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All management models had some success but non succeeded totally in injecting enough of that vitality and adaptability into organizational life to allow it to thrive and remain viable in this
age of change and sociological turmoil.
First used by Peter Drucker in 1954, M.B.O. has been further developed by many other management theoreticians
like Douglas McGregor, George Odiorne, and John Humble.
And thus M.B.O.(Management By Objectives) was born.
Management By Objectives
Management Objectives
Management is the process, consisting of planning, organizing,
actuating and controlling
performance to determine and accomplish the
objectives by the use of people and
resource.
Objectives are the aims which the
management wishes to the organization to
achieve. These are the end points
towards which all business activities like
organizing, staffing, directing and
controlling are directed.
Characteristics Of Sound Objectives that should be always kept in mind:
they should always be clear and acceptable.
they should always support each
other.they must always be precise and measurable
they should always be valid (feasible).
Thus, every objective must meet these criteria:
Management by Objectives was
introduced by Peter Drucker in the 1950s.
Partly, the idea may have become a victim of its own
success: It became so much a part of
the way business is conducted that it no
longer may have seemed
remarkable, or even worthy of comment.
It evolved into the idea of the Balanced
Scorecard, which provided a more
sophisticated framework for
doing essentially the same thing.
Drucker outlined the five stages of MBO. Each stage
has particular challenges that
need to be addressed for the whole system to work effectively.
Set or Review Organizational Objectives
MBO starts with clearly defined strategic organizational objectives. If the organization isn't clear where its going, no one working there will be
either.
Cascading Objectives Down to Employees
To support the mission, the organization needs to set clear goals and objectives, which then need to
cascade down from one organizational level to the next until they reach everyone.To make MBO goal and objective setting more effective, Drucker used
the SMART acronym to set goals that were attainable and to which people felt accountable. He said that
goals and objectives must be: •Specific
•Measurable
•Agreed (relating to the participative management principle)
•Realistic
•Time related
Monitor Progress Because the goals and objectives are SMART,
they are measurable.This monitoring system has to be timely enough so that issues can be dealt with before they threaten goal achievement.On the other hand, it is essential that you ensure
that the goals are not driving adverse behavior because they have not been designed
correctly.Set up a specific plan for monitoring goal performance
Evaluate and RewardPerformance MBO is designed to improve
performance at all levels of the organization. To ensure this, a comprehensive evaluation system is needed.As goals have been defined in a specific, measurable and time-based way, the evaluation
aspect of MBO is relatively straightforward. Employees are evaluated on their performance with respect to goal achievement All that is left to do is
to tie goal achievement to reward, and perhaps compensation, and provide the appropriate
feedback.
To make sure that everybody within the organization has a clear understanding of the
aims, or objectives, of that organization, as well as awareness of their own roles and
responsibilities in achieving those aims
Unity of management action is more likely to occur when there is pursuit of a common
objective. The greater the focus on results on a time scale, the greater likelihood of achieving
them. The greater the participation in setting
meaningful work with accountable results, the greater the motivation for completing
“Managers should avoid the “activity trap”,i.e. getting involved in day to day activities and forgetting the main objective. They should
participate in the strategic planning process in order to improve the implementability of the plan
and implement a range of systems to keep the organization on the right track.”
Peter Drucker
George S. Odiorne
“A process whereby superior and subordinate managers of an organization jointly define its common goals, define each individual’s major
areas of responsibility in terms of results expected of him and use these results as guides
for operating the unit and accessing the contribution of each of its members.”
Gain greater commitment and desire to contribute from subordinates
Gain better control and coordination toward goal accomplishment
Gain an increased ability to help subordinates
The boss puts constant pressure on the subordinate to produce results and forgets about using MBO
for commitment, desire to contribute, and management development.
Even well intentioned managers misuse MBO because they do not have the interpersonal skills or knowledge of human needs to keep their appraisal sessions from
becoming critical, chewing-out periods.