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MANAGEMENT BY OBJECTIVES - FEATURES, PROCESS, BENEFITS, LIMITATIONS

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MANAGEMENT BY OBJECTIVES - FEATURES, PROCESS, BENEFITS, LIMITATIONS

  1. 1. MANAGEMENT BY OBJECTIVES - MBO
  2. 2. Objectives • At the end of the chapter you will be able to – Know about Objectives, its features and advantages – Learn about MBO, its features, process and benefits – Have an idea about the problems of MBO – Understand the guidelines for effective objectives
  3. 3. Introduction • Every institution or organization is established for he purpose of achieving some objectives • The objective may differ from one organization to another
  4. 4. Definition • According to McFarland: Objectives are the goals, aims or purposes that organization wish to achieve over varying periods of times • Objectives may be defined as the expectations of end results for which an organization is established and which it tries to achieve
  5. 5. Features of Objectives • Each individual has objectives of his own • The objectives of any organization are specially mentioned • The objectives of any organization should be clearly defined • The whole organization is divided into several sections
  6. 6. Features of Objectives • The objectives of any organization must conform to the general needs of the public • All the organizations have several objectives at a time • The objectives of any organization may be changed in due course • The profit or sale may be expressed in
  7. 7. Advantages of Objectives • Unified planning • Individual Motivation • Co-ordination • Control • Basis for Decentralization
  8. 8. MBO • Management by Objectives (MBO) is a management system in which each member of the organization effective participates and involves himself • Popularized in the USA by George Odiorne
  9. 9. Feature of MBO • MBO tries combine the long range goals of organization with range goals • MBO’s emphasis is not only on goals but also on effective performance • It increases the organizational of achieving goals at all levels • Aims at replacing the exercise of
  10. 10. Process of MBO • Defining organizational objective – States why the business is started and exists • Goal of each section – Goals or objectives are expressed in a meaningful manner • Fixing key result areas – Indicates strength of an organization
  11. 11. Process of MBO • Setting subordinates objectives or targets – Subordinates are induced to set the standards themselves giving an opportunity • Matching resources with objective – The objectives are framed on the basis of availability of resources • Periodical review meetings – The fixed standards may be changed in
  12. 12. Process of MBO • Appraisal of activities – At the end of the fixed period for achieving the objectives, there should be discussion between the superiors and subordinates • Reappraisal of objectives – There are a lot of changes within the short period in this dynamic world. So the top management executive should review the organization’s objectives to frame them according to the changing situation
  13. 13. Benefits of MBO • Helps the managers to understand their role in the total organization • Managers are involved in objectives setting at the various levels of management under MBO • Manager recognizes the need for planning • Provides a foundation for participative management • A department does not work at
  14. 14. Benefits of MBO • Systematic evaluation of the performance • Helps to take corrective actions for performance • Delegation of authority is done • Motivates the workers • A workers responsibility is fixed through MBO • Decision taken by the management is very quickly
  15. 15. Limitations of MBO • Fails to explain philosophy • Time consuming • Emphasizes on only the short-term objectives • Status setting of subordinates is not possible • Rigid • Objectives are set without considering the available resources
  16. 16. Guidelines for setting Effective Objectives • Objectives are framed only by the participants who are responsible for implementing them • Objectives should be attainable ones • Objectives should have the characteristics of innovation • Objectives should be ranked on the basis of their importance • Objectives should be simple, clearly defined, specific and time bound
  17. 17. Summary • Objectives are the goals, aims or purposes that organization wish to achieve over varying periods of times • Management by Objectives (MBO) is a management system in which each member of the organization effective participates and involves himself
  18. 18. Summary • Process of MBO involved defining the organizational objectives, goals of each section etc. • MBO fails to explain philosophy • MBO is rigid • Objectives should be simple, clearly defined, specific and time bound
  19. 19. End of Chapter 5 Objectives and MBO

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