Management By Objective

HUMAN RESOURCE MANAGEMENT Presented To Hemani Avasthi

Presented By Prashant Sharma Dilip Kumar Singh

Management by objective MBO

• Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. • The term "management by objectives" was introduced in 1954 by Peter Drucker in his book 'The Practice of Management'.

What is MBO? • We set goals and then performance is judged based on how well we accomplish these goals. • Intellectually – this seems like the way to go.

Management by Objectives (MBO) • Goal Setting theory has an impressive base of research support. But as a manager, how do you apply this theory in the work place? Install a MBO program. • MBO emphasizes participatively set tangible, verifiable, and measurable.

goals

that

are

• It enables managers to use goals to motivate people not control them. • MBO devices a process by which objectives flow down through the organization. The organization’s overall objectives are translated into specific objectives for each succeeding level.

Management by objective

The goals must be: • Mutually agreeable to employee and supervisor • Demanding (stretching) but achievable • Within the control of the employee • Reviewed periodically for modifications based on events

The goals must also be: • Clearly defined • Simple to understand • Written

Management by Objectives (MBO) 1. Goal Specific Objectives used in MBO should be specific, measurable, attainable and clear. Example, “cutting costs by 7% in the coming 5 months” 5. Participative Decision Making The objectives in MBO are not unilaterally set by the boss and then assigned to employees. MBO replaces imposed goals with participative goals setting. Together the manager and the employee choose the goals and agree on how they will be measured.

Management by Objectives (MBO) 3. Explicit Time Period Each objective has a specific time period in which it is to be completed. 7. Performance Feedback Continuous feedback on progress towards goals so that individuals can monitor and correct their own actions.

Problems with MBO programs

• Employees get more credit or deserved

systematically blame than

• unfairness still exist in rating.

Domains and levels • Objectives can be set in all domains of activities (production, services, sales, R&D, human resources, finance, information systems etc.). • Some objectives are collective, for a whole department or the whole company, others can be

Management by objective – harvested class

MbO Record Name

Job/Role

Key Job Area

Objective/Target to be Achieved

Date Data for Monitorin

Training/Learning Needs

1. 2. 3. 4. Progress Review Dates Notes on Achievements/Progress

Signed: (Postholder)

Signed: (Manager)

Goal-Setting Theory • Many believe that already sets goals.

everyone

• But this is not true • When groups do set goals, output always increases.

Goal setting and incentives

• Incentives improve performance.

• Only if they cause individuals to set and commit to attaining specific goals

Why does goal setting effect performance? • Goals focus activity • Goals regulate expenditure of effort • Difficult goals lead to more persistent effort than do easy goals These 3 are critical to the MBO

Performance Appraisal • Employees can be monitored in respect to many types of MBOs, for example, Quality MBOs, Quantity MBOs, Cost MBOs, or Time based MBOs.

Management by Objectives (MBO) •

MBO is heavily used in many businesses.

•

MBO’s popularity should not be constructed to mean that it always works.

•

MBO fails in a lot of cases but not because of problems in the basic components of the program but because of problems in implementations : lack of top management commitment, unrealistic expectations, an inability or unwillingness to allocate rewards.

•

MBO provides management with a medium for the implementation Goal-Setting theory.

THANK YOU