management by objectives 97-03 version

8/8/2019 Management by Objectives 97-03 Version

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PRINCIPLES OF MANAGEMENT



DEFINATION OF MBO.

FEATURES

MBO PROCESS SMART

BENEFITS

LIMITATIONS SUGGESTIONS FOR

IMPROVEMENT



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.



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.



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.



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



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.



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



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.



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.



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



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



Better management and utilization of resources

Aid in Planning

Result oriented approach

Impartial goals

Higher morale Personal leadership



Concentration on key result areas

Employee motivation & Better TeamWork

Development of personnel/satisfaction

Objective Evaluation

Sound Organizational Structure



Time & Cost

Failure To Teach MBO Philosophy

Emphasis On Short-term Objectives

Inflexibility

Frustration

Conflicting Objectives

Higher Paperwork

Lack Of Durability



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.



FOR GIVING US SUCH WONDERFRULOPPURTUNITY

TORESEARCH THIS PROJECT

OFPRINCIPLES OF MANAGEMENTWE WOULD LIKE TO THANK

OUR PRINCIPAL DR. A.C.VANJANI

ANDPROFESSOR SALEEM KHAN.



REEMA ARORA 06

RISHIKA DEVNANI 13CHANDNI SABNANI 46

SANMEEN SAHNI 48

AKSHAY SHIVANI 54

AANCHAL SHROFF 55

management by objectives 97-03 version

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