MANAGEMENT BY OBJECTIVES

PRESENTED BY:

Javeria11-arid-3303

MIT-4University Institute of Information Technology,

Rawalpindi (UIIT, UAAR)Pakistan

INTRODUCTION

Management by objectives (MBO), also known as management by results (MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them.

MANAGEMENT BY OBJECTIVES

Main ConceptThe core aim of management by objectives is the alignment of company goals and subordinate objectives properly, so everyone in the organization works towards achieving the same organizational goal.

MBO reflects a proactive way of managing that is: result oriented emphasize accomplishments rather than inputs encourages participation at all levels of an organization

Essence of MBO:

Participative goal setting choosing course of actions decision making

An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set.

MBO IN ACTION

EXPLANATION

Routine objectives Innovation objectives Improvement objectives

The objectives must be focused on result, not on activity.

Types Of Objectives:

Smart Objectives Every objective must meet these criteria:

Domains and levels

Objectives can be set in all domains of activities

production services sales R&D

HR finance information

systems

Some objectives are collective, for a whole department or the whole company, others can be individualized

ADVANTAGES OF MBO

Motivation – Involving employees in the whole process of

goal setting increases employee empowerment, job

satisfaction and commitment.

The employees are clear as to what is expected from them. Better communication and Coordination – Frequent

reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solves many problems.

The MBO Process sets a benchmark for every employee.

DISADVANTAGES OF MBO It over-emphasizes the outcomes over the procedure.

It sometimes ignores the prevailing culture and

working conditions of the organization. It is difficult to appraise and identify potential. MBO

only deals with performance on the present job.

MBO is a time consuming process.

IMPLEMENTATION

Where to Use MBO

The MBO process is appropriate for knowledge-based enterprises when your staff is competent.

It is appropriate in situations where you wish to build employees' management and self-leadership skills and tap their creativity and initiative.

Management by Objectives (MBO) is also used by chief executives of multinational corporations (MNCs) for their country managers abroad.

MBO at Hewlett-Packard

MBO received a boost when it was declared an integral

part of “The HP Way”, the widely acclaimed management

style of Hewlett-Packard, a computer company.

At every level within Hewlett-Packard, managers had to

develop objectives and integrate them with those of other

managers and of the company as a whole.

Written plans were produced that showed what people

needed to achieve if they were to reach those objectives.

The plans were then shared with others in the corporation

and coordinated.

MBO urged that the planning process, traditionally

done by high-level managers, should be delegated to

all members of the organization.

The plan, when it finally emerged, would then have the

commitment of all of them.

As the plan is implemented, MBO demands that the

organization monitor a range of performance

measures, designed to help it stay on the right path

towards its objectives.

The plan must be modified when this monitoring

suggest that it’s no longer leading to desired objective.

MBO at Hewlett-Packard

MBO at Hewlett-Packard

Bill Packard, one of the two founders of Hewlett-Packard, said of MBO:

“No operating policy has contributed more to Hewlett-Packard's success…

…Management by objectives refers to a system in which overall objectives are clearly stated and agreed upon, and which gives people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility.”

Some Other Organizations Practicing MBO