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Management By Objectives (MBO): A Comprehensive Analysis

u2018Management By Objectivesu2019 is the strategic process of setting organizational goals with reciprocated responses from both employees and management. The term u2018Management by Objectivesu2019 was coined by Australian-American management author Peter Drucker in his book u2018The Practice Managementu2019 in 1954.

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Management By Objectives (MBO): A Comprehensive Analysis

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  1. Management By Objectives (MBO): A Comprehensive Analysis

  2. What is Management by Objectives (MBO)? • ‘Management By Objectives’ is the strategic process of setting organizational goals with reciprocated responses from both employees and management. The term ‘Management by Objectives’ was coined by Australian-American management author Peter Drucker in his book ‘The Practice Management’ in 1954. • Management By Objectives is designed by aligning organizational goals with the overall employee objectives to provide a directive pre-defined conduct to accomplish the vision of the business in the future. • It is a strategic approach to enhance the efficiency and effectiveness of the organization and remove any ambiguity.

  3. The MBO process follows a ‘SMART’ approach to set organizational objectives. The SMART goals include: • S – Specific: It signifies a clearly defined set of goals that are constituted by the organization to assist employees in functioning with clarity and avoiding complexity. It emphasizes specific goals rather than generic ones. • M – Measurable: It implies that organizational goals to be framed must be flexible to align with alterations in the future and should have measurable traits for evaluation. • A – Achievable: It signifies the goals must be attainable. It should be challenging enough, but with achievable traits. • R – Realistic: It signifies that the goals are expected to be realistically achievable in a given frame of time with adequate available resources. • T – Time Bound: The goals to be set must be time bound or have deadlines. Having a specified defined time limit for accomplishments will also avoid work overdue. •  Now that we learned about the MBO process, let us discuss the steps involved in the process of defining specific objectives and framing Management By Objectives and goals.

  4. Steps Of the Management By Objectives Process • #Step 1: Setting Organizational Objectives • The first and foremost step in the MBO process is to develop the objectives of the company. Following the SMART approach, the management of the organization needs to draft and finalize its goals. • The company goals should comply with its policies and procedures to avoid any legal or operational issues or internal conflict. The goals are set to ultimately enhance the focus of employees. • #Step 2: Aligning Company Objectives with Employees’ Progress • Every employee has their personal objectives, career and own goals. The project manager needs to align the company goals with the employees’ personal goals so it will result in enhancing the organization as well as employee progress and keep the organization away from employee turnover. • When the company objectives match the company culture and the individual goals of employees, it inflates the employee satisfaction index. • Aligning objectives also heightens the objective standards and reputation of the organization. Besides, it builds an image among noteworthy companies for valuing human resources.

  5. #Step 3: Evaluation of Company Performance • The next in a row is the evaluation of the objectives from time to time to examine the output and overall impact of the objectives set for the entire company. • Objectives management is an essential task as the business trends of companies are dynamic and keep changing over time according to geographic location, company size, necessities, available resources, customer satisfaction and demands, and more. • #Step 4: Monitoring • The succeeding step is to monitor the progress or degradation of the pre-defined objectives. It is crucial to monitor the output matrix for making necessary alterations in case of decline or stagnation and improvise plans accordingly. • #Step 5: Feedback • Employers should provide feedback to employees to ascertain their progress and point out the flaws in execution along with strategic solutions for a clear understanding of the company’s goals. • It enables them to understand their progress and take corrective actions if required. • #Step 6: Rewards and Recognition • Last but not the least, employees should be given performance appraisals, promotions, and more for positive performance reviews. This would not only improve the performance of employees but also escalate their self-motivation to achieve success for themselves as well as their company.

  6. Full Article on our page here – https://www.pockethrms.com/blog/management-by-objectives/

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