Management By Objectives (MBO)

Management By Objectives (MBO)

MBO was first popularized by Peter Drucker in 1954 in his book 'The practice of Management’. It is a process of agreeing within an organization so that management and employees buy into the objectives and understand what they are. It has a precise and written description objectives ahead, timelines for their motoring and achievement. The employees and manager agree to what the employee will attempt to achieve in a period ahead and the employee will accept and buy into the objectives.

Definition

“MBO is a process whereby the superior and the mangers of an organization jointly identify its common goals, define each individual’s major area of responsibility in terms of results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.”

Features of MBO

ü MBO is concerned with goal setting and planning for individual managers and their units.

ü The essence of MBO is a process of joint goal setting between a supervisor and a subordinate.

ü Managers work with their subordinates to establish the performance goals that are consistent with their higher organizational objectives.

ü MBO focuses attention on appropriate goals and plans.

ü MBO facilitates control through the periodic development and subsequent evaluation of individual goals and plans.

Strategies

The  term  'Strategy'  has  been  adapted  from  war  and  is  being  increasingly  used  in business to reflect broad overall objectives and policies of an enterprise. Literally speaking, the term 'Strategy' stands for the war-art of the military general, compelling the enemy to fight as per out chosen terms and conditions. According to Koontz and O' Donnell, "Strategies must often denote a general programme of action and deployment of emphasis and resources to attain comprehensive objectives". Strategies are plans made in the light of the plans of the competitors because a modern business institution operates in a competitive environment. They are a useful framework for guiding enterprise thinking and action. A perfect strategy can be built only on perfect knowledge of the plans of others in the industry. This may be done by the management of a firm putting itself in the place of a rival firm and trying to estimate their plans. Characteristics of Strategy

ü It is the right combination of different factors.

ü It relates the business organization to the environment.

ü It is an action to meet a particular challenge, to solve particular problems or to attain desired objectives.

ü Strategy is a means to an end and not an end in itself.

ü It is formulated at the top management level.

ü It involves assumption of certain calculated risks.