MANAGEMENT BY OBJECTIVES (MBO)

  • This method was given or propounded by “Peter Drucker”
  • In this method, he has specified a five step procedure for converting general to specific objectives

Steps:

1.Setting organisational objectives:

there are various long term objectives set up by the organisation which are known as strategic objectives. These objectives are further divided into short term objectives, departmental/divisional objectives and further divided into individual objectives. These individual objectives serve as benchmarks for target achievements.

2.Key results area (kra):

the KRA’s indicate the present state of organisational health and top management perspective for the future.

The examples of KRA can be:

  1. Profitability
  2. Market standing
  3. Innovation
  4. Productivity
  5. Worker’s performance
  6. Physical financial resources
  7. Top management performance
  8. Social responsibility towards society

3.Setting subordinates objectives:

the final objectives are set through mutual negotiation between the superiors and the subordinates.

4.Marketing resources with objectives:

the top management helps the subordinates by allocating the required resources for goal attainment. The resource can be physical or related to manpower.

5.Appraisal:

finally, after the end of the time period, there is a detailed analysis on If’s and Buts’ of goal attainment. Individual employees are appraised for their performance and reasons are identified for those goals which couldn’t be attained within the stipulated time period.

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