Management By Objectives(MBO)

A comprehensive managerial system that

integrates many key managerial activities
in a systematic manner and is consciously
directed towards the effective & efficient
achievement of objectives
It is a planning & controlling device
It is a comprehensive, goal driven,
success oriented management system
 Management By Objectives(MBO)
It is a technique & philosophy of management
based on converting an organization objective
in to personal objectives.

It is based on the presumption that

establishing personal objectives makes an
employee committed and thus leads to better
performance.
Management By Objectives(MBO)
MBO is basically a process whereby the
superior & subordinate jointly identify
organizations common goals
It is an effective link between planning
and its effective implementation
MBO also implies managing by properly
identifying the objectives of an organization.
Management By Objectives(MBO)
MBO has been widely used for performance
appraisal & employee motivation
It results in better managing
It encourages people to commit to the goals
It helps develop effective controls
 Steps in setting up MBO
1. The first step is to clarify and set the
common goals of the entire organization
2. Revisions/modifications in organizational
structure (any appropriate changes in the
organization structure i.e., changes in titles,
duties, relationships, authority,
responsibility, span of control etc.
3. Superiors sets down goals & measures for
subordinates after subordinates propose
goals for their job/position
 Steps in setting up MBO
4. Discuss department goals & measures with
all subordinates at meetings (i.,e how can
each employee contribute to the Dept. goal)
5. Define expected results (i.e., set individual
goals i.e., short term individual targets)
6. Performance Review
7. Provide feedback i.e., evaluate the progress
 Benefits of MBO
Motivational aspects of clear goals
Improvement of managing through results
oriented planning
Clarification of organizational roles & structures
Encouragement of commitment to goals
Development of effective controls that
measure results & lead to corrective actions
Management By Objectives(MBO)
It is a systematic & organized approach that
allows management to focus on achievable
goals and to attain the best possible results
from available resources (Peter Drucker,1954)
It 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
Peter Druckers 5 Questions
What is our Mission?
Who is our Customer?
What does the Customer values?
What are our Results?
What is our Plan?
Management By Objectives(MBO)
MBO is now practiced all over the world
It is also widely used for Performance
Appraisal & Employee Motivation
It results in better management
It encourages people to commit themselves to
achieve goals
It helps development of effective controls that
measure results and lead to corrective actions