Page 64 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Unit 3: Planning and Decision-making

3.5.3 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 on his own.

3.5.4 Process of Management by Objectives

The process of MBO consists of the following steps:

Figure 3.1: The MBO Process

Define
organizational goals

Performance Defining employee
Appraisals objectives
(Rewards/punishments)

Continuous monitoring
Providing of performance
feedback and progress

Performance
evaluation/reviews

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.
Setting specific performance objectives is a multi-step process, MBO is based on two
concepts:
(a) let people know what is expected of them and
(b) allow employee in participation setting goals.

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