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Management by Objectives

Management by Objectives (MBO) is a collaborative method where managers and employees set, monitor, and evaluate specific goals, with rewards based on performance outcomes. Successful implementation requires clear, measurable goals and regular communication, while potential failures can stem from lack of management support, unclear objectives, and insufficient employee involvement. Additionally, 360-degree feedback and continuous performance feedback are emphasized as effective appraisal methods to enhance employee performance and organizational productivity.

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12 views4 pages

Management by Objectives

Management by Objectives (MBO) is a collaborative method where managers and employees set, monitor, and evaluate specific goals, with rewards based on performance outcomes. Successful implementation requires clear, measurable goals and regular communication, while potential failures can stem from lack of management support, unclear objectives, and insufficient employee involvement. Additionally, 360-degree feedback and continuous performance feedback are emphasized as effective appraisal methods to enhance employee performance and organizational productivity.

Uploaded by

nduatijoyce56
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Management by objectives.

(MBO): This method is where the both managers


and employee together identify, plan, organize and communicate the objectives
to work on during a certain period of the appraisal. After identifying the
objectives and set clear goals, both the managers and employees meet regularly
to discuss the progress. During this meeting they will try to see if the objectives
are specific, achievable, measurable and realistic. After the end of this period the
employees will be judged by their results and rewarded by increase in salary or
promotion for success and transfers or further training by failures.
How to implement a successful MBO program.

 Goals should be expressed in specific, measurable terms.


 Every goal should have a clear description and plan to accomplish it.
 To determine how progress should be measured and how often.
 Agree on the correction actions to be taken if the progress is not positive.
 Each goal at every level should be related to the objectives of the organization.

Reason why the MBO can fail.

 Lack of Involvement of Top Management: Without strong leadership support and


commitment from top management, MBO efforts may lack the direction and resources they
need to succeed.

 Unclear MBO Programs: When MBO programs are vague or poorly defined, it becomes
difficult for employees to understand what is expected of them, leading to ineffective goal-
setting.

 Inadequate Corporate Objectives: If corporate objectives are not aligned with the
overall strategy, they may lack relevance or focus, causing confusion and misalignment in the
organization.

 Overemphasis on Quantifiable Goals: MBO programs often focus heavily on


measurable goals, overlooking qualitative aspects like creativity, innovation, and employee
morale, which can be equally important.

 Lack of Employee Involvement: Employees may feel disengaged or resistant to MBO if


they are not adequately involved in the goal-setting process. Their lack of ownership can lead
to poor performance and motivation.

 Inflexibility: MBO can sometimes become rigid, making it difficult to adapt to changing
business environments or unforeseen circumstances. This inflexibility can lead to missed
opportunities or inefficient resource use.

 Inadequate Feedback and Communication: Regular feedback and communication are


essential for the success of MBO. If there is a lack of consistent monitoring, feedback, or
dialogue between managers and employees, progress can stall, and adjustments may not be
made in time.
 Short-Term Focus: MBO programs that prioritize short-term objectives over long-term
goals can lead to decisions that undermine the overall success of the organization, such as
cutting costs at the expense of quality or innovation.

 Misalignment Between Personal and Organizational Goals: If employees’ personal


goals are not aligned with the organization’s objectives, it can create friction, lack of
motivation, or even conflict, reducing the overall effectiveness of MBO.

 Time-Consuming Process: Implementing and managing MBO can be time-consuming,


especially in large organizations. The time and effort required to set goals, monitor progress,
and review outcomes can drain resources and divert attention from other critical tasks.

 Focus on Individual Performance over Teamwork: MBO programs that emphasize


individual goals may inadvertently discourage collaboration and teamwork, as employees
focus more on achieving their personal targets rather than working collectively towards
shared goals.

360-Degree Feedback
This is a multidimensional appraisal performance method that evaluate an
employee using the feedback collected from the employee contacts in line of
duty. This method consists of these five integral parts
 Self-appraisal: Through self-appraisal the employees get a chance to
identify their weakness and strength.
 Peer reviews: It helps to determine the ability of employees to work well
with a team among them when the hierarchy is removed from the picture
 Managerial reviews: These are reviews done by the managers. It includes
the individual ratings awarded by the supervisors.
 Customer or client reviews- It includes the both internal and external
clients who interact with the specific employee regularly. Their reviews
can evaluate the performance of an employee better.
 Subordinates Appraisal Manager (SAM): This is the upward appraisal
component of the 360-degree feedback
Advantages and disadvantages of Staff Performance Appraisal System (SPAS) Advantages

 Performance improvement: It helps to improve the performance of the


employee as it analyses and evaluates opportunity factors.
 Corrective actions: Through the appraisal system deficiency of
employees can be detected and corrected.
 Development of employees: The appraisal system determines which
employees need more training and gives the strength and weakness of an
employee
 Promotions: It helps the management to make promotions, rewards and transfers.
 Motivational
 Career planning.
Disadvantages
 Contrast error: This error occurs when the rating is done without taking
account the performance standard, like comparing the performance of
employee with the past performance.
 Ratter bias: This can happen when the ratter is bias in terms of race, sex,
appearance, religion and favourism.
 Central tendency error: This is when all the employees are rated within a
narrow range, assuming that all employees are of average level.
 Leniency
 Sampling error: If small sample of work is used to rate.
Continuous performance feedback

It refers to frequent communication about the employees on their performance as


opposed to a once a year event like the appraisal.
Merits of maintaining continuous performance feedback

 It helps nature the friendly relationship in an organization


 The productivity of the organization is enhanced
 Projects take less time to be completed
 Continuous performance feedback increases the efficiency of the
employees and the job is done very well.
 It keeps the employees in high morale by which they remain loyal to
work and institution.
Evaluation of performance appraisal

 Summative evaluation (end of year): Summative evaluation is the


assessment which is done at the end of the year
 Periodical: This is the employee report card from the manager
acknowledging the work done in specific time and the scope for
improvement.
 End of project
Correction/performance interventions

The five ways to manage under performers are as follows.


 Identifying and agree the problem Analyze the feedback and obtain
agreement from the staff and the feedback should be provided by
managers.
 Should establish reasons for the shortfall- The manager should not crudely
blame the staff rather both manager and staff jointly to identify the facts
that contributes to the problem.
 Should Decide and agree on actioned required, The staff can take steps to
change behaviour and improve skills
 Should provide training, coaching and guidance required to enable agreed
actions to take place
 Managers and staff should monitor performance to ensure timely
feedback is provided and agreed on any further actions that are necessary.

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