MBO Process (Management by Objective)

Welcome

Principle of ManagementModule Code: MGT-101

Semester: 5th

Group: E-2 Batch: 18th

Submission Date: 25th September 2014Submitted to

Mahfuzul Islam Mahfuj Lecturer

Faculty of Apparel Manufacturing Management & Technology, Shanto-Mariam University of Creative Technology, Dhaka.

Submitted by

Sl.No. Name ID

1 Md. Hasanuzzaman (Group Leader) 121011403

2 Md. Rakibul Hasan Shorif 121011421

3 Md. Mizanur Rahman 121011423

4 Al-Mamun Mia 121011424

Management By Objective (MBO Process)

Presentation Title

Agenda

Introduction

Definition

Objectives

MBO principles

Smart goal

The MBO process

tools

Advantage

Disadvantage

Problem & Limitation

Obsolete

Conclusion

Introduction Popular Technique of Appraisal of managerial

performance.

Introduced by Peter Druker’s book, “THE PRACTICE OF MANAGEMENT”, Published in 1954.

Usually been design and used with the business & Industries.

It is the most widely accepted philosophy of management today. It is a demanding and rewarding style of management.

A process whereby superiors & subordinates jointly identify the common objectives to make best of organizational resources.

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DEFINATIONBY PETER DRUKER

DEFINITION OF MBO

§ Management Model based on Objectives that are agreed on between Management and Employees

§ The aim is to reach overall Strategic Goals for the

Organization but also Individual Goals for the Employees

§ This Model integrates Employees in the planning process what leads to Participation, Motivation and Commitment

Click icon to add pictureDEFINITION OF MBO

§ Employees measure their daily Work on their individual goals and act in best interest of the company

§ Sum of all individual goals forms the overall goal of the company

Objectives

To Measure and judge performance.

To relate individual performance to organizational goals

To clarify both the job to be done and the expectations of accomplishment.

To foster the increasing competence & growth of the subordinates.

To enhance communication between superior & subordinates.

To serve as a basis for judgment about salary & Promotion.

To stimulate the subordinate‘s motivation.

To serve as a device for organizational control & Integration.

Management

EmployeeEmpowerment

Balance Between

The balance between management and employee empowerment has to be struck, not by thinkers, but by practicing managers. Turning their aims into successful actions, forces managers to master four basic operations: setting objectives, organizing the group, motivating and communicating, measuring performance, and

developing people, including yourself.

MBO Principles

Setting Goals Together

Periodically Evaluation

Support from Superior

Focus on Goals, not on Methodologies

MBO PRINCIPLES

How to Establish g o a l S ?

How to be a smart?SMART G O A

LSpecific

Measurable

Achievable

Relevant

Time-based

Get SPECIFIC and clear about what you want to

achieve!

SMART G O A L STEP-1

I want to be rich

Make your goal MEASURABLE-quantify

what you want !

SMART G O A L STEP-2

I want to have One Billion

Dollars

Make your goal ACHIEVABLE within your

resources!

SMART

I work hard as hell

Make your goal RELEVANT–Is it

worthwhile?SMART

I want to keep her

happy

Your goal needs to be TIMED-Set a start and a

finish date!

SMART G O A L STEP-5

One year till the first million

Work

Specific

Measurable

Achievable Have

S

U

C

E

S

S

Relevant

Time-based

SMART G O A L Finally

The MBO’sProcess

Central Goal Setting

Individual Goal Setting

Progress Monitored

Performance appraisal

Achievers Rewarded

Next MBO Operating

period

The MBO’s Process

RoutineObjectives

Problem-SolvingObjectives

ImprovementObjectives

InnovationObjectives

CENTRAL GOAL SETTING

Development ofIndividual Goals

Revision of JobDescription

ResourceAllocation

INDIVIDUAL GOAL SETTING

RESULTS’ REVIEW- Objectives and key results- Long and short term priorities- Scope of assistance expected- Standards of performance

PROGRESS MONITORED

PROPERFORMANCE APPRAISAL

Self Evaluation

360-DegreeEvaluation

ChecklistEvaluation

Critical IncidentsMethod

Non-FinancialMotivators

§ Salaries§ Commission§ Share Ownership§ Performance Pay

FinancialMotivators

§ Job Enlargement§ Job Rotation§ Job Enrichment§ Empowerment

ACHIEVERS REWARDED

TOOLS

Organizational Goals =Organizational KPI

(e.g. number of complaints in the end of the week)

KEY PERFORMANCE INDICATORS

Individual Goal = Individual KPI

(e.g. weekly % difference in complaints handled that result in satisfied customers vs. unsatisfied customers)

8 Key Result Areas Where Managers Must Pursue Clear Objectives

Marketing

Innovation

Human organization

Financial resources

Physical resources

productivity

Social responsibility

Profit requirement

• Improves employee motivation• Improves communication in the

organization• Flags up and highlights training needs

required to achieve objectives• Improves overall performance and

efficiency

ADVANTAGES OF MBO

Requires the cooperation of all employees to succeed

Can be bureaucratic and time consuming (meetings, feedback)

Can encourage short-term rather a more focused long-term growth

Setting targets for certain specialized employees may be difficult

DISADVANTAGES OF MBO

Difficulty of setting goalsFailure to teach MBO philosophyProblems in objective settingEmphasis on short-term objectivesInflexibilityFrustration

PROBLEMS AND LIMITATIONS OF MBO

Is MBO OBSOLETE?

High Volatility in Markets and Trends

YES! BUT WHY?

Conservative Individual Goals

Having productivity measured is hard

Non Collaborative Goals = Inefficiency

Conclusion

• MBO is used for different purposes. Some organizations use MBO to clarify the employee’s job , others use it to motivate employees while still other organizations apply MBO as a performance control mechanism to check performance. In this way MBO process is directly related to all the major functions of management.Thus, MBO is a result-oriented and rational philosophy. It permits management by results in place of management by crisis. Many organizations both in the private sector and the public sector have benefited a lot through the application of MBO.