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Management by Objective by Peter Drucker

Management by Objectives (MBO) is a management strategy first outlined by Peter Drucker in 1954 where objectives are set for employees to focus their efforts. Some key aspects of MBO include setting objectives throughout the organization relating to its mission, having staff contribute to their own target setting, and ensuring goals are realistic. MBO aims to improve areas like profitability, innovation, market standing, productivity, resources, performance, and public responsibility. Benefits include clarity of goals, motivation, better teamwork, and commitment, while limitations include the time-consuming nature and potential emphasis only on short-term targets.

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77 views22 pages

Management by Objective by Peter Drucker

Management by Objectives (MBO) is a management strategy first outlined by Peter Drucker in 1954 where objectives are set for employees to focus their efforts. Some key aspects of MBO include setting objectives throughout the organization relating to its mission, having staff contribute to their own target setting, and ensuring goals are realistic. MBO aims to improve areas like profitability, innovation, market standing, productivity, resources, performance, and public responsibility. Benefits include clarity of goals, motivation, better teamwork, and commitment, while limitations include the time-consuming nature and potential emphasis only on short-term targets.

Uploaded by

Areej Asad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Management

by objectives

Peter Drucker 

This Photo by Unknown author is licensed under CC BY-SA.


Common
Problem
faced by a
lot of
organization
s •Is that employees just don’t know what
is expected of them, and many
employees just work their set hours
ONE OF THE
MANY SOLUTIONS IS MBO

Manages performance
of Employees by setting
Tangible expectations.
their objectives(with
their involvement)-
KEY ASPECTS OF DRUCKER'S
MANAGEMENT BY OBJECTIVE
• Set objectives at top of organization
• Relate to organizations mission
• Pass down to units and staff

 Staff should contribute to the target-setting for


themselves and division
 Goals/targets must be realistic.

Presentation title 4
AREAS OF • History 
DISSCUSSION • Drucker's key
Objectives
• Process
• Benefits 
• Limitations 
Presentation title
• The idea of management by
objectives (MBO), first
outlined by Peter Drucker
in his book "The Practice
HISTORY of Mangement" in 1954
and then developed by
George Odiorne, his
student, was popular in the
1960s and 1970s. 

6
Profitability

Innovation

Market standing

DRUCKER'S Productivity

KEY
OBJECTIVES Financial and physical resources

Managerial performance and development

Worker performance and attitude

Public responsibility

Presentation title 7
MANAGEMENT BY
OBJECTIVE WORKS-
IF YOU KNOW THE
OBJECTIVES,
NINETY PERCENT
OF THE TIME YOU DON'T.
Peter Drucker
Presentation title 8
A COMPANY
CANNOT
SURVIVE
FOCUSING
ONLY ON
PROFITS
EXAMPLE; NOKIA COMPANY

Presentation title 9
This Photo by Unknown author is licensed under CC BY.
SUCCESS
MEANS
SETTING
VARIED
PERFORMANCE
OBJECTIVES 

Presentation title 10
MARKET
STANDING

• Objectives set in relation to competitors


• Increased market share implies successful
marketing/sales, product quality
reputation.
• Improved market standing suggest strong
longer term performance.

Presentation title 11
INNOVATION

• Innovation R&D cost


reduce short term profit.
• New products/changed
designs generate higher
profits long term and keep
company ahead of
competition

Presentation title 12
This Photo by Unknown author is licensed under CC BY-NC.
PRODUCTIVITY

Measures best use of


resources, e.g. output over
period/per  employee
Presentation title 13
This Photo by Unknown author is licensed under CC BY-NC-ND.
PHYSICAL
AND
FINANCIAL
RESOURCES

• Objectives
regarding use,
acquisition and
maintenance of
capital/monetary
resources, e.g
positive cash flow

Presentation title 14
This Photo by Unknown author is licensed under CC BY-ND.
MANAGER
PERFORMANCE
• Managers must perform effectively, e.g finance
managers reports
• Training objectives ensure mangers continuously
learn and develop.

Presentation title 15
• More effective workers are motivated and
productive 
WORKER • May also stay at company longer
PERFORMANCE • e.g, worker productivity targets, staff
satisfaction survey results
Presentation title 16
This Photo by Unknown author is licensed under CC BY-NC.
PUBLIC
RESPONSIBILIT
Y

Corporate social
responsibility and ethics
ensure reputation remains
high and avoid legal
issues.

Presentation title 17
PROFITABILITY

Often the best measure of


current performance.

Presentation title 18
Presentation title 19
Clarity of goals and organizational structure.

Motivation- involving employees in the whole


process increases employees job satisfaction and commitment.

BENEFITS It usually results in better teamwork.

Higher commitment and loyalty.

Managers can ensure that subordinates objectives are related to


the organizations objectives.

Presentation title 20
Manager sometimes
Time consuming
over emphasize target setting

It might lead to tug

LIMITATIONS Coordination problem. of war between subordinates


and superiors.

Presentation title
Short term nature of
goals( strategic goals are Increases paperwork.
replaced by operational goals

21
THANK YOU

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