MBO Process (Management by Objective)
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Transcript of MBO Process (Management by Objective)
Principle of ManagementModule Code: MGT-101
Semester: 5th
Group: E-2 Batch: 18th
Submission Date: 25th September 2014Submitted to
Mahfuzul Islam Mahfuj Lecturer
Faculty of Apparel Manufacturing Management & Technology, Shanto-Mariam University of Creative Technology, Dhaka.
Submitted by
Sl.No. Name ID
1 Md. Hasanuzzaman (Group Leader) 121011403
2 Md. Rakibul Hasan Shorif 121011421
3 Md. Mizanur Rahman 121011423
4 Al-Mamun Mia 121011424
Agenda
Introduction
Definition
Objectives
MBO principles
Smart goal
The MBO process
tools
Advantage
Disadvantage
Problem & Limitation
Obsolete
Conclusion
Introduction Popular Technique of Appraisal of managerial
performance.
Introduced by Peter Druker’s book, “THE PRACTICE OF MANAGEMENT”, Published in 1954.
Usually been design and used with the business & Industries.
It is the most widely accepted philosophy of management today. It is a demanding and rewarding style of management.
A process whereby superiors & subordinates jointly identify the common objectives to make best of organizational resources.
DEFINITION OF MBO
§ Management Model based on Objectives that are agreed on between Management and Employees
§ The aim is to reach overall Strategic Goals for the
Organization but also Individual Goals for the Employees
§ This Model integrates Employees in the planning process what leads to Participation, Motivation and Commitment
Click icon to add pictureDEFINITION OF MBO
§ Employees measure their daily Work on their individual goals and act in best interest of the company
§ Sum of all individual goals forms the overall goal of the company
Objectives
To Measure and judge performance.
To relate individual performance to organizational goals
To clarify both the job to be done and the expectations of accomplishment.
To foster the increasing competence & growth of the subordinates.
To enhance communication between superior & subordinates.
To serve as a basis for judgment about salary & Promotion.
To stimulate the subordinate‘s motivation.
To serve as a device for organizational control & Integration.
Management
EmployeeEmpowerment
Balance Between
The balance between management and employee empowerment has to be struck, not by thinkers, but by practicing managers. Turning their aims into successful actions, forces managers to master four basic operations: setting objectives, organizing the group, motivating and communicating, measuring performance, and
developing people, including yourself.
MBO Principles
Setting Goals Together
Periodically Evaluation
Support from Superior
Focus on Goals, not on Methodologies
MBO PRINCIPLES
Make your goal MEASURABLE-quantify
what you want !
SMART G O A L STEP-2
I want to have One Billion
Dollars
Your goal needs to be TIMED-Set a start and a
finish date!
SMART G O A L STEP-5
One year till the first million
The MBO’sProcess
Central Goal Setting
Individual Goal Setting
Progress Monitored
Performance appraisal
Achievers Rewarded
Next MBO Operating
period
The MBO’s Process
RoutineObjectives
Problem-SolvingObjectives
ImprovementObjectives
InnovationObjectives
CENTRAL GOAL SETTING
Development ofIndividual Goals
Revision of JobDescription
ResourceAllocation
INDIVIDUAL GOAL SETTING
RESULTS’ REVIEW- Objectives and key results- Long and short term priorities- Scope of assistance expected- Standards of performance
PROGRESS MONITORED
PROPERFORMANCE APPRAISAL
Self Evaluation
360-DegreeEvaluation
ChecklistEvaluation
Critical IncidentsMethod
Non-FinancialMotivators
§ Salaries§ Commission§ Share Ownership§ Performance Pay
FinancialMotivators
§ Job Enlargement§ Job Rotation§ Job Enrichment§ Empowerment
ACHIEVERS REWARDED
Organizational Goals =Organizational KPI
(e.g. number of complaints in the end of the week)
KEY PERFORMANCE INDICATORS
Individual Goal = Individual KPI
(e.g. weekly % difference in complaints handled that result in satisfied customers vs. unsatisfied customers)
8 Key Result Areas Where Managers Must Pursue Clear Objectives
Marketing
Innovation
Human organization
Financial resources
Physical resources
productivity
Social responsibility
Profit requirement
• Improves employee motivation• Improves communication in the
organization• Flags up and highlights training needs
required to achieve objectives• Improves overall performance and
efficiency
ADVANTAGES OF MBO
Requires the cooperation of all employees to succeed
Can be bureaucratic and time consuming (meetings, feedback)
Can encourage short-term rather a more focused long-term growth
Setting targets for certain specialized employees may be difficult
DISADVANTAGES OF MBO
Difficulty of setting goalsFailure to teach MBO philosophyProblems in objective settingEmphasis on short-term objectivesInflexibilityFrustration
PROBLEMS AND LIMITATIONS OF MBO
High Volatility in Markets and Trends
YES! BUT WHY?
Conservative Individual Goals
Having productivity measured is hard
Non Collaborative Goals = Inefficiency
Conclusion
• MBO is used for different purposes. Some organizations use MBO to clarify the employee’s job , others use it to motivate employees while still other organizations apply MBO as a performance control mechanism to check performance. In this way MBO process is directly related to all the major functions of management.Thus, MBO is a result-oriented and rational philosophy. It permits management by results in place of management by crisis. Many organizations both in the private sector and the public sector have benefited a lot through the application of MBO.