Page 101 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 6: Management by Objectives and Styles of Management

6.1.2 Characteristics of Management by Objectives Notes

Management by Objectives has following characteristics.
1. MBO emphasises participation in setting goals that are tangible, verifiable and measurable.
2. MBO focuses attention on what must be accomplished (goals) rather than how it is to be
accomplished (methods).
3. MBO, by concentrating on key result areas translates the abstract philosophy of management
into concrete phraseology. The technique can be put to general use (non-specialist technique).
Further, it is ‘a dynamic system which seeks to integrate the company’s need to achieve its
profit and sales growth with the manager’s need to clarify and achieve its profit and sales
growth with the manager’s need to contribute and develop himself.
4. MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals. It allows the subordinate
with plenty of room to make creative decisions by himself.

6.2 Process of MBO

The process of MBO consists of the following steps, as shown in the figure.
Figure 6.1: The MBO Process

Define
organizational goals

Performance Defining employee
Appraisals objectives
(Rewards/punishments)

Continuous monitoring
Providing of performance
feedback and progress

Performance
evaluation/reviews

6.2.1 Defining the Goal

Any MBO programme must start with an absolute enthusiastic support of top management. It
must be consistent with the philosophy of the management. The long-term goals of the
organisation must be outlined initially, like: What is the basic purpose of the organisation?
What business are we in and why? What are the long-term prospects in other areas? After these
long-term goals are established, management must be concerned with determining specific
objectives to be achieved within a given time capsule.
Goal setting is a powerful way of motivating people. Goals provide a clear idea of what we are
trying to achieve. Goals allow us to measure our progress. We are able to plan what we need to
do to achieve these goals through people, time, resources etc. Keeping all this in mind
companies should set SMART goals. S - Specific, M - Measurable, A - Achievable, R - Realistic and
T - Time-based.

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