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Management by Objectives

The document discusses the concept of management by objectives (MBO). It describes MBO as a philosophy, appraisal tool, and process of management. The key aspects of MBO include setting quantifiable, qualitative, and verifiable objectives. The document also outlines the characteristics, benefits, and defects of using an MBO approach.

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54 views9 pages

Management by Objectives

The document discusses the concept of management by objectives (MBO). It describes MBO as a philosophy, appraisal tool, and process of management. The key aspects of MBO include setting quantifiable, qualitative, and verifiable objectives. The document also outlines the characteristics, benefits, and defects of using an MBO approach.

Uploaded by

raisk2511
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Management

by Objectives

Dr. Sunil Kumar Rai


Concept of MBO
• This concept was developed during 1960s. Initially, MBO was developed, in the
main, by J. Humble of Urwick Orr and Partners who called planning by objective
setting on a total organisation and individual basis as ‘Management by Objectives.’
Although it was applied for the purpose of assessing managerial performance, it
made a great impact on planning.
• Later on, George S. Odiorne, Tosi and Carroll, Harry Levinson, etc. also laid
emphasis on MBO.
• However, Peter F. Drucker has the credit for popularising this concept widely.
• MBO is also known as ‘goals management’ or ‘management by results’.
• MBO is view as a philosophy of management, appraisal tool; as a system of managing; as a
planning and control device; as a tool of assessing managerial performance; as a
motivational technique; as a system of planning and appraisal; as a process of management,
and so on.
• The concept of MBO has finely been explained by Peter F. Drucker. According to Drucker,
“It (MBO) rests on a concept of the job of management. It rests on an analysis of the
specific needs of the management group and the obstacles it faces. It rests on a concept of
human action, human behaviour and human motivation. Finally, it applies to every manager,
whatever his level and function, and to any business enterprise whether large and small. It
insures performance by converting objective needs into personal goals. And this is genuine
freedom, freedom under the law.”
• The approach of MBO is based on the setting of
• (i) quantifiable objectives,
• (ii) qualitative objectives, and finally,
• (iii) verifiable objectives.
• Thus, it answers the four basic questions:
• (i) How much? That is, quantifiable objectives.
• (ii) How well? That is, qualitative objectives.
• (iii) At what time and cost? That is, the time and cost aspects.
• (iv) With what result? That is, verifiable objectives.
• The final conclusion which may be drawn can be expressed as—
• MBO = AP + AO = APER
• Here,
• MBO stands for Management by objectives.
• AP stands for Agreed Plans.
• AO stands for Agreed Objectives.
Characteristics of MBO
• 1. A dynamic system of management
• 2. Goal-oriented approach
• 3. Needs integration
• 4. Quantification of goals
• 5. Determination of key areas
• 6. A planning and control device
• 7. Review and reappraisal of performance
Benefits of MBO
• 1. It results in effective and better management by promoting team work.
• 2. It integrates individual goals with overall corporate goals.
• 3. It forces the top management and other managers to clarify the structure of organisation.
• 4. It defines the specific roles of all the managers and subordinates in terms of their responsibilities for
achieving the organisational goals.
• 5. It assists management in coping with environmental threats through cooperative endeavours and through
the re-appraisal of overall objectives.
• 6. It makes decentralisation work effectively through the process of delegation of authority.
• 7. It helps in promoting a sense of participation in the people of the enterprise.
• 8. It promotes high morale and sense of purpose.
• 9. It helps in developing effective measures of control.
• 10. It helps in establishing better communication system.
• 11. It promotes unity and consistency between thought and action.
• 12. It facilitates recognition of managerial skills, talents, capabilities and potentials.
• 13. It helps in expressing goals in qualitative, quantitative and verifiable terms.
Defects of MBO
• 1.Failure to teach the philosophy of MBO.
• 2.Failure to give guidelines to goal setters.
• 3.Difficulty of setting goals.
• 4.Emphasis on short-run goals.
• 5.Danger of inflexibility.
• 6.Overuse of quantitative goals.
• 7.Possibility of downgrading important goals.
• 8.Possibility of overemphasis on goal setting than managing.
• 9.Difficulty in adjusting to the fast changing environment.

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