Page 69 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Performance Management System

Notes MBO as a mutual goal setting exercise is most appropriate for technical, professional, supervisory
and executive personnel. In these positions, there is generally enough latitude and room for
discretion to make it possible for the person to participate in setting his work goals, tackle new
projects, and discover new ways to solve problems. This method is generally not applied for
lower categories of workers because their jobs are usually too restricted in scope. There is little
discretionary opportunity for them to shape their jobs.

MBO may be viewed as a system of management rather than an appraisal method. A successful
installation of MBO requires written mission statements that are prepared at the highest levels of
top management. Mission statements provide the coherence in which top-down and bottom-up
goal setting appear sensible and compatible. MBO can be applied successfully to an organization
that has sufficient autonomy, personnel, budget allocation, and policy integrity. Managers are

expected to perform so that goals are attained by the organization. Too often MBO is installed top-
down in a dictatorial manner with a little or no accompanying training. If properly implemented,
it serves as a powerful and useful tool for the success of managerial performance.
MBO is a tool that is inextricably connected with team building so that the work commitment
of team members can be increased and their desire to excel in performance can be inspired. It is
important to have effective team work among a group of managers or a group of subordinates.
The group of employees or subordinates must be looked upon as a team that needs to be brought
together. Goals should be set by manager-subordinate pairs, and also by teams. The basic
superior-subordinate relationship in an organization is in no way undermined in this concept of
team goal setting. Lines of responsibility, authority, and accountability remain clear.

MBO has many benefits, since it:
1. Providing a way for measuring objectively the performance of subordinates.

2. Co-ordinates individual performance with company goals.

3. Clarifies the job to be done and defines expectations of job accomplishment.

4. Improves superior-subordinate relationship through a dialogue that takes place regularly.
5. Foster increased competence, personal growth, and opportunity for career development.

6. Aids in an effective overall planning system.
7. Supplies a basis for more equitable salary determination, especially incentive bonuses.
8. Develops factual data for promotion criteria.
9. Stimulates self-motivation, self-discipline and self-control.
10. Serves as a device for integration of many management functions.
MBO has certain potential problems such as:

1. It often lacks the support and commitment of top management.

2. Its objectives are often difficult to establish.
3. Its implementation creates excessive paperwork if it is not closely monitored.
4. It concentrates too much on the short run at the expense of long-range planning.

5. It may lead to excessive time consuming.
6.4 360-degree Feedback or 360-degree Appraisal

Traditionally, in most performance evaluations a supervisor evaluates the performance of
subordinate. Recently, a new approach has been enunciated by the western management gurus,

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