How management by objectives MBO is successful in organization?
MBO or management by objectives is defined as a comprehensive managerial system that integrates many key managerial activities in a systematic process and that is consciously directed toward the effective and efficient achievement of organizational and individual objectives. Show
The practical importance of objectives in management can best be seen by summarizing how successful managing by objectives works in practice. The 6 steps of the MBO process are;
Let’s briefly look at each of these;
Category: Performance Management. Organizations of all kinds need effective management frameworks to follow in order to best reach their individual goals. Management by Objectives is one such framework that aims to create a cohesive communication between all associates within a company, from the management to the employees.
Management by Objectives, also known as MBOs, is a strategic model used by organizations to clearly outline specific objectives and major company goals that are agreed upon by both management and employees. The process of MBOs consists of five steps that aim to enhance performance. In this article we will explore the origin of MBOs and the key steps within its process. We will also discuss other components on MBOs such as the three types of objectives, the pros and cons of this strategy, examine real life examples, and dissect how MBOs compares to other modern performance management systems. The Origin of MBOs The theory of Management by Objectives was first described by Peter Drucker in 1954 in his book The Practice of Management. This original outline was further developed throughout the 1950s to 1970s, which was also the timeframe in which it was most commonly used. The Management by Objectives model runs off the principle that a company’s effectiveness is a more important skill than its efficiency. This puts a focus of management on the quality of performance rather than speed. One of the later developers of the model, Douglas MacGregor, insisted that MBO as a system was better at helping the superiors of a company more effectively assess their subordinates. After the 70’s, however, widespread usage of MBO largely decreased, especially as new styles and systems of management began to be developed. There was some critique that MBO was simply not a comprehensive enough system of management, especially in the sense of MBO being too short-sighted, according to HR Zone. Has MBO Become Obsolete? As such, MBO is still an important management model to examine for companies today. The principles outlined have the potential to work as solid tools within a broader scope of knowledge about management styles. The Key Steps and Components of MBO These additional components are the types of MBO objectives, quantification of objectives, and performance appraisals. Each of these contributes not only to the success of MBO but to the greater organizational understanding of the wants and needs of a company. The Five Steps 1. Set Company Objectives:A company’s management team must identify clear and measurable goals that are within a reasonable realm of achievement and align with the company’s mission, ideals, and ethics. 2. Translate Objectives to Employees: The objectives, once decided upon, must then be delivered to and aligned with employees of the company. 3. Employees Set Individual Objectives: Once given the broad company-oriented objectives, employees should plan their own personal objectives that will help them to arrive at the larger company goal 4. Monitoring of Employees: The employees are now monitored by management for how well they perform and deliver on both the agreed upon individual and company objectives. 5. Evaluation: The final step is an evaluation and provision of feedback for employees by management. Those doing well and staying on track with the objectives are rewarding, providing incentive for employees to stay focused and work hard. The 3 Types of Objectives Generally speaking, objectives within any sort of strategic management can be divided into three overarching categories. These apply to MBOs objectives, but they can also apply to objectives in different management systems and scenarios as well. They are as follows: 1. Strategic Objectives: These are the broad, all-encompassing objectives determined by company management in step one. These should always be set first and then used to determine later objectives. 2. Tactical (Team) Objectives: These are more specific objectives within a company that set groups or teams should work towards accomplishing. This can include tasks that require teams from different departments to intersect and collaborate to achieve a common goal. 3. Operational (Individual) Objectives: These are highly-specific goals that belong to either an individual employee or to a singular department. These objectives will vary greatly from person to person depending on what their overall role in the larger objective is. Quantification of Objectives
Performance Appraisals
Pros
and Cons of MBO According to Harvard Business Review: “With pre-established goals and descriptions, little weight can be given to the areas of discretion open to the individual but not incorporated into a job description or objectives” However, others argue that when MBO is used as a tool within a larger and more comprehensive management plan, it can greatly help to simplify management and optimize it for efficiency. The truth of the matter is the MBO comes with both advantages and disadvantageous. Being aware of its strengths and weaknesses is key in utilizing the system as effectively as possible. Below are outlined the main pros and cons of Management by Objectives: Pros
Cons
Real-World MBO Examples
In truth, all aspects of a company – from human resources to marketing to sales to information technology and everything in between – can benefit from clear objective setting in areas where the company may currently fall short. How MBO Compares to Alternatives
Final Thoughts Related ArticlesHow can I make my MBO Programme successful?The 5 step MBO process. Define organizational objectives. The first course of action is to define your organizational objectives. ... . Translate objectives to team members. ... . Monitor performance. ... . Evaluate progress. ... . Reward achievements.. How is management by objectives is used in organization?Management by objectives (MBO) uses a set of quantifiable or objective standards against which to measure the performance of a company and its employees. By comparing actual productivity to a given set of standards, managers can identify problem areas and improve efficiency.
What is an MBO What is the reason of MBO success?MBO results in improved and better managing. Better managing requires setting goals for each and every activity and individual and ensuring that these are achieved. MBO not only helps in setting objectives but also ensures balancing of objectives and resources.
What are the benefits of management by objectives MBO?Some of these advantages include:. Planning. To set goals, management must plan for the future and determine the overall objectives for their business. ... . Employee involvement. ... . Measurable goals. ... . Stronger criteria for employee evaluations. ... . Improved communication. ... . Career development. ... . Improved company performance. ... . Defined roles.. |