Mgt by Objective(MBO)

1. Mgt by Objective(MBO) The idea was advocated and popularised by Peter Drucker. MBO is a process by which managers and subordinates work together in identifying goals and setting up objectives and make plans together ,in order to achieve these objectives.These objectives and goal are consistent with the org goals.It is also refered by the name Mgt by Resultz/Goal mgt.

2. MBO Process 1) Central goal setting- setting org goals,clear specific,must be made known to all the members of the org. 2) Mgr subordinate involvement - after the org goal setting the subordinate associate with the mgr in setting therir individual goal. merely short range goal. 3) Matching goals & resources -mgt must make sure that the subordinate is given necessary materials & tools to effectively achieve the set goals. 4) Freedom of implementation -mgr subordinate task force should have adequate freedom in deciding on the utilization of resources and the means of achieving it. 5) Review and appraisal of performance –periodic reviews of the progress towards the goal btw mgr & the subordinate. helps in knowing unanticipated change occurred helps the subordinate in understanding the MBO better.

3. Advantages of MBO 1 Since MBO focuses on setting & controlling goals, encourages mgr’s in improving planning process, it improves overall mgt system 2 since both mgr & subordinate know what they expected to perform there is no role confusion. 3 mgrs are required to establish measurable targets & std’s of performance 4 MBO promotes the subordinates in setting the org goals this improves their morale & commitment. 5MBO often highlights the area in which the employees need training 6 The system of periodic evaluation lets the subordinates know how well they are doing. 7 it improve communication btw mgt & subordinates since there is a continuous feed back.

4. Disadvantages of MBO 1)it is not suitable for a typical classical hierarchical structure 2 )MBO may be resented by subordinates-sometimes the subordinates may be under pressure to get along with the mgt while setting the goals & objectives & these goals may set unrealistically high which will be unattainable for the subordinates. 3)The main strategy of MBO is to quantify the goals & objectives but there are some areas were quantification is difficult & even more difficult to evaluate. 4)Ther is a considerable paper work involved in this system & it takes too much of mgr’s time.

5. 5)Mbo focuses on short range goals. 6)Most mgr’s may not be sufficiently skilled in interpersonal interaction which is extensively required in MBO 7)Integretion of MBO system wit other system such as forecasting & budgeting etc is very poor .This makes the overall functioning of all systems more difficult. 8) Co-ordination of group goal achivement is more difficult.ie; co- ordinaton of one dept goal with another dept goal if found to be difficult. Suggestions for improving the effectiveness 0f MBO 1) It is important to secure top mgt support & commitment with out which MBO can never really be a success

6. 2)The objective set should be clearly formulated & should be realistic & achievable. 3)MBO should be for the entire org rather than a divisional process. 4)Goals must be continuously reviewed & modified as the changed conditions require. 5) All personnel's involved should be given formal training in understanding the basics as well as the contents of the program. 6)MBO as a system should be wholly accepted as a style of managing & should be totally synthesized with the org climate

7. Management of performance • Performance Appraisal-The identification, measurement and mgt of human performance in org. • Model of performance appraisal system IDENTIFICATION I MEASUREMENT I MANAGEMENT OF PERFORMANCE

8. Identifying performance dimensions –ie; identifying ‘what is to be measured?’ • Measuring Performance- ‘How to measure the identified performance dimension?’ -Performance appraisal tools Individual evaluation methods: 1confidential report -The report mainly analyses streangth & weakness of the employee. report is not made public and feed back is not given to the appraisee,it’s a totally subjective analysis,mostly used in govt org. 2 Essay evaluation- the rater mainly analyse the following of the appraisee; job knowledge & potential of the employee,employees understanding of the companies’s programes,policies objectives etc.employee relationship with co workers &superiors etc.the employees general planning organizing and controlling ability,the attitudes & perception of employeess in general.

9. 3 Critical incidents Technique -under this method the mgr record both the effective & ineffective behaviour of an employee. For eg; Good critical incident of a sales assistant is July 20-sale clerk patiently attended to the customers complaint. he is polite prompt, enthusiastic in solving the customers problem. Bad critical incident July 20-the sales assistant stayed 45 minutes over on his break during the busiest part of the day. he failed to answer the store mgr’s call thrice. he is lazy negligent, stubborn,& uninterested in work. Limitations of this method .

10. -negative incidents may b more noted. -tendency to unload a series of complaints abt the incidents during an annual performance review session. -results in very close supervision of employees which may not b liked by the employees. -time consuming & sometimes forgotten b the mgr to record the incidents 4 Check lists and weighted checklists -It consists of a set of objective/descriptive statements about the employees and his behaviour.If the rater believes that the employee possess a particular listed trait he checks the item otherwise it is left blank.

11. Limitations -highly biased and -expensive & time consuming. 5 Graphic rating scale-It is a printed from listing out the various traits required for a job against the ranking criterias.The examples of traits include; quality ,quantity knowledge of job etc.against scales like unsatisfactory, fair,satisfactory,good etc 6 Behaviorally anchored rating scale -it is a combination of rating scale &critical incident techniques of employee performance based on certain performance dimension.

12. Steps involved in the construction of BARS 1)collect the critical incidents 2)identify the performance dimensions- specific area were the appraisal is needed eg; technical competence, relationship with customers, handling paper work,& meeting day to day dead lines etc. 3)reclassification of incidents-Another group of participants who are knowledgeable abt the job is instructed to retranslate/reclassify the CI’s generated in the step 1.At this stage an incident of which there is not 75% agreement are discarded, as being too subjective. 4)assigning scale values to the incidents- each incident is rated on a 1 to 9 scale with respect of how well it represents performance on the appropriate dimensions rating of 1 represents ineffective performance and a rating of 9 represents very effective performance. 5)producing the final instrument-abt 8 or 9 incidents for each performance dimensions will b used as behavioral anchors.

13. 7 Forced choice method- This method makes use of several sets of pair phrases, two of which may be positive and two negative and the rater is asked to indicate which of the four phrases is the most & least descriptive of a particular worker 8 MBO- • Multiple person evaluation method 1 Ranking method -The person in a group is ranked among the group members based on certain performance criteria,ie;ranking frm top to bottom. 2 Paired comparison -Each worker is compared with all other employees in the group. 3 Forced distribution method -The rater is asked to appraise the employee according to a pre determined distribution scale. The rater bias is sort to be eliminated from this method. • Other methods 1Group appraisal- A group of raters appraises e an employee’s performance. 2Human resource accounting -Cost /benefit associated with the human resource is accounted based on which the performance of personnels in carried out.

14. 3) Assessment centre -In this method individuals frm various dept’s are brought together to work o an individual or group assignment. similar to the one’s they would b handling when promoted. rates rank their performance in order if their merit. It is the excellent means of conducting an evaluation is an objective way. 4)Field review method -In this method a trained HR personnel ( expert) goes in to the field and assist line supervisors with their ratings of their respective subordinates. The HR expert requests specific information abt the subordinate frm the supervisor regarding their performance. Based on this expert prepares a report regarding the employees performance and is given back to the supervisor for review ,change, approval,& discussions. The ratings are done on a standardized form. since the rating is done by the expert in consultation with the supervisor the ratings are more reliable.

15. - challenges to effective performance measurement 1Raters errors and bias- Halo error- rater goes for only one performance dimension while rating the performance. Restriction of range errors.- Restricting all of the rating to a small portion of rating scale Leniency error- restricting all the rating to high portion of the scale. Central tendency error -using only the middle portion of the scale. Severity error -using only the low portion of the scale. 2The influence of liking-when a rater allow their like or dislike of an individual to influence their assessment of that particular person’s performance.

16. 3Org politics-rating is done on the goals agendas of the supervisor. 4Whether to focus on the individual or the group. Now the trend on org is team building, so the performance appraisal are to be carried out in two aspects viz; Individual contribution to team The performance of team as a unit to the org. Individual performance is found to be simple when compared to team appraisal .The org is not able to reach a consensus with regard to the appraisal tool which are to be used with respect to the team appraisal. 5Legal issues.mainly focuses on the fact that there shouldn’t be any discrimination with regard to the appraisal system carried out in the org as well as in all terms & conditions of the employment. That is the rating given to an employee should be same as to the rating given by a rater to the another employee whose performing the same job .Also Performance appraisal system must be free of discrimination both at group & individual level.

17. Mgt of performance • Appraisal interview- formal interview carried out by the mgr with the subordinate to provide feed back with respect to his /her performance. Feed back is given in respect to the following areas; - feed back regarding performance (mgr act as a coach) - feed back regarding salary (mgr act as judge) Normally both are not conveyed to the employee simultaneously. research as well as the best mgt practice is said to be conveying both performance & salary simultaneously to the employee, due to following reasons since money is at a stake mgr is much serious with regard to the task of feed back & appraisal. Including salary discussion can energize the performance discussion. • performance improvement- It s been said the best performance appraisal improvement function is to conduct informal day to day performance mgt. supervisors who manage performance effectively generally share the following characteristics: • Explore the causes of performance problem. Determining the causes of performance problem are carried out mainly due to following reasons; * to determine how to evaluate performance * to reduce conflict btw supervisors & workers * to determine what type of solution to be carried out.

18. Factors that contribute to the causes of performance problem * Ability factors * motivational factors * situational factors. Factors that facilitate in identifying the causes of performance problem. * Self appraisal- appraisal done by worker itself. * peer review -workers at the same level in the org rate one another. * subordinate review- workers review their supervisors. All the three together are know as 360 degree appraisal • Direct attention to the causes of problem.-the mgrs must take actions to control the performance problems say, if certain factors effect the performance positively ,mgr’s should try to retain those factors and they should try to eliminate those factors which act as constraints to the performance of the employees.

19. Develop an action plan & empower workers to reach solution. the supervisors traditionally acted as director /controller towards an employee. but now the role of a supervisor is to be changed to that of a coach. by avoid giving orders. and trying to help them com up with solutions to over come the performance problem. • Directing communication at performance and provide effective feed back.