Management By Objective

Management by Objectives (MBO)
Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.[1]
The essence of MBO is participativegoal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

Unique featuresand advantage of the MBO process

The principle behind Management by Objectives (MBO) is basically for employees to have clarity of the roles and responsibilities expected of them. They then understand the objectives they must do and the over all achievement of the organization. They also help with the personal goals of each employee.
Some of the important features and advantages of MBO are:1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
2. Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.3. Clarity of goals
4. Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers.
5. Managers can ensure that objectives of the subordinates are linked to the organization’s objectives.

Limitations

There are several limitations to the assumptive base underlying the impact of managing by objectives, including:
1. Itover-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
2. It underemphasizes 3. Companies evaluated their; from MBO to Deming to Project Management and Beyond]
When this approach is not properly set, agreed and managed by organizations, in self-centered thinking employees, it may trigger an unethical behavior of distorting the system of results and financialfigures to falsely achieve targets that were set in a short-term, narrow, bottom-line fashion.[2][dubious – discuss]
The use of MBO needs to be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process,objectives are discussed and agreed, based upon a more strategic picture being available to employees. Engagement of employees in the objective setting process is seen as a strategic advantage by many.[3]
A saying around MBO and critical success factor's, or CSF's -- "What gets measured gets done" [4]-- is perhaps the most famous aphorism of performance measurement; therefore, to avoid potentialproblems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
MBO includes ongoing tracking and feedback in the process to reach objectives.
Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book 'The Practice of Management'. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when hesaid: "It's just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the objectives, 90% of the time you don't."
Core Concepts
According to Drucker managers should "avoid the activity trap", getting so involved in their day to day activities that they forget their main purpose or objective. Instead of just a few top managers, all...