What is Management by objective? * Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization.
Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives. Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book ‘The Practice of Management’. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when he said: “It’s just another tool.
It is not the great cure for management inefficiency…
Management by Objectives works if you know the objectives, 90% of the time you don’t. ” Core Concepts of MBO * According to Drucker managers should “avoid the activity trap”, get so involved in their day to day activities that they forget their main purpose or objective.Instead of just a few top-managers, all managers should: * participate in the strategic planning process, in order to improve the implement ability of the plan, and * Implement a range of performance systems, designed to help the organization stay on the right track. Managerial Focus * MBO managers focus on the result, not the activity. They delegate tasks by “negotiating a contract of goals” with their subordinates without dictating a detailed roadmap for implementation.Management by Objectives (MBO) is about setting you objectives and then breaking these down into more specific goals or key results.
Main Principle of MBO * The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization.Setting Objectives * In Management by Objectives (MBO) systems, objectives are written down for each level of the organization, and individuals are given specific aims and targets. “The principle behind this is to ensure that people know what the organization is trying to achieve, what their part of the organization must do to meet those aims, and how, as individuals, they are expected to help. This presupposes that organization’s programs and methods have been fully considered. If they have not, start by constructing team objectives and ask team members to share in the process.
* “The one thing an MBO system should provide is focus”, says Andy Grove who ardently practiced MBO at Intel. So, have your objectives precise and keep their number small. Most people disobey this rule, try to focus on everything, and end up with no focus at all. * For Management by Objectives (MBO) to be effective, individual managers must understand the specific objectives of their job and how those objectives fit in with the overall company objectives set by the board of directors.
“A manager’s job should be based on a task to be performed in order to attain the company’s objectives…
he manager should be directed and controlled by the objectives of performance rather than by his boss. ” * The review mechanism enables leaders to measure the performance of their managers, especially in the key result areas: marketing; innovation; human organization; financial resources; physical resources; productivity; social responsibility; and profit requirements. Question 1 Roopali Deshmukh implemented the MBO process as an intervention to improve the productivity of her sales team. She successfully implemented the process by following a sequence of effective planning, control and development.The following are the various phases of the MBO process that led to its success: * The MBO program was initiated by the top management which set the overall organizational goals and communicated them to the people down the hierarchy. However, the management did not interfere much with the means of achieving the objectives.
In other words, it gave adequate autonomy to its employees to implement the progress. * Deshmukh then drafted a plan of action to achieve the targets decided by the management for the year. * She invited employee participation in various aspects of implementation of the program.She encouraged her team members to decide the role each one would play in role to achieve the team’s target. She sought their suggestions to play in order to achieve the team targets that each individual would achieve.
These short term targets were in line with the team’s long term goals and objectives. * Deshmukh also set specific time frames for the accomplishments of the targets. Thus the goals were not only specific but also time bound.
* Deshmukh closely monitored the performance of all the team members without actually interfering in their job.She also offered positive feedback to her subordinates and this helped them overcome their shortcomings and perform effectively. Thus the MBO program implemented in the sales team proved to be beneficial to both the employees and the management Question 2 Explain briefly the process of Management by objectives (MBO) The process of MBO cans divide into 4 steps: 1) Set objectives 2) Meet with each employee 3) Meet periodically 4) Select the next set of objectives * First, set objectives by the manager or supervisor’s own upcoming project or time period (presumably in consultation with a person in the next highest managerial level).Next, the manager or supervisor should plan the larger departmental objectives. * Second, the manager and supervisor should meet with each employee, outline his or her larger objectives, and guide each person in determining the smaller objectives and goals that will help achieve the larger departmental and organizational objectives. The smaller objectives will be the employee’s job or work objectives.
* Third, meet periodically (i. e. , quarterly or when projects or priorities change) to evaluate the status for meeting or achieving objectives and to troubleshoot any roadblocks or set new priorities.
Evaluate performance toward achieving the objectives together. A written summary of the joint evaluation, signed by both the supervisor and the employee, with a copy given to each party, assures each of them that the other will keep this evaluation in mind in the upcoming rating period. * Finally, select the next set of objectives. A whole new set of duties may await the employee on the next project or during the upcoming performance period or fiscal year, so this evaluation will be strictly confined to closing out the previous project.Question 3 Behind the principle of Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. Then they can understand how their activities relate to the achievement of the organization’s goal.
Also places importance on fulfilling the personal goals of each employee. Management by objectives is a goal-setting tool where goals are set by employees in collaboration with the management. The aim of management by objectives is the achievement of organizational goals.MBO involves setting up short-term goals for employees in line with the long term objectives of the organization. MBO is thus an effective tool for planning, control and development. Most organizations use MBO as a control mechanism to ensure that there is no deviation between employee performance and organizational objectives. Organizations also use MBO as a performance measurement tool. Since MBO is a bottom-up approach, the organization gains from the participation of employees in the establishment and achievement of employee goals.
Since individual goals are set collaboratively by employees and employers and are closely linked to the organization’s mission and objectives, achievement of individual goals results in accomplishment of organization’s objectives. Thus an effective MBO program not only motivate employee to achieve their individual goals but also helps in attaining organizational goals. • Everybody will be having a common goal for whole organization. That means, it is a directive principle of management. • Managers can ensure that objectives of the subordinates are linked to the organization’s objectives.
Motivation – Involving employees in the whole process of goal setting and increasing =- • Better communication and coordination – Frequent reviews and interactions between superiors and subordinates help to maintain harmonious relationships within the organization and also to solve many problems. • Relationships between the managers and those under them can be improved. There is better communication within the organization and increased coordination. Managers can ensure that objectives of the subordinates are linked to the organization’s objectives.