Management by Objective (M.B.O) Management by results Goal management.

Management by Objective (M.B.O)

Management by resultsGoal management

Nature of objective.

• Hierarchy of objective.• Process of formulating Objective and the

Organizational Hierarchy.• Network of objective.• Multiplicity of objectives.

Characteristics of sound objectives

• In writing• Time bound• Measurable• Attainable• Mutually supportive

Advantages of goal setting

• Encourages unified planning• Provides motivation• Goal oriented tasks avoid unproductive tasks• Provide standards to support the control of

human efforts

Level of Organizational Hierarchy Types of objective

Board of directors and top level managers.

VisionVision

MissionMission

Overall objective of the firm.Overall objective of the firm.

Objectives in the key result•Productivity•Physical and financial resource.•Profitability and market standing.•Innovation.•Managerial performance and development, worker performance and attitude.•Social responsibility.•Quality and service issues.

Middle level manager.Divisional objectiveDivisional objective

Departmental objectives.

Lower level manager.

Department and unit objective.Department and unit objective.

Objective for subordinate.•Performance goal.•Development goals.

• This concept was first introduce by Mr. Peter Drucker in the 1950.

• Definition :-“ A process whereby the superior and the subordinate

managers of an enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of the result expected of him, and use the measures as guides for operating the unit and assessing the contribution of each of it’s members.”

• Heinz Weihrich and Harold Koontz define M.B.O as “ A comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed toward the effective and efficient achievement of organizational and individual objective.

The M.B.O Process has many steps:-

Develop overall organizational goal.

Establish specific goals for various departments, subunits and individual.

Formulate action plans identifying the problem areas.

Implement and maintain self-control.

Appraise performance of the subordinates.

Conduct periodic review of the plans.

Benefits of M.B.O:-Benefits of M.B.O:-

• Better managing• Clarity in Organizational action• Personal satisfaction • Development of skills and abilities• Basic for organizational change.• Encouragement of personal commitment.• Increases motivation• Development of effective control.• Improved communication• Appraisal is more objective and specific

Limitations of M.B.O:-

• Failure to teach M.B.O Philosophy.• Failures to give guideline to goal setters. Lack

of interpersonal skills in managers• Difficulty in goal setting. Resentment by

subordinates• Emphasis on short-term goal.• Inflexibility.

Making M.B.O effective:-

• Top management support.• Training for M.B.O.• Formulating clear goal.• Effective feedback.• Encouraging participation.