1. “MBO plays a major role in planning process” – Critically analyse the statement in detail with live examples. Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims.
The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization. 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 he said: “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. ” 1. According to George Odiome, MBO is “a process whereby superior and subordinate managers of an Organisation jointly define its common goals, define each individual’s major areas 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. “
2. According to John Humble, MBO is “a dynamic system which seeks to integrate the company’s needs to clarify and achieve its profits and growth goals with the manager’s need to contribute and develop himself. It is a demanding and rewarding style of managing a business. ” Role of Management By Objectives in planning 1. Goal setting: The first phase in the MBO process is to define the organizational objectives. These are determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members.
In setting objectives, it is necessary to identify “Key-Result Areas’ (KRA). 2. Manager-Subordinate involvement: After the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting. 3. Matching goals and resources: Management must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates.
4. Implementation of plan: After objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors. 5. Review and appraisal of performance: This step involves periodic review of progress between manager and the subordinates. Such reviews would determine if the progress is satisfactory or the subordinate is facing some problems. Performance appraisal at these reviews should be conducted, based on fair and measurable standards.
