Management by Objectives+ PDF

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Concept of Management by Objectives:

 MBO is one of the management strategies, which sets the objectives of each managerial position and thus the presence of any position without objectives in the organization becomes a superfluous. It depends only on the performance of the employees in the achievement, i.e. the employee is evaluated through what has been accomplished and not with the qualities he possesses. In addition, MBO is based on participatory contribution in management and not the management of closed doors.  MBO is as a process whereby the superior and subordinate jointly identify common goals, define each individual's major areas of responsibility in terms of the results expected of him or her, and use these measures as guides for operating the unit and assessing the contribution of each of its members. Each member’s commitment to this improvement process is essential in order for MBO to be effective. The members do not necessarily have to be from the same department or area; they just need to share a common goal or purpose. The heart of MBO is having the entire group collectively set SMART goals.  MBO is (parameters of strategically planning) a process that converts organizational objectives into individual objectives. After determining the objectives during a specific period of time and identifying the factors that hinder reaching these objectives, the results are reviewed and analyzed to evaluate the performance of subordinates and to move away from inappropriate goals and hence setting alternative objectives that enables the organization to achieve its goals with minimal effort and cost.  The attention in MBO is on contributions individuals make to the broader organizational aims.  MBO harmonizes the manager’ aims with the employees in order to reach the objectives introduced by organization. MBO is the process of setting objectives in the organization to give a sense of direction to the employees.  MBO is a planning, supervisory and control tool, and it is a method that includes all the functions of management, coordinates them and works to integrate them.  MBO allows the organization to use all available resources and at the same time it gives a common direction to efforts towards vision, and also creates team spirit and aligns the goals of the individual "employee" with the common and general interest of the organization.

 MBO measures and compares between an employee's actual performances with the standards set. Ideally, when employees themselves have been involved with the goal-setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

 MBO allows managers to take work that needs to be done one step at a time to allow for a calm, yet productive work environment.  MBO assists to achieve each objective in sequence and helps organization members to see their accomplishments as they achieve each objective, which reinforces a positive work environment and a sense of achievement.  MBO motivates employees to realize organizing objectives.  Applying MBO method as technique for evaluating employees’ performance in organization raises their employees’ effectiveness.  Applying MBO method creates the opportunity of organization to realize successfully its main principle to survive, to win and increase.  Applying this method creates competing advantages in trade.  Applying MBO method raises employees’ effectiveness.  Applying MBO evaluates employees’ performance.

Fig 1. Conceptual model

Fig 1. Conceptual model

Uses of Management by Objectives:

MBO provides an organization with improvements in: Management performance Planning, coordination, control, and flexibility Superior-subordinate relationships Personal development

Advantages and disadvantages of Management by Objectives:

Advantages  Easy to ececute and measure.  Facilitates employee counseling, guidance focusing employees on desired gools.  Performance oriented diagnostic system.  Employee motivated as he is aware of expected roles and accountability.  Employees have clear understanding of the roles and responsibilities expected of them.  Employees are more self-directed than bossdirected  MBO can be applied in any organization.  MBO facilities communication between managers and subordinates regarding goals and action plans.  Managers can ensure that objectives of the subordinates are linked to the organization's objectives.  Allowing individual discretion in achieving goals, enhance as their growth.  Objectives are set at all levels and in various departments and are discussed before being agreed upon.  Possibility to improve an effectiveness of an organization on its every level.  Objectives are carefully established and monitored.  MBO combines planning and controlling in the rational management system.  MBO forces organization to create and develop goals hierarchyfrom the highest to the lowest level of management.  MBO encourages self-management and individual engagement by participating in goal setting.  The MBO program provides guarantee for the employee loyalty for achievement of the organizational objectives.  MBO emphasizes final results more than good intentions or personal traits of employee.  The program MBO continually emphasizes what needs to be done in the organization to achieve the objectives

Disadvantages  Goals are difficult to set and ther is a difficult for appraise to agree on objectives.  Interpretation of goals may vary from manager to manager, and employee to employee.  Possibility of missing integrity, quality, etc.  Time consuming, complicated, lengthy and expensive. Thus, this reduces the effective working time for the managers and other employees.  Not applicable to all jobs and continuous changes disturb using the MBO.  Goals tends to be short-run rather than important and long-term goals.  It has to be systematically done.  There is more importance given to the setting of the goals than on the actual outcome or course of action.  It may lead to polarization of efforts, whereby, people or departments are not motivated to look beyond their own targets and help others.  It does not take into consideration, the environment I which the goals are set, like available resources, stake holders, etc.  Managers start believing in the concept of an “ideal employee” and evaluate their subordinates based on what they expect they should be.  Quality of goals set may be poorer or too unrealistic.  Targets can be misreported and objective setting may become counter –productive to the organization.  Organizations operating mechanically and values that discourage the participation can harm MBO processes.  MBO is liable for autocratic managing style and creating rigid bureaucratic rules and politic.  Pressure on objective measurement of goals can be a threat in hands of overzealous managers.

Employee motivated as he is aware of expected Misses intangibles like honesty, integrity, roles and accountability. quality, etc. Performance oriented diagnostic system. Interpretation of goals may vary from manager to manager, and employee to employee. Facilitates employee counseling and guidance. Time consuming, complicated, lengthy and expensive. Easy to execute and measure Difference in goal interpretation. Possibility of missing integrity, quality, etc. Employees have clear understanding of the roles and responsibilities expected of them. Assists employee advising and direction. Difficult for appraise to agree on objectives. Not applicable to all jobs. It focuses employees on desired results. Failure to teach the philosophy. It facilities communication between managers Failure to give setters guidelines. and subordinates regarding goals and action plans. Job satisfaction is increased. Goals are difficult to set. Allowing individual discretion in achieving Goals Tends to be Short-Run. goals, enhance as their growth. Both quality and quantity or performance Failure to ensure network of Goals. seems to improve. It provides a vertical linkage between top and Setting Arbitrary Goals. lower level goals. It is more useful for managerial positions. Not applicable to all jobs, allocation of merit pay may result in setting short term goals rather than important and long-term goals etc. Objectives are discussed before being agreed It has to be systematically done upon. There is more importance given to the setting There is participation in setting of goals, of the goals than on the actual outcome or deciding the action course and in making course of action decisions. It may lead to polarization of efforts, whereby, There is increased motivation and job people or departments are not motivated to satisfaction. look beyond their own targets and help others Relationships between the managers and those It does not take into consideration, the environment I which the goals are set, like under them improve. available resources, stake holders, etc. To avoid potential problems SMART and There is better communication within the SMARTER objectives need to be agreed upon organization and increased coordination. There is no stimulation of innovation. Managers can ensure that objectives of the subordinates are linked to the organization's objectives. Objectives can be set at all levels and in Managers start believing in the concept of an various departments. “ideal employee” and evaluate their subordinates based on what they expect they should be Objectives can be set individually for each Targets can be misreported and objective

department especially in promotion, marketing, and financial planning MBO can be applied in any organization Traits of MBO can be found in industries like the electronic media where performance objectives are carefully established and monitored, particularly in the areas of promotion, marketing, and financial planning. In an MBO system, employees are more selfdirected than boss-directed

Focus on goals. Possibility to improve an effectiveness of an organization on its every level. Increase of motivation Departments’ and individual goals are in line with organizational ones. MBO combines planning and controlling in the rational management system. MBO forces organization to create and develop goals hierarchy from the highest to the lowest level of management MBO emphasizes final results more than good intentions or personal traits of employee MBO encourages self-management and individual engagement by participating in goal setting. The program MBO continually emphasizes what needs to be done in the organization in order to achieve the objectives The MBO program provides guarantee for the employee loyalty for achievement of the organizational objectives. Both, the managers and other employees are concentrated on achieving the organizational objectives because they were the ones who set the objectives.

setting may become counter –productive to the organization Quality of goals set may be poorer or too Unrealistic It is time-consuming to implement and difficult to maintain.

Setting production targets may encourage resources to meet those targets through whatever means necessary, which usually results in poor quality It is not easy to identify all the objectives Continuous changes disturb using the MBO. Environment, in which relations between a superior and subordinate are poor, influences negatively the MBO effectiveness. Strategic goals can be supplant by operative goals. Organizations operating mechanically and values that discourage the participation can harm MBO processes. MBO too often is treated as a remedy for all problems in organization MBO is liable for autocratic managing style (theory X) and creating rigid bureaucratic rules and politic. MBO takes too much time and effort; it causes to much paper work. Pressure on objective measurement of goals can be a threat in hands of overzealous managers. First, the progress of the organizational objectives takes long time and this reduces the effective working time for the managers and other employees. Writing about the objectives, giving a statement about organizational objectives and detailed evaluation about the achievement of the organizational objectives increases the paperwork....