MANAGEMENT BY OBJECTIVES | MEANING | STEPS | ADVANTAGES | LIMITATIONS

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Management by objective is the systematic process of setting goals for employees so that they are aware of their responsibilities at work.

It is defined as the system of setting objectives in the organization so as to give a sense of direction to the employees

It is a systematic approach that helps management to focus on attainable goals and achieve the best possible results with the resources available.

It is essentially a process or system in which a manager and his or her subordinates sit down and collectively set objectives that must be accomplished within a specific time frame and for which the subordinate is then directly responsible.

Management by objectives (MBO) defines the roles and responsibilities of employees and guide the future course of the organisation.

Peter Drucker first coined the term "management by objective" in his 1954 book "Practice of Management."

Since then, Management theorists such as George Odiorne and John humble have all contributed to the development of management by objective. 

Management by objectives is sometimes called management by results (MBR), Management by planning.

Steps In Management By Objectives

To put management by objectives into practice, Peter Drucker has given five steps

1. Determine the organisational objectives: Every organization has one or more things that it seeks to achieve.

This is referred to as objectives, and it serves as a roadmap for where the organization wants to go.

2. Translating the organizational objectives to employees objectives: Every employee has to contribute towards achieving the organization goal.

Hence, Managers and employees objectives jointly create objectives that employees should reach within a predetermined time frame. 

This ensures that each member of the organization understands their role in the company and how they may help the company achieve its objectives.

3. Stimulating the participation of employees in the determination of objectives: Here, employees participate in the setting of personal objectives which must consistent with the overall organizational objectives.

In other words, employees are allowed to plan their objectives

In this way, everyone in the organization can make their translation of what their contribution to the organization should be.

4. Monitoring of progress: Objectives may not be attained if they cannot be monitored.

Monitoring of progress means that the performance of each member of the organization should be regularly checked against predetermined objectives.

In management by objectives,  Managers and employees regularly check if employees are reaching their target.

5. Evaluate and reward achievements: Management by objective is designed to serve as a performance appraisal system and means of improving the performance of every member of the organization.

Because the objectives have been stated in advance, evaluating performance is simple. MBO ensures that employees are evaluated and rewarded according to their overall performance.

Advantages Of Management By Objectives

1. Reduces role ambiguity: Because employees are jointly involved in creating objectives, management by objectives helps employees understand what is expected of them.

Confusion of job duties, as well as job mismatches that may arise from ambiguous job roles, are fully addressed by management through objectives.

2. Lead to innovation:  When employees understand what is expected of them, they can contribute to the achievement of the organization's goals in their unique way, thus making for innovation

3. Increases productivity: Management by objectives creates satisfied workers. 

Because satisfied workers are more likely to improve on their performance than those who are not satisfied,  Management by objectives also increases productivity

4. Promotes a positive work environment: Management by objectives improves management and employee communication.

It creates a positive ambience at the workplace.

5. Creates better organization: Management by Objectives results in a well-defined workplace hierarchy. Transparency is ensured at all levels.

6. Required for better controlling: In an organization, management by objectives functions as a control mechanism.

It establishes benchmarks for each employee, and any deviation from these benchmarks is immediately detected by the monitoring process.

7. Increases job satisfaction: Job satisfaction emanates from the feeling of having completed a job to the best of one's ability and receiving public recognition for it.

MBO adds to job satisfaction by providing specified objectives that can be used to evaluate performance, allowing employees to see how well they have performed.

In the absence of an MBO, a person may be unsure of what is expected of him or how his performance would be evaluated.

Furthermore, Management by Objective has a reward system in place for employees who perform well, which is essential for job satisfaction.

8. Highlight areas of improvement: Periodic performance evaluations in MBO can assist workers and management in identifying areas for improvement.

It can assist in identifying underutilized employees as well as managers who are ineffectively managing the organization's resources.

Limitations Of Management By Objectives

Despite its many accolades, management by objectives still has the following flaws:

1. Difficulty in setting goals: As you may be aware, management by objectives requires managers and employees to jointly establish goals that must be achieved.

Setting targets and goals, however, isn't always simple. This is especially true if managers and staff are unable to communicate effectively.

Moreover, setting arbitrary goals by the subordinates may frustrate the use of MBO.

2. Danger of inflexibility: The existence of MBO imposes rigidity on the activities of both managers and employees activities.

Managers and employees must carry out their responsibilities according to objectives, and deviations from these objectives may not be tolerated

This makes employers and managers inflexible to changing business environments.

3. Time-consuming: Management by objectives requires a lot of time to carefully set objectives, across all levels of management.

Indeed, to set objectives, managers must hold numerous meetings with subordinates, which is time-consuming

4. Wrong applications: A lack of adequate knowledge about the philosophy of management by objectives may result in the application of the technique is out of context.

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