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Management By Objectives

The key to MOB is that it is a participative process, actively involving managers and staff members at every organizational level. By building on many of the barriers to planning. This approach is also known by other names such as ‘Management by Results’ (MBA), ‘Goal Management’, ‘Planning by Objectives’ (PUB), ‘Results Management’, Joint Target Setting’, ‘Work Planning and Review’. Today, MOB is used not only as a technique of goal setting but also as a total system of planning, titivation, performance appraisal and self-control. 7. 2 What is Management by Objectives (MOB)?

MOB is difficult to define. Organizations use it in different ways and for different reasons. In broad terms, it may be stated that MOB is both a philosophy and an approach of management. It is a process in which superiors and subordinates sit together to identify the common objectives and set the goals which are to be achieved by the subordinates, assess the contribution of each individual and integrate individual objectives with those of the organization so as to make best use f the available resources of the organization. According to George S.

Doreen, “Management by objectives can be described as a process whereby the superior and subordinate managers of

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an organization Jointly identify its common goals, define each individuals major area of responsibility in terms of results and use these measures as guides for operating the unit and assessing the contribution of each of its member. ” In the words of Kenton, O’Donnell and Hierarchic, “MOB is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective and efficient achievement of organizational and individual objectives. Henry Elevations defines, “Management by objectives as a performance appraisal and review which intended to: 0 Measure and Judge performance; 0 Relate individual performance to organizational goals; 0 Foster the increasing competence and growth of the subordinates; 0 Enhance communication between superior and subordinates; 0 Serve as a basis for judgment about promotion and incentives; 0 Stimulate the subordinates’ motivation; 0 Serve as a device for organizational control and integration. The essence of an MOB yester lies in the establishment of common goals by managers and their subordinates acting together.

Each person’s major areas of responsibility are clearly defined in terms of measurable expected results (objectives). These objectives are used by subordinates in planning their work and by both subordinates and their superiors for monitoring progress. Performance appraisals are conducted Jointly on a continuing basis, with provisions for regular periodic reviews. 7. 3 Features of Management by Objectives (MOB) Based on the definitions of MOB, its features can be identified as below: 1. MOB as a Philosophy: MOB is a philosophy of management. It is more than a set of techniques.

It emphasis on what is to achieve, not how to achieve. It suggests how the best use of available resources 88 properly be called a ‘philosophy’ of management because it rests on a concept of human action, behavior, and motivation. Finally, it applies to every manager, whatever his level or function, and to every organization, whether large or small. ” 2. MOB as an Approach: MOB is an approach to management. Approach refers to various tools or techniques used in order to achieve the objectives. MOB introduces overall new techniques of management.

It also enhances the relevance and utility of existing ones. It is thus, a Joint application of a number of principles and techniques. It works as an integrating device. Many principles and techniques of planning and control are used in an organization in the normal situation, but in MOB the focus is more on these techniques. 3. Organizational and Individual Goals Determination: MOB is a participating and interactive process whereby superiors and subordinates Jointly determine common objective for the organization and also define each individual’s areas of work and susceptibility. 4.

MOB Emphasizes Participative Set Objectives that are Tangible, Verifiable, and Measurable: Grittier writes, “The common denominator that has made MOB approach so popular in both management theory and practice is the emphasis on ‘objectives’ that are both measurable and participative set. 5. MOB is a Top-down or the Bottom-up Approach in Results Management: which aims at optimum use of organizational resources. Thus MOB is a systematic and rational technique that allows management to attain maximum results from available resources. It allows the subordinate plenty of room to make creative decisions on his 6.

MOB has Multiple Uses: MOB is a way of promoting managerial self-control and it applies to total management system. It has multiple uses. There are various managerial sub-systems that can be integrated with MOB process; they include performance appraisal, design of organizational structures, management development programmed, organizational change programmed, and budgeting. 7. BOO has Some Relationship with Every Management Technique and It is a Universal Tool: In fact, MOB provided the stimulus for the introduction of new techniques of management and enhances the utility of the existing ones.

MOB is the Joint application of a number of principles and techniques. It works as an integrating device. It is a valuable management tool for profit as well as non-profit organizations. It is a simple, non-technical, operational management approach which can be applied to every type of organizations. 8. MOB as a Performance Appraisal and Review: As a performance appraisal and review, MOB is intended to measure and Judge performance, to relate individual performance to organizational goals and to foster the increasing competence and Roth of the subordinates. 9.

A Comprehensive System Approach: MOB has become a comprehensive system. It considers both economic and human aspects of an organization. It applies to managers and employees in any kind and size of organization at all levels and in all functional areas. Kenton and Hierarchic write, “MOB, to be effective, has to be viewed as comprehensive system. It must be considered as a way of managing, and not an addition to the managerial Job. ” 10. Guidelines for Appropriate System: MOB has a thrust achieved on the objectives. Allocation, delegation of authority etc. 89 re determined on the basis of objectives.

Similarly, reward and punishment system is attached with the achievement of objectives. Finally we can say that the salient features of MOB are – cascading of organizational goals and objectives; specific objectives for each team/group and member; participative decision making process; explicit time period deadlines; and performance evaluation and feedback. Activity A: Discuss the area of objective setting in specific concern to your study plan for final examination. 2. “Is the philosophy of MOB really works? ” Explain with suitable examples. MOB programs can vary enormously.

Some are designed for use in a subunit, while others are used for the organization as a whole. The particular methods and approaches that managers use in an MOB program will differ. There also may be wide differences in emphasis. Therefore the MOB process requires rigorous analysis, clarity and balance of objectives and participation of managers with accountability for results. This process has the following steps: 1 . Setting of Objectives: The first step of MOB process is to establish verifiable objectives for the organization and for arioso positions at various levels.

Without having a clear objective no group or individual can perform effectively or efficiently. One of the major criteria to set clear objectives is the scope of measuring it. Therefore, objectives should be set in such a way that they provide a clear direction to the people who have to contribute and perform for achievement of the same. It is always desirable to have a participatory approach to set objectives. However, management aspirations and expectations should be kept in view while adopting a participatory approach to set objectives. Setting precise, measurable, and well-defined objectives is indeed a difficult task.

It requires an intelligent input from superiors and practice and team effort on the part of subordinates. Objectives should: 0 Be verifiable; 0 Indicate the time frame within which they are to be achieved; 0 Indicate associated cost involved; 0 Indicate quantity and quality aspects of the expected achievements; 0 Help in promoting personal and professional growth and development; 0 Get duly communicated to all who are concerned with it; 0 Align short-term objectives to medium and long-term objectives; and 0 Give due importance to the views of individuals expected to contribute in the achievement of objectives at the time of setting objectives. Revived the basis for the identification of key-result areas. Key-result areas are derived from the expectations of the various stake holders and indicate priorities for organizational performance. They indicate top management perspectives for the future and the present state of health of the organization. These are the areas in reference to which organizational health may be measured or appraised for example: (I) profitability, market standing, (iii) innovation, (iv) productivity, etc. These areas are not the same for every organization.

They differ from organization to organization, depending upon various internal and external environmental factors. 3. Setting of Subordinates Objectives: Organizational objectives are achieved through individuals. Therefore, every individual must know in advance what he is expected to achieve. Objectives for each subordinate should be set in consultation between that subordinate and his or her supervisor. A degree of recycling is required in setting of objectives. This means that a degree of interaction, consultation, and concussion among top level managers, departmental heads, superiors and subordinates is necessary.

In such Joint consultations, subordinates help managers develop realistic objectives since they know best what they are capable of achieving. Managers help subordinates “raise their sights” toward higher objectives by showing willingness to help them overcome obstacles and confidence in subordinates’ abilities. 4. Revision of Organizational Structure: When the goals for each individual are reset under MOB there is a considerable change in the Job description of various positions. This may call for a revision of the existing organization structure.

The organization charts and manuals should be suitably amended to depict the change brought about by the introduction of management by objectives. The Job description of various Jobs must be defined with their objectives, responsibilities, and authorities. They must clearly lay down the relationship with other Job positions in the organization. 5. Matching Objectives and Resources: It should be noted that without a proper balance between the objectives and resources, the achievement of goals will be difficult.

Hence, the superiors must ensure combination of goals with available resources. All managers at various levels require these resources to accomplish their goals. By relating these resources to the goals themselves, superiors can better see the most effective and most economical way of allocating them. 6. Conducting Periodic Progress Reviews: Management by objectives ensures periodic meetings between the superior and the subordinate to review the progress towards the goal attainment.

For this the superior must establish check points or standards of performance for evaluating the progress of the subordinate. The reviews should be held monthly or quarterly. These reviews serve as a built-in feedback mechanism for an MOB system. Since individual or group goals are specifically defined, usually in quantifiable terms, employees can compare their progress at review time against the specified goals. This periodic check-up allows managers and employees to see whether they are on targets or whether some change is necessary.

During the review, managers and employees decide what problems exist and what they can do to resolve them. Done by his immediate superior almost everyday, formal appraisal at periodic interval, usually once or twice a year, does ensure that a thorough evaluation of a manager’s performance is done and his achievements are carefully analyzed against the background of prevailing circumstances and given objectives. The design and format of the performance review form will depend on the nature of the enterprise.

Performance appraisal can serve three purposes: 0 Feedback to employees concerning their actual performance; 0 Provide the basis for identifying more effective Job behavior; 0 Supply information to managers relevant to future Job assignments and to compensation decisions. 8. Feedback: On the basis of overall evaluation, the feedback is provided to higher level of hierarchy. Feedback information helps in taking decisions to make necessary changes in MOB programmer and to shape goals for the next year. The MOB cycle repeats itself on an annual basis. 1 Activity B: Suppose you have a garment store in the main market of your city, draw a MOB programmer with the above steps for diversification. What is ‘Performance Appraisal’? Explain. Management by objectives is a comprehensive management planning and control technique and is bound to affect the entire organization structure, culture. Management by objectives calls for regulating the entire process of managing in terms of meaningful, specific and variable objectives at different levels of managerial hierarchy.

It stimulates meaningful action for better performance and higher accomplishment. It is closely associated with the concept of decentralization. In 1954, Trucker noted that, “The first requirement in managing managers is management by objectives and self-control. ” The main advantages of MOB are described below: 1 . Better Management of Organizational Activities: By applying MOB, organizational sources and activities can be better managed which shows improved results.

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