Management by Objective

(M.B.O)
 Nature of objective.
• Hierarchy of objective.
• Process of formulating Objective and
the Organizational Hierarchy.
• Network of objective.
• Multiplicity of objjective.
Level of Organizational Hierarchy
Board of directors and top level
managers.
Types of objective
Vision
Mission
Overall objective of the firm.
Objectives in the key result
•Productivity
•Physical and financial resource.
•Profitability and market standing.
•Innovation.
•Managerial performance and
development, worker performance
and attitude.
•Social responsibility.
•Quality and service issues.
 Divisional objective
Middle level manager.
Departmental objectives.

Department and unit objective.

Lower level manager. Objective for subordinate.

•Performance goal.
•Development goals.
• This concept was first introduce by Mr.
Peter Drucker in the 1950.
• Definition :- Odeiorne stated the concept
as
“ A process whereby the superior and the
subordinate managers of an enterprise
jointly identify its common goals, define
each individual’s major areas of
responsibility in terms of the result
expected of him, and use the measures as
guides for operating the unit and
• Heinz Weihrich and Harold Koontz
define M.B.O as “ A comprehensive
managerial system that integrates
many key managerial activities in a
systematic manner and that is
consciously directed toward the
effective and efficient achievement
of organizational and individual
objective.
The M.B.O Process has many steps:-
Develop overall organizational goal.

Establish specific goals for various departments, subunits

and individual.

Formulate action plans identifying the problem areas.

Implement and maintain self-control.

Conduct periodic review of the plans.

Appraise performance of the subordinates.

Benefits of M.B.O:-

• Better managing
• Clarity in Organizational action
• Personal satisfaction
• Basic for organizational change.
• Encouragement of personal
commitment.
• Development of effective control.
Limitations of M.B.O:-

• Failure to teach M.B.O Philosophy.

• Failures to give guideline to goal
setters.
• Difficulty in goal setting.
• Emphasis on short-term goal.
• Inflexibility.
Making M.B.O effective:-

• Top management support.

• Training for M.B.O.
• Formulating clear goal.
• Effective feedback.
• Encouraging participation.