Que:4 Explain Management by Objectives (MBO)

Answer: Management by Objectives (MBO) Peter F. Drucker gave the concept of MBO in the year 1954 in his seminal work “The Practice of Management”. This concept envisages a management viewpoint which puts a great premium on the contributions of employees. This concept is recently being applied in the area of performance appraisal. Management by Objectives (MBO) is a managerial approach for promoting participation of managers and employees towards the common goal fulfillment. Here, focus is on defining objectives so efficiently that both management and employees of the organisation understand their role and position and collectively work towards organisational objectives. MBO is responsible for incorporating goals and objectives of the organisation in order to improve the operational capability of the organisation. All the employees have total clarity on the objectives and get strong indications regarding the framing of their objectives, and implementation plan etc.

Through MBO each operational unit within the organisation, clearly identifies its I role in attaining strategic goals. People know what is expected of them for the organisation to achieve its objectives. MBO makes a distinction between achieving an objective and getting the job done. The emphasis should be on achieving an objective. The role of the managers is to guide their assistants in the accurate direction and ensure that the right environment is created in the organisation. ; According to Prof. Reddin, “MBO is the establishment of effectiveness areas and effectiveness standards for managerial positions and the periodic conversions of these into measurable time bound objectives linked vertically and horizontally and with future planning”.

MBO helps in motivating and encouraging the employees for achieving their individual goals. With the implementation of MBO, employees know what is expected from them and also get clarity on the overall objectives of the organisation. MBO helps in reducing the internal conflicts and minor disputes that arises between the managers of the same company for limited resources. Furthermore, it helps in increasing the morale of the managers as they compete with themselves for better performances. However, in the long-run, MBO can be self defeating as it fosters a reward-punishment methodology. It tends to violate the personality of the subordinate. At times it has also been found to wrongly punish superior performers.

BU,Bhopal MBA 1 SEM 2014