the employee according to the
    results
    3 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 sale goals
    specified last quarter"

    MBO Requirements
    For MBO to be successful, three things have to happen:
    1.The Commitment of Top Management is
    Essential
    2.It Must Be Applied Organization-wide
    3.Objectives Must CascadeMBO works by
    cascading objectives 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. The organizations overall objectives and strategies are
    formulated.
    2. Major objectives are allocated among divisional and
    departmental units.
    3. Unit managers collaboratively set specific objectives for
    their units with their managers.
    4. Specific objectives are collaboratively set with all
    department members.
    5. Action plans, defining how objectives are to be achieved,
    are specified and agreed upon by managers and employees.
    6. The action plans are implemented.
    7. Progress toward objectives is periodically reviewed, and
    feedback is provided.
    8. Successful achievement of objectives is reinforced by
    performance-based rewards.
    The Strengths & Limitations of MBO
    Strengths
    It can improve performance at all levels
    It emphasizes getting results
    It motivates employees to do better
    Top management commitment and
    involvement
    Limitations
    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
    Consumer products division Industrial products division
    producti
    on
    sales
    Custome
    r
    service
    marketin
    g
    resear
    ch
    developme
    nt
    Individual
    objectives
    Divisional
    objectives
    Departmental
    objectives

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