M.b.o (management By Objective)

MANAGEMENT BY OBJECTIVE Management by objective or management by result has been drawn considerable attention of both academicians as well as practitioners because of two reasons; First:-it focuses sharply on the objective or results which a manager is expected to achieve with in specified period. Second:-it emphasis participative management an approach which provide high motivation to individuals in organization. The MBO was coined by “peter Drucker” in 1954 when he emphasized the concept of managing by objective since then many organization ,both business and nonbusiness, have adopted this in some form or the order .through there are some various in the practices of MBO and there fore its decisional aspects , MBO has defined as follows:“MBO is a comprehensive managerial system that’s interrogates many key managerial activities in a sysrematic manner, consciously directed towards the effective and efficient achievement of organizational objectives”

PROCESS OF MBO MBO is a system for achieving organizational objective, enhancement of employee commitment and participation. Therefore its process should facilitate translation of basics concepts into management practice. Hence the process of MBO is explained by above term:1. Setting of organizational purpose and objectives. 2. Key results areas. 3. Setting subordinates objectives. 4. Matching resources with objectives. 5. appraisal 6. Recycling.

1. SETTING OF ORGANISATIONAL PURPOSE AND OBJECTIVES: - the first basic steps in MBO is the definition of organizational purpose and objectives question such as “why does the organization exist?, what business are we in?, what should be our business?” provide guidelines for the statement of purpose .this in interaction with external factors, then determines the long range strategic objective like : (1) Whether to achieve growth through expansions in the same line of business or diversify. (2) What should be the degree of vertical integration? (3) What should be blending of trading and manufacturing activities a so on. Usually the objective setting starts at the top level of the organizational and movers download to lowest managerial level.

2. KEY RESULT AREAS:- organizational objective s and planning premises together provide the basis for identification of key result areas (KRAs).it may be emphasized that KRAs are derived from the expectations of various stake holders and indicate the priorities for organizational performance.KRAs also indicate the present state of an organizations health and the top management perspective for the future. Examples of KRAs applicable to most of the organizations:(1) Profitability. (2) Market standing. (3) Innovation. (4) Productivity (5) Worker performance. (6) Financial& physical resources. (7) Manager performance. (8) Public responsibility.

3.SETTING SUBORDINATES OBJECTIVE:- the organizational objectives are objectives achieved through individuals. Therefore each individual manager must know in advance what he is expected to achieve. Every manager in the managerial hierarchy is both supervisor and subordinate except the person at the top and the lowest level. Therefore, there is series of supervisor and subordinates relationships. The process of objective setting begins with superior’s proposal recommendations for his subordinate’s objective. in the beginning of M.b.o process in a organization ,there may be wide gap between recommended objectives by the superior and subordinates objectives because the latter may like to put lesser burden on him by setting easily achievable objectives.however,with the experience gained over the period of time , this gap narrows because of narrowing down of perception of superior and subordinates about what can be done at a particular level.

4.MATCHING RESOURCE WITH OBJECTIVE:-when objective are set carefully ,they also indicate the resource requirement .in fact ,resources availability becomes an important aspect of objective setting because it is the proper application of resources which ensure object achievement. Therefore there should be matching between objectives and resources. By relating these to objectives, superior manager is better able to see the need and economy of allocating resources. The allocation and movement of resources should be done in consultation with the subordinate manager. 5. APPRAISAL:- appraisal aspect of MBO tries to measure whether the subordinates is achieving his objective or not .if not what are the problems can be overcome .appraisal is undertaken as an on going processes with a view to find out deficiency in the working and also to remove its promptly. It is not taken merely to punish the non-performer and reward the performer. it is taken as a matter of system to ensure that everything’s is going as planned and the organization is able to achieve its objective.

6.RECYCLING:-through appraisal is last aspect of M.B.o process it is used as an input for recycling objective and other actions. objective s are neither set at top and communicated to the bottom nor are they set at the bottom and go up .objective setting is a joint process through interaction between superior and subordinate. There fore, what happened at each level may affect other levels also. the out come of appraisal at one level is the next higher level .this can be presented by the following figure:-

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RECYCLING ASPECT OF MBO 1

RECYCLING ASPECT OF MBO 1

RECYCLING ASPECT OF MBO