MBO

Management by Objectives (MBO) Two reasons to gain attention Focuses on the objectives or results which a manager is expected to achieve within a specified period. It emphasizes participative management.

Features of MBO 1. It is an approach and philosophy to management and not merely a technique. 2. It is the joint application of a number of principles and techniques. 3. The basic emphasis of MBO is on objectives. 4. It is characterized by the participation of concerned managers in objective setting & performance reviews. 5. Periodic review of performance

6. Objectives in MBO provide guidelines for appropriate system & procedures.

Process of MBO
1. Setting of Organizational Purpose & Objectives. 2. Key Result Areas 3. Setting Subordinates Objectives 4. Matching Resources with Objectives 5. Appraisal 6. Recycling

1. Setting of Organizational Purpose & Objectives. Purpose - why does an organization exist? what business are we in? what should be our business? Objectives - long range & strategic objectives short term organizational objectives divisional/ departmental objectives individual managers objectives.

2. Key Result Areas (KRAs) Organizational objectives & planning premises together provide the basis for the identification of KRAs. KRAs also indicate the present state of an organizations health & the top management perspective for the future. Ex: profitability, market standing, innovation, productivity, worker performance, public responsibility etc.

3. Setting Subordinates Objectives Organizational objectives are achieved through individuals. Process of objective setting: 1. Superiors proposed recommendations for his subordinates objectives 2. Subordinate state his own objectives perceived by him. 3. Final objectives mutual negotiation between superior & subordinate

4. Matching Resources with Objectives It is the proper application of resources which ensures objective achievement. A superior manager is better able to see the need & economy of allocating resources. Allocation & movement of resources should be one in consultation with subordinate manager.

5. Appraisal It is undertaken as an on-going process with a view to find out deficiency in the working & also to remove it promptly. Not merely to punish the non-performer or to reward the performer. To ensure that everything is going as planned & the organization is able to achieve its objectives.

6. Recycling Appraisal, the last aspect of MBO process, is used as an input for recycling objectives & other actions. Three aspects involved in recycling process: Objective setting at various levels Action planning Performance review

Exercise:

Find out the Benefits & Limitations of MBO.