Management by Objectives (MBO)

MBO needs the management to set specific, measurable objective with each worker and then discuss periodically the latter's progress towards these objective. This technique emphasises participatively set objective (that are agreed upon by the superior and the employee) that are tangible, verifiable and measurable. MBO targets attention on what need to be accomplished (goals) instead of how it is to be complete. Thus It is a type of goal setting & appraisal programme involving six steps which are following:

Set the organisation's goals: Set up an organisation broad plan for next year and fix company goals.

Set departmental goals: At this stage departmental heads take the broader company goals (as improving profits by 20%, enhancing market share by 10 % etc.) and, with their superiors, jointly set objective for their departments.

Discuss departmental goals: Now The departmental goals are put to discussion in a departmental meeting along subordinates. The departmental heads would need the subordinates to fix their own preliminary individual goals, mostly focusing on what they may do to attain the department's goals.

Define expected results: In the preceding step, the departmental heads & their subordinates do agree on a set of participatorily set short term, and individual performance goal.

Performance reviews: Departmental heads compare each of the employee's actual & targeted performance, either annually or periodically. When periodic review is intended to recognize and solve specific performance difficulty, the annual review is conducted to reward and assess one's total contribution to the organisation. Because worker is evaluated on their performance results, MBO is frequently called a result-depend on performance appraisal system.

Provide feedback: Now both of the parties discuss and evaluate the real progress made in attaining goals, where things have gone off the track, how greatest to rectify the mistakes made in the past, and how the worker could meet the targets next time, focus attention on his strengths.

However, setting visibly measurable goals is not simple task. MBO demands a vast deal of time to set verifiable objective at all of the levels of an organisation. In the race to describe everything rigidly, some qualitative aspects may be ignored (such as job satisfaction, workers attitudes etc). Frequently the superior can set goals at a frustratingly high level, while the subordinate can wish to have it at a comfortable level. At times, the short-term objective may take precedence over long term objective. The only way to solve these problems is to let managers at all of the levels to describe, coordinate & direct the programme in a democratic, persuasive way. The jointly set targets ought to be attainable and fair. The superiors and the subordinates both ought to be taught how to set up realistic goals and be familiarised with the outcome for which they are at last held responsible.