MBO PPT

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it also serves a variety of
purposes. It needs to include several different types of managers in setting goals. The objectives
set by the supervisors are provisional, based on an interpretation and evaluation of what the
company can and should achieve within a specified time.

2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and the strategies to follow,
the managers can start working with their subordinates on establishing their personal
objectives. This will be a one-on-one discussion where the subordinates will let the managers
know about their targets and which goals they can accomplish within a specific time and with
what resources. They can then share some tentative thoughts about which goals the
organization or department can find feasible. 

3. Continuous monitoring performance and progress

Though the management by objectives approach is necessary for increasing the effectiveness of
managers, it is equally essential for monitoring the performance and progress of each employee
in the organization.

4. Performance evaluation

Within the MBO framework, the performance review is achieved by the participation of the
managers concerned. 

5. Providing feedback

In the management by objectives approach, the most essential step is the

continuous feedback on the results and objectives, as it enables the employees to track and
make corrections to their actions. The ongoing feedback is complemented by frequent formal
evaluation meetings in which superiors and subordinates may discuss progress towards
objectives, leading to more feedback. 

6. Performance appraisal

Performance reviews are a routine review of the success of employees within MBO
organizations.
 1. Define Organizational Goals

Goals are critical issues to organizational effectiveness, and they serve a

number of purposes. Organizations can also have several different kinds
of goals, all of which must be appropriately managed.

And a number of different kinds of managers must be involved in

setting goals. The goals set by the superiors are preliminary, based on
an analysis and judgment as to what can and what should be
accomplished by the organization within a certain period.

2. Define Employees Objectives

After making sure that employees’ managers have informed of pertinent

general objectives, strategies and planning premises, the manager can
then proceed to work with employees in setting their objectives.

The manager asks what goals the employees believe they can
accomplish in what time period, and with what resources. They will
then discuss some preliminary thoughts about what goals seem
feasible for the company or department.

3. Continuous Monitoring Performance and Progress

MBO process is not only essential for making line managers in business
organizations more effective but also equally important for monitoring the
performance and progress of employees. For monitoring performance and
progress the followings are required;

1. Identifying ineffective programs by comparing

performance with pre-established objectives,
2. Using zero-based budgeting,
3. Applying MBO concepts for measuring individual and
plans,
4. Preparing long and short-range objectives and plans,
5. Installing effective controls, and
6. Designing a sound organizational structure with clear,
responsibilities and decision-making authority at the
appropriate level.
 4. Performance Evaluation

Under this MBO process performance review is made by the participation

of the concerned managers.

5. Providing Feedback

The filial ingredients in an MBO program are continuous feedback on

performance and goals that allow individuals to monitor and correct their
own actions. This continuous feedback is supplemented by periodic formal
appraisal meetings in which superiors and subordinates can review
progress toward goals, which lead to further feedback.

6. Performance Appraisal

Performance appraisals are a regular review of employee performance

within organizations. It is done at the last stage of the MBO process.

Time frame
The theory of Management by Objectives was first described by Peter Drucker in
1954 in his book The Practice of Management. This original outline was further
developed throughout the 1950s to 1970s, which was also the timeframe in which it
was most commonly used.

The Management by Objectives model runs off the principle that a company’s
effectiveness is a more important skill than its efficiency. This puts a focus of
management on the quality of performance rather than speed. One of the later
developers of the model, Douglas MacGregor, insisted that MBO as a system was
better at helping the superiors of a company more effectively assess their
subordinates.

After the 70’s, however, widespread usage of MBO largely decreased, especially as
new styles and systems of management began to be developed. There was some
critique that MBO was simply not a comprehensive enough system of management,
especially in the sense of MBO being too short-sighted, according to HR Zone.

This can be simplified by the use of the acronym SMART, which means:
 Specific: The objective should exist within a well-detailed set of parameters
with a clear target in mind.

 Measurable: Progress carried out by the employee or department should be

documentable or measurable, meaning clear milestones are being assigned
and completed.

 Achievable/Assignable: The objective should be achievable by a certain

employ or department. This also means the company must have proper staff
or department available to assign the objective to.

 Realistic: The objective should have an expectation of results within

reasonable limits given the amount of time and resources available.

 Time-Bound: The objective should be set within a specific time period with a

clear deadline outlined.

pros

 Personalization of Objectives: Employees are given tasks that fit their specific

skillsets and best employ their individual strengths, rather than having to focus
on a myriad of tasks that may not be as knowledgeable of.

 Efficiency: The highly structured nature of MBO plus the requirement of

quantifying the objectives to be time-bound tends to lead towards higher
levels of productivity and efficiency.

 Clear Boundaries: The extent to which objectives are discussed amongst both

management and subordinates makes for clear-cut expectations and
boundaries for employees to follow.

 Increased Communication: MBO requires detailed discussions between

company associates at all levels in order to run smoothly. Thus, employee to
employee, employee to management, and inter-management communication
is all improved and heightened.
  Self-Direction: Thanks to MBO requiring employees to establish their own
personal and individual objectives in order to reach the greater business
goals, employees tend to be more self-directed in day to day activities.

 Transparency: MBO requires a break down of all elements and task required

in order to achieve an objective. Moreover, it requires companies to be totally
transparent about their main objectives with employees.

 Increased Commitment and Accountability: The structure, communication,

and transparency of MBO helps to strengthen the commitment of employees
by giving them a clear idea of their role. Additionally, higher levels are
accountability are seen thanks to the personalized nature of individual
objectives.
Cons

 Inhibits Growth: Due to employees staying within their clearly set lanes of

tasks and production, there is limited opportunity for them to grow outside
their comfort zones.

 Weak Infrastructure: The focuses on broad objectives and company goals can

lead to a negligence towards company infrastructure and mundane
operations. This can in turn lead to errors and mistakes by employees unsure
how to resolve issues within the infrastructure of the business.

 Slow to Set-Up: While the overall system of MBO can ultimately make the
achieving of objectives more efficient, the process of establishing and
agreeing upon objectives can become quite lengthy if management has
difficulty deciding upon the most important goals, and can thus cancel out the
aforementioned efficiency.

 Negative Competition: The evaluation and reward system has the potential to

cause tensions between employees. This can lead to negative competition
wherein employees begin to be less cooperative and communicative with
each other in order to try and best one another.
  Limited Innovation: Because employees decide upon their own set of
objectives, this can lead to them becoming to narrow-sighted and unwilling to
try out creative or innovative solutions when problems arise if those solutions
stray outside of the rules and boundaries that have been set for them.

 No Room for Mistakes: Managers may begin to expect too much precision

and perfection from employees, making small errors or mistakes suddenly
seem like much more drastic issues.

 Not Enough Emphasis on Results: The steps of MBO may lead to too much
emphasis being placed on the setting of objectives rather than the planning
and execution of strategy on how to reach that objective.
Real-World MBO Examples
There are many fields that can utilize and potentially benefit from MBO. Here are
some real-world examples of how MBO can be used:

 Human Resources: MBO can be used for such things as improving employee

satisfaction, hosting company events, or increasing employee engagement.

. Efficient Management
The management is efficient when the team's output is higher than the
input and resources they put into it. It is directly related the employee
productivity or how much time they take to meet their goals and
objectives. Often productivity gets dwindled when there is no proper
structure aligned to fulfill organizational goals.
Organizations that follow MBO are more productive at their jobs, and their
efficiency increases. Employees are more explicit about their goals which
helps them plan and have a prominent structure to follow. One of the
precise reasons for this is the systematic plan adopted by every member of
the organization to complete the assigned tasks.
Organizations that follow MBO are more productive at their jobs and their
efficiency increases. Employees are more clear about their goals which
help them plan and have a very clear structure to follow. One of the clear
reasons for this is the systematic plan which is adopted by every member
of the organization to complete the assigned tasks.

2. Effective Planning
The purpose of planning is to develop a blueprint for growing a business.
The better the planning is, the easier it is for management to take action.
Effective planning requires an attitude of never being satisfied with the
organization's current performance.
Planning becomes relatively more straightforward with MBO. Since
employees are clear about the organizational objectives, they can develop
a systematic approach and plan to achieve them. With this business
strategy, the planning process becomes relatively more straightforward.
Related: Building an Effective Workforce Planning Program

3. Transparency
Communication is the central pillar of any organization to sustain and
thrive. The communication process becomes more active between the
management and the employees with this management technique. The
continuous flow of two-way communication brings more opportunities and
clarity in ambiguous roles by defining clear objectives for every team
member. With MBO, members of the organization become aware of the
roles others are playing. It helps subordinates report to their managers and
understand it better since their assigned work is mutually decided. Also,
since all the members work towards the main organization goal, MBO gives
an edge to understand it and follow transparency in the process.

4. Reinforces Commitment
In an organization, we often see employees gradually lose their job
satisfaction and their sense of commitment. The reason behind this,
though, has diverse reasons. Still, one of the significant factors is lack of
direction, transparency, and miscommunication between the superior and
subordinates. This strategic model bridges that gap and creates a positive
and open work environment.
MBO reinforces the involvement of every member by allowing them to plan
and achieving their company goals.
Also, since everyone is assigned goals to reach the target, it gives
employees a sense of commitment. The fact that their work is designed
and monitored for the greater purpose reinforces the responsibility in them.
It also helps employee motivation as employees are included in the goal-
setting process and give them the extra push to complete the tasks.

5. Goal Setting
We are aware of the fact that how important goal-setting is for any
organization. It directs management and gives a roadmap to follow. And it
is better when everyone in the organization is aware of the process or
included to share their perspectives and ideas. This also helps the
employees to understand their roles and tasks better.
With MBO Strategic Model, goal-setting is done with mutual participation of
the management and the organization. Objectives are more likely to be
fulfilled by the employees. They actively participate in the goal-setting
process and choose the actions to achieve those. It gives everyone in the
team a clear goal and perspective to keep the boat floating.

6. Accountability
MBO gives accountability to everyone in the room by creating a structure
that defines goals and boosts performance. Management is a tricky affair,
and one needs to be accountable to get the work done. Even the best of
teams often cannot reach their full potential due to the management's
loopholes or inability to delegate tasks and monitor effectively. With this
management technique, the team members should consider participatory
behavior that encourages team morale and overall productivity of the
organization.

7. Efficient Utilization of Human Resources

If you do not know how to utilize your human resources, you might do more
harm to your business than imagine. Having the best teams is not enough.
The world is growing more imaginative. The digital transformations are not
only bringing us tremendous opportunities but also competition. So how do
you sustain in a hugely competitive market? One sure trick here is to utilize
your resources to their fullest potential. And you can also only do that by
delegating tasks to individuals who suit best the given role. With MBO,
employees and managers collaborate on assigning roles and setting goals.
Thoughtful matching of talents to jobs fosters success and utilizes human
resources to maximum effect.
8. Minimizes Ambiguity
There is no role ambiguity since everyone is clear about their job roles.
Confusion of job roles or managing multiple tasks by specific individuals
creates an imbalance in the overall management structure. It also impacts
performance and encourages a toxic work culture. Many employees feel
discouraged by not being able to understand the workflow or what is
expected of them. With MBO, the collaboration between the manager and
the employees clears the air. It leaves room for everyone to thrive and
understand their job roles effectively.