What Is Management By Objectives (MBO)? What Are It's Benefits?

Benefits of Managements by Objectives
1. Improvements of managing:
All the advantages of managements by objectives can be summarized by saying that is results is greatly improved management. Objectives cannot be established without planning is the only kind that makes sense. Management by objectives forces managers to think about planning for results, rather than merely planning activities or work.
2. Clarification of organization:
Another major benefit of managing by objectives is that is forces managers to clarify organizational roles and structures. To the extent possible, positions should be built around the key results expected of the people occupying them.

3. Encouragement of personal commitment:
One of the great advantages of management by objectives is that it encourages people to commit themselves to their goals. No longer are people just doing work, following instruction, and waiting for guidance and decisions; they are now individuals with clearly defined purposes. They have had a part in actually setting their objectives; they have had an opportunity to put their ideas into planning programs.

4. Development of effective controls:
In they same way that management by objectives sparks more effective planning, it also aids in developing effectives controls. Control involves measuring results and taking action to correct deviations from plans in order to ensure that goals are reached.

Management by Objective is a method adopted by firms where the management and the employees agree on the objectives of the firm and hence understand their own position within the firm. The basic aim of MBO is to increase the organizational performance by aligning goals and objectives throughout the organization.

This process has several advantages. Firstly, it works as a strong motivator to the employees as they have more independence in there job. This increases the productivity of the workers. The top management can also monitor clear control over the working and spent there time on the major activities of the firm and not waste time by looking over normal everyday work.

Other advantages include increase in profits and objective managerial evaluation. Adopting Management by Objective (MBO) results in better planning by the firm and improves the participant morale of both the employee and the employer.

Management  by  objectives,  it`s  advantages  ,disavantages    limitations

Once they have defined their goals and plans, managers use these to direct the activities of the entire organization. One method often used to link goals and plans with everyday actions is management by objectives (MBO), the process by which managers and employees jointly define their goals, the responsibility for achieving these goals, and the means of evaluating individual and group performance. Popularized by management expert Peter F. Drucker, MBO provides a systematic method of setting goals for work units and for individuals so that all their activities are directly linked to achieving organizational goals.

A wide variety of for-profit organizations have adopted the MBO process, including General Electric and General Motors, two early adherents. In the public sector, schools, universities, and government agencies have also applied MBO. The Holt public school system in Michigan, the Canadian Post Office, and many other nonbusiness organizations has implemented the MBO process. For example, Planned Parenthood Federation of America uses MBO to connect management and employee activities with the attainment of organizational goals and with continued professional development. Each year, Planned Parenthood employees establish goals that are assigned a percentage weight to determine their relative importance. Supervisors measure progress against each goal and award salary increases based on how employees have performed.

Discuss Concept Of Management

Management by objectives (MBO) is now practiced around the world. Yet, despite its wide applications, it is not always clear what is meant by MBO. Some still think of it as an appraisal tool, others see it as motivational techniques: still other consider MBO a planning and control device. In other words, definitions and applications of MBO differ widely.
We can say the management by objectives as a comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed towards the effective and efficient achievement of organizational and individuals' objectives.
This view of MBO as a system of management is not shared by all. While some still define MBO in a very narrow, limited way, besides being used for performance appraisal, as an instrument for managerial subsystems that can be integrated into the MBO process. they include human resource planning and development staffing as well as individuals and organization development, career planning which build on personal strengths and overcoming weakness, the reward system , budgeting and others managerial activities for a specific position. These various managerial needs to be integrated into a system. So MBO must be considering a way of managing and not an additional to managerial job.

Tell me how many steps in management by objective?

Management by Objectives is a program that encompasses specific goals, participatively set, for an explicit time period with feedback on goal progress.

It emphasizes on the set of goals that are tangible, verifiable and measureable.MBO appeal undoubtedly lies in its emphasis on converting overall organizations objectives into specific objectives for organizational units and individual members. There are four ingredients common to MBO programs :

1. Goal specificity
2. Participative decision making
3. Explicit time period
4. Performance feedback

Management by Objectives specifically means managing your business by giving setting specific goals and objectives to the employees. Goals are set for each and every person working in the company and the persons have to achieve the goal. Their promotions, increment, bonus depends on the achievement of the goals. The performance of each and every individual working in the company is judged by the achievement of the objectives set for him.

One can implement this system by setting goals for each and every employee at the beginning of the new year. Once the goals are set the personnel have to work towards achieving the same. At the end of the year a team would assess if the individuals have achieved the goals and targets set for them.

Accordingly, the appraisal system is devised so that each and every employee in the company gets their worth. No one feels that he has been treated unjustly. Everyone is certain that the assessment has been done on a fair basis.

Advantages of this system are many. Goals lead to focused activity by the individual workers, they know what to work for and therefore work in a more systematic and organised fashion. Also, it leads to a lot of saving of time and money, since goals are specifically set after much thought and the process is streamlined, there is no duplication of work, therefore resources are utilised to the optimum level, curtailing wasteful and unnecessary expenditure.

Difficult goals lead to more persistent effort by the individuals, they also take more trouble in equipping themselves better in their pursuit to achieve the goals.

The goals should be mutually agreeable to employees and supervisors and they should be demanding but achievable.

The goals should also be reviewed periodically and should be modified in accordance to changed circumstances.

This is clear in every aspect of management, organize; time, money, space, positions, employees, and hours of operation. These all are what gives a manager some format to decide how, when and where to make changes in the everyday flow of things. Managing is made easy by the gathered knowledge one has in using their best tools to gauge it all. You can do this with piecharts, schedulecharts, performancecharts, expenditures, overhead and using these is what can guide a manager in the right direction. However the best just know from knowing the business with which they thrive in.

Clarity of goals and motivation

MBO is a kind of contract between the top person or control-group of the company in charge and the manager(s). For example: increase the number of key-accounts from 10 to 15 within a given time and area, resulting in increased turnover / gross profit of XY%. The manager is given a budget and either an existing team to fulfil his part of the contract. He will then, in turn, give his team "objectives" to fulfil part of the master plan. Operations are broken down to marketing-assistant and secretary-level. Each and every person has their objectives clearly outlined and within this frame is free to decide as to "how" to go about them, as long as general company policy is not broken..
Benefits: MBO can be a strong motivator to staff, as they are free in their decisions most of the way without having a boss looking over their shoulder all the time, telling them how to hold a pencil-:) and it allows top-management to see clearly who performs 100% and who fails. Even if the "master plan" was a flop, However, MBO should be done on mutual consent, and not top - down only.