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Management by Objectives

Management by Objectives (MBO) is a process where managers and employees define objectives for departments, projects, and individuals to monitor performance. MBO involves joint goal setting between supervisors and subordinates to establish performance goals consistent with higher organizational objectives. The steps for MBO include setting goals, developing action plans, reviewing progress and taking corrective action, and appraising overall performance. For MBO to be effective, goals must be specific, measurable, achievable, and committed to by both parties with periodic reviews. MBO creates motivation by enhancing communication and allowing more objective performance appraisal.

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Salman Saeed
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67 views

Management by Objectives

Management by Objectives (MBO) is a process where managers and employees define objectives for departments, projects, and individuals to monitor performance. MBO involves joint goal setting between supervisors and subordinates to establish performance goals consistent with higher organizational objectives. The steps for MBO include setting goals, developing action plans, reviewing progress and taking corrective action, and appraising overall performance. For MBO to be effective, goals must be specific, measurable, achievable, and committed to by both parties with periodic reviews. MBO creates motivation by enhancing communication and allowing more objective performance appraisal.

Uploaded by

Salman Saeed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Planning Perspective

MANAGEMENT BY OBJECTIVES
MANAGEMENT BY OBJECTIVES (MBO)
 A method whereby managers and employees
define objectives for every department, project,
and person and use them to monitor subsequent
performance.
THE NATURE & PURPOSE OF MBO
MBO is concerned with goal setting and planning for
individual managers and their units.
The essence of MBO is a process of joint goal setting
between a supervisor and a subordinate.
Managers work with their subordinates to establish
performance goals that are consistent with higher
organizational objectives.
MBO helps clarify the hierarchy of objectives as a series
of well-defined means-ends chains.
STEPS FOR MANAGEMENT BY OBJECTIVES
 Set Goals
 Long and short term goals.
 Develop Action Plan
 For both workgroups and individuals.
 Review Progress/ Take corrective action
 Periodic during the year.
 Appraise Overall Performance.
 Review Annual Goals.
STEPS FOR MBO
Set Goals Develop Action Plan
– The most difficult step. – Course of action
– Concrete – For both workgroups and
– Specific target and timeframe individuals
– Assign responsibility

Review Progress
– Periodicity
– Course corrections

Appraise Overall Performance.


– How are we doing?
– Do we need to restate our goals?
HOW TO MAKE MBO EFFECTIVE…..
 If MBO is to be successful, it must start at
the top of the organization

 Employees must be educated about what MBO


is and what their role in it will be.

 Managers must implement MBO in a way that


is consistent with overall organizational goals.
…..HOW TO MAKE MBO EFFECTIVE
 Managers tell their subordinates what organizational
and unit goals and plans top management has
established.
 Managers meet with their subordinates on a one-to-
one basis to arrive at a set of goals for each
subordinate that both develop and to which both are
committed.
 Goals are refined to be as verifiable as possible and
achievable within a specified period of time.
…..HOW TO MAKE MBO EFFECTIVE
 Goals must be written and very clearly stated.
 Managers must play the role of counselors in
the goal-setting and planning meeting.
 The meeting should specify the resources that
he subordinate will need
 Conducting periodic reviews
 The employee is rewarded on goal attainment.
WHY USE MBO?
 Organizations create a powerful motivational
system for their employees by adopting MBO.
 Through the process of discussion and collaboration,
communication is greatly enhanced.
 With MBO performance appraisal may be done
more objectively.
 MBO facilitates control through the periodic
development and subsequent evaluation of
individual goals and plans.
 MBO helps identify superior managerial talent
for future promotion.
WEAKNESSES OF MBO
 The major reason for MBO failure is lack of top
management support
 Goals and plans cascading throughout the
organization may not be those of top
management.
 Some firms may overemphasize quantitative
goals
 Some managers will not or cannot sit down
and work out goals with their subordinates

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