Management by objectives helps improve managerial performance and effectiveness. It provides a workable framework to the manager within which he can make decisions which are in the best interest of the organisation. The key concepts of MBO are emphasis on results, participative objective setting for each managerial position, and emphasis on team work, human relations and a regular review system. The process of MBO involves setting objectives, action planning and reviewing performance. For successful implementation, proper planning and preparation are required. To achieve success with MBO it is necessary to have the top management's full support and commitment, a realistic time frame for implementation, adequate training of people who would be involved in the process, and a proper understanding of the role of MBO.
In this knowledge leaf, we will learn about
- Focus of Decision Making
- Evolution of MBO
- The need for MBO
- Definitions and Concepts
- The MBO Process
- Ensuring Successful Implementation of MBO
- Benefits of MBO
- MBO in India
1. Focus of Decision Making:
When a manager takes a decision the purpose is to increase either the efficiency or the effectiveness of the existing operation, or increase both efficiency and effectiveness;
Efficiency is defined as the ratio of output to input. The more output that can be obtained from a given input, the more efficient is the utilization of the input.
Effectiveness is concerned with doing the right task.However efficient a manager may be at performing his tasks, if the choice of tasks itself is not right; his efficiency is certainly not helping his organisation.
But a firm whose choice of tasks is totally wrong, no matter how high its efficiency, will certainly fail.
Management By Objectives (MBO) is a tool by which managers can improve their performance and increase their effectiveness.
But a firm whose choice of tasks is totally wrong, no matter how high its efficiency, will certainly fail.
Management By Objectives (MBO) is a tool by which managers can improve their performance and increase their effectiveness.
2. EVOLUTION OF MBO
George Odiorne of USA, promotes MBO as a "guide for operating the unit and assessing the contribution of each of its members"
John Humble of U.K. visualises MBO as a "system which integrates the company's need to achieve its goals with the managers need to contribute and develop himself" and consequently places greater emphasis on corporate planning.
3. THE NEED FOR MBO :
- Specialisation of work
- Misdirection of effort by the boss
- Hierarchical structures of management
- Misdirection by compensation.
Thus there is need to unify the efforts of individuals towards achievement of corporate goals. This unifying force is provided by MBO.
MBO helps to align efforts of specialised skills and specialised workers towards the achievement of the firm's overall objectives.