MANAGEMENT BY OBJECTIVES

RAJAN SHARMA Assistant Professor Business Management DAVIET, Jalandhar.

PRESENTED BY:

MANAGEMENT BY OBJECTIVES (MBO)

Peter Drucker 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. It emphasizes participatively set goals that are: Tangible Verifiable Measurable It works both from bottom up & top down.

GOAL SETTING THEORY OF MOTIVATION

In 1960s, Edwin Locke put forward the Goal-setting theory of motivation. This theory states that goal setting is essentially linked to task performance. It states that specific and challenging goals along with appropriate feedback contribute to higher and better task performance.

MBO PROCESS

CASCADING OF OBJECTIVES
OVERALL ORGANIZATIONAL OBJECTIVES

DIVISIONAL OBJECTIVES

DEPARTMENTAL OBJECTIVES

INDIVIDUAL OBJECTIVES

MBO PROGRAM INGREDIENTS

Goal specificity Participative decision making Explicit time period Performance feedback

LINK BETWEEN GOAL SETTING THEORY & MBO

GOAL SETTING THEORY MBO

hard goals Specific result in higher level of individual performance. Feedback on ones performance leads to higher performance. POINT OF DIFFERNCE Participation is not a must.

Specific hard goals make MBO most effective. emphasizes on It continuous feedback system for taking timely corrective action. POINT OF DIFFERNCE Participation is a key principle to MBOs success.

STRENGTHS OF MBO

Organizations create a powerful motivational system for their employees. Through the process of discussion and collaboration, communication is greatly enhanced. Appraisal may be done more objectively.

STRENGTHS OF MBO

Helps to identify superior managerial talent for future promotion. Provides a systematic management philosophy. Facilitates control through the periodic development and subsequent evaluation of individual goals and plans.

WEAKNESSES OF MBO/ REASONS FOR FAILURE OF MBO

Lack of top management support. Goals and plans cascading throughout the organization may not be those of top management. Overemphasis on quantitative goals. Some managers will not or cannot sit down and work out goals with their subordinates.

WHERE TO USE MBO

The MBO style is appropriate for knowledge-based enterprises when your staff is competent. MBO is appropriate in situations where you wish to build employees' management and self-leadership skills and tap their creativity, tacit knowledge and initiative. MBO is also used by chief executives of multinational corporations (MNCs) for their country managers abroad.