Management
by
Objective
(MBO)
INTRODUCTION
Management by Objectives (MBO)
is simply one of several management models that have been used, and are still
being used even today. This technique allows management to focus on the
attainable goals of the organization, and to work towards achieving the best possible
results, using the resources available to the organization at that point in time.
-a process whereby the employees and the superiors come together to identify
common goals; the employees set their goals to be achieved, the standards to
be taken as the criteria for measurement of their performance and contribution and
deciding the course of action to be followed.
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INTRODUCTION
The origins of MBO can be traced back to 1954, when management expert Peter
Drucker first introduced the term and the concept in his book, entitled “The Practice
of Management”. Basically, he described it as an environment where management
and employees join forces and work together to set and monitor the goals of the
organization for a certain period.
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INTRODUCTION
The goal of this model is to improve the overall performance of an
organization by defining its objectives clearly, and these objectives have
to have been agreed to completely by the management, the employees,
and the other members of the organization.
Benefits:
1. Better Managing
2. Clarifying Organisation
3. Encouraging Personal Commitment
4. Developing Controls
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IMPLEMENTATION OF MBO PROGRAMS
1. Top Management Support and Commitment:
It is essential that MBO should have the support and commitment of the top management without this
support, MBO can never be a success. The superiors must be willing to relinquish and share the
authority with the subordinates. They should consider the subordinates as part of the team for decision
making.
2. Clear Goal Setting:
The objectives should be clearly formulated, must be realistic and achievable. They should be clearly
understood by all concerned. The targets should neither be very high nor very low.
3. Participative Goal Setting:
The objectives and goals should be set with the active participation of the subordinates. There should be
effective two way communication between the superior and the subordinates for setting the goals, and
for discussing the subordinates problems. These objective must be properly communicated and clearly
understood and accepted by all. MBO works best when the goals are willingly accepted.
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IMPLEMENTATION OF MBO PROGRAMS
4. Overall Philosophy of Management:
MBO should be treated as an overall philosophy of management and the entire organization.
It should not be simply a performance appraisal technique or a divisional process. It should
change and replace all the old systems rather than just being added to them.
5. Decentralization of Authority:
MBO will not be effective if the manager is not willing to delegate sufficient authority to the
subordinates. The subordinates who have been given challenging assignments through
discussion with the superior must be given adequate authority to accomplish their goals
otherwise they will not be willing to accept new assignments and they will resist the setting of
clearly defined goals.
6. Revision and Modification Goals:
The goals must be continuously reviewed and modified, as the changed conditions require, to
avoid inflexibility. The review technique should be such that all deviations are caught early and
corrected.
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IMPLEMENTATION OF MBO PROGRAMS
7. Orientation and Training of Executives:
As the philosophy of MBO is to be implemented by the executives, they must be given formal
training in understanding the basis as well as the contents of the programme. They must be
adequately oriented about the value of MBO. They should be trained in how to set the goals, the
methods and tools to achieve these goals, methods of reviews and evaluation of performance
and provision to include any feedback that may be given.
8. Integration of MBO Programme:
MBO cannot be implemented as an isolated programme. It should be accepted as a style of
managing and should be synthesized with the organizational climate. All personnel involved
should have a clear understanding of their role, authority and their expectations. The system
should be absorbed wholly by all departments and members of the organization.
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