management by objectives 97-03 version
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8/8/2019 Management by Objectives 97-03 Version
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PRINCIPLES OF MANAGEMENT
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DEFINATION OF MBO.
FEATURES
MBO PROCESS SMART
BENEFITS
LIMITATIONS SUGGESTIONS FOR
IMPROVEMENT
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The full form of MBO is Management byObjectives.
Management By Objectives term was
first popularized by Peter Drucker in1954 in his book 'The Practice ofManagement'.
It is a systematic and organized
approach that allows management tofocus on achievable goals and to attainthe best possible results from availableresources.
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MBO is a philosophy or a system, and
not merely technique.
It emphasizes participative goalsetting.
It clearly defines each individual
responsibilities in terms of results.
If focuses attention on what must beaccomplished (goals) rather than on
how it is to be accomplished.
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It converts objective needs intopersonal goals at every level in the
organization.
It establishes standards or yardsticks
(goals ) as operation guides and also as
basis of performance evaluation.
It is a system intentionally directed
toward effective and efficientattainment of organizational and
personal goals.
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Step 1: Setting of organizational purposes
and objectives
Usually objectives setting at top level with the
following sequence:1. Defining the purpose of the organization
2. Setting long range and strategic e.g.questions like whether to achieve growththrough expansion or diversification etc.
3. Setting short ² term organizationalobjectives
4. Setting divisional / departmental /sectional objectives
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Step 2: Identifying Key Result Areas (KRA)
The organizational objectives and planningcome together to define KRA. KRA·s arederived from different stake holders.
KRA indicates-
Priorities of organizational performance.Present state of health of an organization
Top Management·s perspective.
Examples of KRA are:
Profitability, market standing, innovation,productivity, manager·s and worker·sperformance, financial and physical resources,public responsibility.
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Step 3: Setting subordinates Objectives
All middle level managers are both superiorand subordinate except the top and lowestlevel.
Organizational objectives are achieved through
individuals Hierarchy of setting objectives-
Superior·s recommendation to subordinates
Subordinates in turn states his own
objectivesSetting of final objectives of subordinates in
consultation
Bridging the gap between the objectives setby superiors and stated by the individual
subordinate
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Step 4: Matching of resources with objectives
Once the objectives are set carefully theyindicate resource requirement.
Proper allocation of resources ensures theachieving of objectives.
Need and economy of resources can beviewed in a better way because of thematching of objectives with resources.
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Step 5: Appraisal
Appraisal (assessment / evaluation) is an on ²going process with a view to find out anydeficiency in the working and also to removepromptly.
It is a system which checks that everythinggoes smoothly as per the plan.
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Step 6: Recycling
Objective setting is a joint process whichoccurs
through the interaction between superiors and
Subordinates.
The change at any level affects the otherlevels.
Hence there is a requirement of objectiverecycling
Three aspects of recycling are-
11OBJECTIVE SETTING
ACTION PLANNING
PERFORMANCE REVIEW
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MBO is often achieved using set targets.
MBO introduced the SMART method forchecking the validity of the objectives which
should be SMART.Specific
Measurable,
Agreed
Realistic, andTime-Specific or Time related
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Better management and utilization of resources
Aid in Planning
Result oriented approach
Impartial goals
Higher morale Personal leadership
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Concentration on key result areas
Employee motivation & Better TeamWork
Development of personnel/satisfaction
Objective Evaluation
Sound Organizational Structure
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Time & Cost
Failure To Teach MBO Philosophy
Emphasis On Short-term Objectives
Inflexibility
Frustration
Conflicting Objectives
Higher Paperwork
Lack Of Durability
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Support from all: The policy must receivecomplete support from the managers as well asthe sub-ordinates.
Training of managers: The managers should be
given adequate training in MBO philosophybefore the programme is introduced.
Allocate adequate time and resources: A well-conceived MBO programme requires three to fiveyears of operation before it provides fruitfulresults.
Information feedback: Superiors andsubordinates should have regular informationavailable to them as to how well subordinate·sgoal performance is progressing.
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FOR GIVING US SUCH WONDERFRULOPPURTUNITY
TORESEARCH THIS PROJECT
OFPRINCIPLES OF MANAGEMENTWE WOULD LIKE TO THANK
OUR PRINCIPAL DR. A.C.VANJANI
ANDPROFESSOR SALEEM KHAN.
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REEMA ARORA 06
RISHIKA DEVNANI 13CHANDNI SABNANI 46
SANMEEN SAHNI 48
AKSHAY SHIVANI 54
AANCHAL SHROFF 55
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