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Management by objectives (MBO) is about making effective use of scope for action ('right' activity) as

well as motivating people to make greater efforts ('sufficient' activity).

if a desired outcome is defined as a goal and progress is measured towards reaching that goal, then the chances of

reaching that outcome are enhanced. From a simplistic view, if you start out with a goal in mind, you are more likely

to reach it or conversely.

The idea was to improve management and work productivity in general by being more defined about the intended

outcomes. What the basic MBO principles included:

Management by Objectives (MBO) is the most widely accepted philosophy of management today. It is a demanding

and rewarding style of management. It concentrates attention on the accomplishment of objectives throughparticipation of all concerned persons, i.e., through team spirit. MBO is based on the assumption that people perform

better when they know what is expected of them and can relate their personal goals to organizational objectives.

Superior subordinate participation, joint goal setting and support and encouragement from superior to subordinates are

the basic features of MBO. It is a result-oriented philosophy and offers many advantages such as employee

motivation, high morale, effective and purposeful leadership and clear objectives before all concerned per-sons.

Conclusion:All in all it appears difficult to design a management by objectives system with adequate target indicators which

reflect political priorities and in which target achievement actually lies in the area of activity of the local actors. It is

important here to develop an adequate targets system with the participation of parties involved and taking into account

the information about the possibilities for having an effect. Another important decision is whether and how target

values are to be set. Wrong decisions interfere with the motivation to perform. When implementing management by

objectives in labour market policy it is essential that opportunities for improvement are put to systematic use. Aconstructive dialogue between all parties involved would be helpful in this connection. Lastly, the challenge is to

coordinate what is desired and what is doable.

Conclusion

MBO is an approach to management that depends on the identification of the organisation's and an individual's

objectives for a given period. It relies on defining end results, identifying the areas for improvements, planning action

to achieve improvements and reviewing the outcome of the action. It motivates individuals to achieve and strengthen

the subordinate-superior relationship. By introducing MBO in the SAF at the appropriate levels, commanders will

jointly identify and set objectives which will be developed into a work plan. Achievements of goals set or amendments

as necessary, are frequently discussed between superiors and subordinates in a congenial manner that promotes

teamwork. The success or failure of the subordinates reflects on the management and the leadership of the superior

INTRODUCTION:

Management by objectives (MBO) is a process of definingobjectiveswithin an organization so thatmanagementand employees agree to the objectives and understand what they need to do in the organization. The essence of MBO

is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the

measurement and the comparison of the employees actual performance with the standards set.

It is an approach and philosophy to management and not merely a technique.

HISTORY:The term "management by objectives" was first popularized byPeter Druckerin his 1954 book 'The Practice of

Management'. It gained a great deal of attention and was widely adopted. new management ideas have come and gone.

Management by objectives (MBO), total quality management, transactional analysis, quality circles, management by

wandering around, and self-managed teams are examples of "new" management approaches that have hit the

workplace like a star gone super-nova, and then swiftly faded to invisibility.

Indeed, new management approaches seem to gain workplace acceptance overnight, and then, equally as quickly,

disappear from the workplace lexicon, often relegated to the status of management fad.

But have these approaches really been sent to the garbage dump of management thought, or are they still being used to

advantage in the workplace? My next several columns will explore answers to this question. So let's begin with:

Whatever happened to MBO?

MBO historyMBO's roots are traceable to the 1930's. Alfred P. Sloan used a version of MBO during his term as president of

General Motors Corp. Sloan's ideas were later introduced as a management process by Peter Drucker in his 1954

classic, "The Practice of Management." MBO rose to euphoric levels in the 1960's and 1970's when it was adopted by

most publicly traded companies. It was also employed by the Nixon administration as a way to manage a burgeoning

government bureaucracy. To be sure, MBO was popular because it worked.

The MBO process is based on communication and participation and involves four basic steps, the first of which is to

establish organizational objectives which are incorporated into a strategic plan. Such objectives are usually determinedby senior management. However, senior managers seldom implement strategic plans. Middle managers and their

subordinates do. Thus, there must be some mechanism for determining who will do what, when, where, and how. This

is a primary purpose of MBO.

In the MBO process, goals cascade downward to the level where they can be successfully accomplished. This requires
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that managers and subordinates mutually agree on things like what specific tasks will be undertaken and when such

tasks need to be finished. As part of this negotiation process, a manager and subordinates agree on how a task will be

approached and what resources will be made available.

The objective-setting meeting plays an important role in implementation success. For not only does the employee

commit to undertake responsibility for the completion of a goal, but his or her manager must similarly commit to both

allocate needed resources and to help remove barriers to success.

It is at this stage that the MBO process is often fractured. Instead of negotiating, managers simply assign duties to

subordinates. As a result, commitment is not obtained and a matching of authority and responsibility is not realized.

When such is the case, the seeds for unfortunate outcomes are sown.Once objectives are agreed to, implementation commences. Periodically throughout the implementation process,

managers and subordinates meet to assess progress. In these meetings, things that are on target, as well as at those that

are behind schedule, receive attention. If additional resources are needed, or adjustments need to be made, this

becomes an important meeting topic.

Finally, when the implementation process is over, the impact on organizational well-being is assessed. As was the case

with goal setting, the assessment process is rife with misapplication opportunity. A common criticism is that managers

use assessment as a club, disparaging subordinates for aspects of the implementation that went awry.

But this is not a failure of MBO, rather it is a failure of management practice. For if the MBO process is properly

conducted, there are no implementation surprises at the end of the effort. Rather, all issues, good and bad, have been

discussed at one of the regular progress meetings and appropriate actions taken.

MBO today

So, what happened to MBO?Nothing. It is still the best way to insure that a strategic plan is implemented in a manner that provides the greatest

opportunity for success.

To be sure, the term MBO is no longer bandied about the workplace. But in well-run organizations, there is a process

in place that insures that corporate goals are communicated throughout the organization, enthusiasm for the plan is

generated, and implementation success is realized.

Whatever it is currently being called, MBO by any other name is still MBO.

BODY:Management by Objectives; a system that seeks to align employees' goals with the goals of the organization. This

ensures that everyone is clear about what they should be doing, and how that is beneficial to the whole organization.

It's quite easy to see why this type of managing makes sensewhen the parts work in unison the whole workssmoothly too. And by focusing on what you're trying to achieve, you can quickly discriminate between tasks that must

be completed, and those that are just a waste of valuable time.

MBO emphasises the importance of objectives as a tool to be used by managers in fulfilling their managerial roles (accomplish their tasks), it

clarifies and quantifies objectives to allow for monitoring, evaluation, and feedback throughout the hierarchy of

objectives.

Managers must negotiate the support needed to achieve the targets with subordinates.

Slide 18 picture mbo framework concept

= T o p m a n a g e m e n t t e a m s t u d i e s system.

Slide picture 21

Demings model also addressed the environment and context - in a manner. Essentially it created a team environment

(Quality Circles) at the mid-management level and below, to protect and nurture the (goal) effort. This also allowed

upper management to support without participating and yet avoid the de-motivating impact of not-walking the talk or

modeling the desired group behavior that harpooned the MBO model. Demings model provided two vehicles foraddressing the complexity of work.

1. A singular or galvanizing focus of pursuing goals through achieving zero defects.

2. A structure for creating and following a series of best practices or task lists to ensure the optimal achievement

(highest quality) of each objective

If you represented the two models discussed as various perspectives on what will most influence the success of

achieving a goal of baking a cake, it might look like this:

1. The MBO model would emphasize setting a goal of baking a cake with as much specificity as possible as to the

nature of the cake, and the timing and metrics relative to setting up the kitchen and the desired conducting cake bakingactivities.

2. The Quality model would add to that perspective by clarifying that you are never going to bake a cake unless you

ensure that your equipment is functioning correctly, there are no bugs in the flour, the milk is of good quality, etc,


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otherwise all the goal setting and action planning will be severely compromised. Furthermore, you are not going to

turn cake baking into an efficient production without measuring and optimizing each step and process involved.

Figure information

Single-use Plans are developed to achieve objectives that are not likely to be repeated in the future. Single-

use plans include both programs and projects.

Standing Plans

are used to provide guidance for tasks performed repeatedly within the organization. The primary standing plans areorganizational policies, rules, and procedures.

Operational Plans

are used to identifies specific results to be accomplished within a given shortterm time period. Contain detailed

information used in the lower levels in an organization.

Where to use MBO:

=Is appropriate for knowledge base enterprise when ur staff is competent, it is appropriate in situations where u wish

to build employees mngmt and leadership skills and tap there creativity, tacit knowledge and initiative. Mbo is usedby ceos of multinational companies (MNCs) for their country mngrs abroad.

= Is appropriate for conducive organizational envoirnment of transperancy, accountability, responsiveness, and good

governance.

Using MBO:

Peter Drucker outlined the five-step process for MBO shown in figure 1, below. Each stage has particular challenges

that need to be addressed for the whole system to work effectively.

1. Set or Review Organizational ObjectivesMBO starts with clearly defined strategic organizational objectives. If the organization isn't clear where it's going, no

one working there will be either.

Why does the organisation exist? What business are we in? What should be our business?

=Top managers has to determine what he or she perceives to be the purpose or mission and the more important goals of the enterprise for a

given period ahead.=Companies strengths and weaknesses should be taken into account in the light of available opportunities and threats while setting the goals.

2. Cascading Objectives Down to Employees

To support the mission, the organization needs to set clear goals and objectives, which then need to cascade down

from one organizational level to the next until they reach the everyone.

To make MBO goal and objective setting more effective, Drucker used the SMART acronym to set goals that were

attainable and to which people felt accountable. He said that goals and objectives must be:

Specific Measurable Agreed (relating to the participative management principle) Realistic Time related

Notice the "A" in SMART is "agreed." This is sometimes referred to as "achievable" but, with MBO, agreement about

the goals is a critical element: It's not enough for the goals and objectives to be set at the top and then handed down.


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They must flow, or trickle, down through various stages of agreement. The only goal that is going to be met is one that

is agreed on. How much easier is it to get buy in when the person responsible for achieving the goal had a hand in

developing it?

For each objective, you need to establish clear targets and performance standards. It's by using these that you can

monitor progress throughout the organization. These are also important for communicating results, and for evaluating

the suitability of the goals that have been set.

3. Encourage Participation in Goal SettingEveryone needs to understand how their personal goals fit with the objectives of the organization. This is best done

when goals and objectives at each level are shared and discussed, so that everyone understands "why" things are being

done, and then sets their own goals to align with these.

This increases people's ownership of their objectives. Rather than blindly following orders, managers, supervisors, and

employees in an MBO system know what needs to be done and thus don't need to be ordered around. By pushing

decision-making and responsibility down through the organization, you motivate people to solve the problems they

face intelligently and give them the information they need to adapt flexibly to changing circumstances.

Through a participative process, every person in the organization will set his or her own goals, which support the

overall objectives of the team, which support the objectives of the department, which support the objectives of the

business unit, and which support the objectives of the organization.

In an MBO system, employees are more self-directed than boss-directed. If you expect this type of independentperformance from employees, you have to give them the tools they need.

Once you have established what it is that someone is accountable for, you must provide the information and resources

needed to achieve results. You must also create a mechanism for monitoring progress towards the goals agreed.

4. Monitor Progress

Because the goals and objectives are SMART, they are measurable. They don't measure themselves though, so you

have to create a monitoring system that signals when things are off track. This monitoring system has to be timely

enough so that issues can be dealt with before they threaten goal achievement. With the cascade effect, no goal is set

in isolation, so not meeting targets in one area will affect targets everywhere.

On the other hand, it is essential that you ensure that the goals are not driving adverse behavior because they have not

been designed correctly. For instance, a call centre goal of finishing all calls within seven minutes might be useful in

encouraging the staff to handle each call briskly, and not spend unnecessary time chatting. However, it might be thatcustomers' calls were becoming more complex, perhaps because of a faulty new product, and call centre operators

were terminating the call after 6 minutes 59 seconds in order to meet their target, leaving customers to call back,

frustrated. In this situation, the monitoring process should pick up the shift in the goal environment and change the

goal appropriately.

Set up a specific plan for monitoring goal performance (once a year, combined with a performance review is not

sufficient!) Badly-implemented MBO tends to stress the goal setting without the goal monitoring. Here is where you

take control of performance and demand accountability.

Think about all the goals you have set and didn't achieve. Having good intentions isn't enough, you need a clear path

marked by accountability checkpoints. Each goal should have mini-goals and a method for keeping on top of each 1.

5. Evaluate and Reward Performance (modern: evaluate control & reward)

MBO is designed to improve performance at all levels of the organization. To ensure this happens, you need to put a

comprehensive evaluation system in place.

As goals have been defined in a specific, measurable and time-based way, the evaluation aspect of MBO is relatively

straightforward. Employees are evaluated on their performance with respect to goal achievement (allowing

appropriately for changes in the environment.) All that is left to do is to tie goal achievement to reward, and perhaps

compensation, and provide the appropriate feedback.

Employees should be given feedback on their own goals as well as the organization's goals. Make sure you remember

the participative principle: When you present organization-wide results you have another opportunity to link

individual groups' performances to corporate performance. Ultimately this is what MBO is all about and why, when

done right, it can spur organization-wide performance and productivity.

When you reward goal achievers you send a clear message to everyone that goal attainment is valued and that the

MBO process is not just an exercise but an essential aspect of performance appraisal. The importance of fair and

accurate assessment of performance highlights why setting measurable goals and clear performance indicators areessential to the MBO system.

Simply stated, control involves the measurement and, if necessary, the correction of performance. Based on an

analysis of performance and deviations, positive steps can be taken to correct deviations and to prevent them from

occurring in the future.


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It is important to re-emphasize that the appraisal orientation is based on the MBO philosophy, which has several

important characteristics. First, it focuses on performance, not on personality. Second, self-control rather than control

by the boss is the underlying theme. Third, responsibility for evaluation and development rests primarily with the

subordinate, not the superior. Fourth, appraisal is an opportunity to learn from the past, but to focus on the future.

Therefore, during the appraisal meeting, a great amount of time is spent to set new objectives. Fifth, emphasis is

shifted from the appraisal of the subordinate to a shared, rational analysis of performance by the superior andthe

subordinate. The meeting is positive, constructive, and oriented toward the future

Repeat the Cycle

Having gone through this five-stage process, the cycle begins again, with a review of the strategic, corporate goals inthe light of performance and environmental monitoring.

When you reward goal achievers you send a clear message to everyone that goal attainment is valued and that the

MBO process is not just an exercise but an essential aspect of performance appraisal. The importance of fair and

accurate assessment of performance highlights why setting measurable goals and clear performance indicators are

essential to the MBO system.

What Leaders and Managers Should DoAs leaders and managers wander around, at least three things should be going on:

They should be listening to what people are saying.

They should be using the opportunity to transmit the company's values face to face.

They should be prepared and able to give people on-the-spot help.

The test of SMART Objectives

Is it specific? Does it clearly talk about one thing, and both the staff member and the supervisor know exactly whatoutput they are talking about?

Is it measurable? Can the output be quantified?Is it appropriate? Does the staff member have the power to accomplish the task? Will it work?

realistic?Based upon experience & data, can output be achieved in the allotted time with a given amount of resources?

Is it time-bound? Is a specific, reasonable amount of time specified to accomplish each objective?

CRITICAL ANALYSIS:Attainment of goals can lead to the satisfaction ofMaslows higher order needs.Can encourage short-term rather a more focused long-term growth (reference figure)

Objectives may go out of date and can restrict staff initiative and creativity

Setting targets for certain specialised employees need to be calculated.

MBO could be suitable for a medium to large business, using a democratic approach to management and operating in

a stable market.Overriding issues therefore r size of business, the leadership style it uses and the rate of change in the market it oprates

Features and advantagesMBO approach can supply the manager with greater measures of three of the tools he or she needs to make the best

use of the organizations greatest resource: people. The manager can: 1. Gain greater commitment and desire to contribute from subordinates by (a) allowing them to feel that the objectives

they are working toward were not just handed to them but are really theirs because they played a part in formulating

them, (b) giving subordinates a better sense of where they fit in the organization by making clear how the

subordinates objectives fit into the overall picture, and (c) injecting a vitality into organizational life that comes withthe energy produced as a worker strives to achieve a goal to which he or she has taken the psychological and

(sometimes economic) risk to commit.

2. Gain better control and coordination toward goal accomplishment by (a) having a clearer picture of who is doing

what and how the parts all fit together, (b) having subordinates who are more likely to control and coordinate their

own activities because they know what will help and what will hinder their goal achievement, and (c) being able to see

which subordinates consistently produce and which do not.

3. Gain an increased ability to help subordinates develop by (a) being better able to see their strengths and weakness in

operation on a specific objective and (b) using a management approach that teaches the subordinates (and the

manager, for that matter) to think in terms of results in the futurean approach that teaches them to try to anticipatechange, to define clear and specific objectives, and to delineate concrete measurements that will tell them when they

have achieved their goals.

The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles

and responsibilities expected of them. They can then understand how their activities relate to the achievement of the

organization's goal. MBO also places importance on fulfilling the personal goals of each employee. Some of the

important features and advantages of MBO are:1.= clarify organizations goals and plans at all levels.

=G a i n b e t t e r m o t i v a t i o n a n d participation from organizations members.


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1. MotivationInvolving employees in the whole process of goal setting and increasing employee empowerment. Thisincreases employee job satisfaction and commitment. 2. Better communication and CoordinationFrequent reviewsand interactions between superiors and subordinates help to maintain harmonious relationships within the organization

and also to solve many problems.

3 Clarity of goals

4. Subordinates tend to have a higher commitment to objectives they set forthemselves than those imposed on them by

another person.

5. Managers can ensure that objectives of the subordinates are linked to theorganization's objectives.

LimitationsThere are several limitations to the assumptive base underlying the impact of managing by objectives, including:

=May demotivate staff if targets are too high and unrealistic, also if imposed rather than agreed. Requires the cooperation of

all employees to succeed. =It wont work in rigid, authoritarian organizations.

1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.

2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes

everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an

example of the influence of management buy-in as a contextual influencer, in a1991 comprehensive review of thirty

years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that

companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity.

Companies with CEOs who showed low commitment only saw a 6% gain in productivity.

3. The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as

it was before, 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 upon. Employees are often involved in this process, which can be

advantageous. A saying around MBO"What gets measured gets done", Why measure performance? Differentpurposes require different measures is perhaps most famous aphorism of performance measurement; therefore, toavoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.

NEW APPROACH TO MBO:Systems Approach to MBO (which, for convenience, we will call SAMBO). This model integrates the well proven

aspects of MBO and adds some new, important dimensions to it.

focus was still primarily on short term, one-year objectives. Unfortunately, this often resulted in undesirable

consequences. For example, individuals, focusing on the one-year cycle, may neglect important decisions necessary

for the long-term health of the organization. This points to the need to integrate long range and strategic plans with

medium and short-range objectives, which require involvement of top management.

Management by Objectives, the widely acclaimed and applied approach to management, has undergone considerable

change over the years. In its early development, MBO was primarily an appraisal tool. Next, it integrated individual

needs with organizational objectives. MBO was then expanded to include long range, strategic planning. But to remain

a viable and effective managerial system, MBO must continue to evolve. New knowledge, where appropriate, must be

merged with MBO. The SAMBO, appears to be the logical next stage in the dynamic growth of MBO.

There are still some who think of MBO as an appraisal tool. But, this is narrow, limited view of MBO, There are also

still some who think MBO approach is the concern only for organizational objectives, Incorrect instead

MBO approach is also the concern for personal development objectives. It recognizes that learning does not stop at the

time a diploma or degree is earned. Learning is a continuing process. Therefore, developmental and growth objectives

are now an important part of the MBO processAnother facet that should be mentioned here is that people in organizations are better educated than ever before.

Consequently, they do not want to accept orders blindly; they demand a part of the action; they want to be involved;

they want more control over their job and their life; and they also want to know where the company is going, so that

they can contribute to the aims of the organization. MBO, which stresses participation, was found to be a means to

satisfy these needs. It was recognized that people want to do a good job and that the needs of the organization and the

individual are not necessarily incongruent, and that they can be integrated. Therefore, both the individual and the

organization can benefit from this approach to management.

The Oxford English Dictionary defines a system as "a set or assemblage of things connected, or interdependent, so as

to form a complex unity; a whole composed of parts in orderly arrangement according to some scheme or plan." At

first, this may seem unclear or insignificant to a manager. But the importance of interdependence becomes evident

when this abstract definition is related to organizational reality.

For example, a manager wants to make a relatively minor change, such as starting the work day one hour earlier. Theeffects on the organization can be dramatic and can result in organizational unrest. Why? It is not only because

employees resist change, but the people in the organizational system are interdependent with other systems such as the

school system (the employee may not be able to take his children to school), and the transportation system (there may


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be no public transportation so early in the morning). It is therefore important to recognize the interdependency of

systems and the fact that a change in one system causes changes in other systems.

is to support and encourage people to manage their own learning in order that theymay maximise their potential, develop their skills, improve their performance and becomethe person they want to be."Eric Parsloe, The Mentoring is a powerful personal development andempowerment tool. It is an effective way of helping people to progress in their careers and is becomingincreasing popular as its potential is realised. It is a partnership between two people (mentor andmentee) normally working in a similar field or sharing similar experiences. It is a helpful relationshipbased upon mutual trust and respect. A mentor is a guide who can help the mentee to find the rightdirection and who can help them to develop solutions to career issues. Mentors rely upon having hadsimilar experiences to gain an empathy with the mentee and an understanding of their issues.Mentoring provides the mentee with an opportunity to think about career options and progress. A

mentor should help the mentee to believe in herself and boost her confidence. A mentor should askquestions and challenge, while providing guidance and encouragement. Mentoring allows the menteeto explore new ideas in confidence. It is a chance to look more closely at yourself, your issues,opportunities and what you want in life. Mentoring is about becoming more self aware, taking

responsibility for your life and directing your life in the direction you decide, rather than leaving it tochance.

Stage 1ExplorationDuring the first stage of the process your role as a mentor is to provide information, when requested by the mentee,

and to ask probing questions to help the mentee make judgements. It is during this stage that you need to use youractive listening skills. Using good questioning techniques and then recapping, paraphrasing and summarising to tryand get to the centre issue being raised. Remember you are there to guide the mentee, not to provide a solution or

impose your point of view.

Stage 2New UnderstandingHaving worked through the first stage, the likelihood is that some new understanding will be reached about the issuebeing discussed. This may be a minor change in viewpoint or a major breakthrough in a persons thinking processes.

Regardless of the size or significance of the breakthrough, your role as the mentor is to reflect back to the

mentee what they have learned. You should then guide the mentee through thinking about the implications of potential

conclusions.

Stage 3ActionIf you have successfully reached a new understanding the next stage is to agree what actions should be taken. Again

this is not about you as the mentor telling the mentee what to do. You need to guide the mentee towards identifying

actions they can implement.

Benefits to the mentoree increased skills and knowledge increased potential for career mobility and promotion improved understanding of their roles in organisation insights into culture and unwritten rules of the organisation a supportive environment in which successes and failures can be evaluated a smoother transition through management levels a powerful learning tool to acquire competencies andprofessional experience potential for increased visibility networking opportunities development of professional skills and self-confidence recognition and satisfaction empowerment

Benefits to the mentor opportunities to test new ideas enhanced knowledge of other areas of the agency renewed enthusiasm for their

role as an experienced employee challenging discussions with people who have fresh perspectives satisfaction fromcontributing to the mentorees development opportunities to reflect upon and articulate their role improved abilityto share experience and knowledge

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