management by objectives final

8/2/2019 Management by Objectives Final

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MANAGEMENT BY OBJECTIVES

PRESENTED BY:

RAJAN SHARMAAssistant Professor

Business ManagementDAVIET, Jalandhar.



MANAGEMENT BY OBJECTIVES(MBO)

• Peter Drucker• MBO is a systematic and organized approach that

allows management to focus on achievable goals and toattain the best possible results from available

resources. It aims to increase organizationalperformance by aligning goals and subordinateobjectives throughout the organization.

• It emphasizes participatively set goals that are:

• Tangible• Verifiable

• Measurable

• It works both from “bottom up” & “top down”.



GOAL SETTING THEORY OFMOTIVATION

• In 1960’s, Edwin Locke put forward the Goal-settingtheory of motivation.

• This theory states that goal setting is essentially

linked to task performance.• It states that specific and challenging goals along with

appropriate feedback contribute to higher and bettertask performance.



MBO PROCESS



CASCADING OF OBJECTIVES

INDIVIDUAL OBJECTIVES

DEPARTMENTAL OBJECTIVES

DIVISIONAL OBJECTIVES

OVERALL ORGANIZATIONALOBJECTIVES



MBO PROGRAM INGREDIENTS

• Goal specificity

• Participative decision making

• Explicit time period

• Performance feedback



LINK BETWEEN GOALSETTING THEORY & MBO

• Specific hard goalsresult in higher level ofindividual performance.

• Feedback on one’sperformance leads tohigher performance.

POINT OF DIFFERNCE• Participation is not

“a must”.

• Specific hard goals makeMBO most effective.

• It emphasizes oncontinuous feedbacksystem for taking timelycorrective action.

POINT OF DIFFERNCE• Participation is a key

principle to MBO’ssuccess.

MBOGOAL SETTING THEORY



STRENGTHS OF MBOSTRENGTHS OF MBO

► Organizations create a powerful motivational systemOrganizations create a powerful motivational system

for their employees.for their employees.

►Through the process of discussion and collaboration,Through the process of discussion and collaboration,communication is greatly enhanced.communication is greatly enhanced.

► Appraisal may be done more objectively. Appraisal may be done more objectively.



STRENGTHS OF MBOSTRENGTHS OF MBO

► Helps to identify superior managerial talent for futureHelps to identify superior managerial talent for future

promotion.promotion.

► Provides a systematic management philosophy.Provides a systematic management philosophy.

► Facilitates control through the periodic developmentFacilitates control through the periodic development

and subsequent evaluation of individual goals andand subsequent evaluation of individual goals and

plans.plans.



WEAKNESSES OF MBO/WEAKNESSES OF MBO/ REASONS FORREASONS FOR

FAILURE OF MBOFAILURE OF MBO

► Lack of top management support.Lack of top management support.

► Goals and plans cascading throughout the organization mayGoals and plans cascading throughout the organization may

not be those of top management.not be those of top management.

► Overemphasis on quantitative goals.Overemphasis on quantitative goals.

► Some managers will not or cannot sit down and work outSome managers will not or cannot sit down and work out

goals with their subordinates.goals with their subordinates.



WHERE TO USE MBO

• The MBO style is appropriate for knowledge-basedenterprises when your staff is competent.

• MBO is appropriate in situations where you wish tobuild employees' management and self-leadershipskills and tap their creativity, tacit knowledge andinitiative.

• MBO is also used by chief executives of multinationalcorporations (MNCs) for their country managersabroad.

management by objectives final

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