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MBO Process (Management by Objective)

Principle of Management Module Code: MGT-101 Semester: 5th Group: E-2 Batch: 18th Submission Date: 25th September 2014

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MBO Process (Management by Objective)

  1. 1. Welcome
  2. 2. Principle of Management Module Code: MGT-101 Semester: 5th Group: E-2 Batch: 18th Submission Date: 25th September 2014 Submitted to Mahfuzul Islam Mahfuj Lecturer Faculty of Apparel Manufacturing Management & Technology, Shanto-Mariam University of Creative Technology, Dhaka. Submitted by Sl.No. Name ID 1 Md. Hasanuzzaman (Group Leader) 121011403 2 Md. Rakibul Hasan Shorif 121011421 3 Md. Mizanur Rahman 121011423 4 Al-Mamun Mia 121011424
  3. 3. Presentation Title Management By Objective (MBO Process)
  4. 4. Agenda Introduction Definition Objectives MBO principles Smart goal The MBO process tools Advantage Disadvantage Problem & Limitation Obsolete Conclusion
  5. 5. Introduction  Popular Technique of Appraisal of managerial performance.  Introduced by Peter Druker’s book, “THE PRACTICE OF MANAGEMENT”, Published in 1954.  Usually been design and used with the business & Industries.  It is the most widely accepted philosophy of management today. It is a demanding and rewarding style of management.  A process whereby superiors & subordinates jointly identify the common objectives to make best of organizational resources.
  7. 7. DEFINITION OF MBO  Management Model based on Objectives that are agreed on between Management and Employees  The aim is to reach overall Strategic Goals for the Organization but also Individual Goals for the Employees  This Model integrates Employees in the planning process what leads to Participation, Motivation and Commitment
  8. 8. DEFINITION OF MBO  Employees measure their dailyWork on their individual goals and act in best interest of the company  Sum of all individual goals forms the overall goal of the company
  9. 9. Objectives To Measure and judge performance. To relate individual performance to organizational goals To clarify both the job to be done and the expectations of accomplishment. To foster the increasing competence & growth of the subordinates. To enhance communication between superior & subordinates. To serve as a basis for judgment about salary & Promotion. To stimulate the subordinate‘s motivation. To serve as a device for organizational control & Integration.
  10. 10. Balance Between Management Employee Empowerment The balance between management and employee empowerment has to be struck, not by thinkers, but by practicing managers. Turning their aims into successful actions, forces managers to master four basic operations:  setting objectives,  organizing the group,  motivating and communicating,  measuring performance, and developing people, including yourself.
  11. 11. MBO Principles Setting Goals Together Periodically Evaluation Support from Superior Focus on Goals, not on Methodologies MBO PRINCIPLES
  12. 12. How to Establish g o a l S ?
  13. 13. How to be a smart? Specific Measurable Achievable Relevant Time-based
  14. 14. SMART G O A L STEP-1 Get SPECIFIC and clear about what you want to achieve! I want to be rich
  15. 15. SMART G O A L STEP-2 Make your goal MEASURABLE-quantify what you want ! I want to have One Billion Dollars
  16. 16. SMART G O A L STEP-3 Make your goal ACHIEVABLE within your resources! I work hard as hell
  17. 17. Make your goal RELEVANT–Is it worthwhile? SMART G O A L STEP-4 I want to keep her happy
  18. 18. SMART G O A L STEP-5 Your goal needs to be TIMED-Set a start and a finish date! One year till the first million
  19. 19. SMART G O A L Finally Work Specific Measurable Achievable Have S U C E S S Relevant Time-based
  20. 20. Central Goal Setting The MBO’s Process Individual Goal Setting Progress Monitored Performance appraisal The MBO’s Process Next MBO Operating period Achievers Rewarded
  21. 21. CENTRAL GOAL SETTING Routine Objectives Problem-Solving Objectives Improvement Objectives Innovation Objectives
  22. 22. INDIVIDUAL GOAL SETTING Development of Individual Goals Revision of Job Description Resource Allocation
  23. 23. PROGRESS MONITORED - Objectives and key results - Long and short term priorities - Scope of assistance expected - Standards of performance
  24. 24. PROPERFORMANCE APPRAISAL Self Evaluation 360-Degree Evaluation Checklist Evaluation Critical Incidents Method
  25. 25. Non-Financial Motivators Financial Motivators  Salaries  Commission  Share Ownership  Performance Pay  Job Enlargement  Job Rotation  Job Enrichment  Empowerment ACHIEVERS REWARDED
  26. 26. TOOLS
  27. 27. KEY PERFORMANCE INDICATORS Organizational Goals = Organizational KPI (e.g. number of complaints in the end of the week) Individual Goal = Individual KPI (e.g. weekly % difference in complaints handled that result in satisfied customers vs. unsatisfied customers)
  28. 28. 8 Key Result Areas Where Managers Must Pursue Clear Objectives Marketing Innovation Human organization Financial resources Physical resources productivity Social responsibility Profit requirement
  29. 29. ADVANTAGES OF MBO • Improves employee motivation • Improves communication in the organization • Flags up and highlights training needs required to achieve objectives • Improves overall performance and efficiency
  30. 30. DISADVANTAGES OF MBO  Requires the cooperation of all employees to succeed  Can be bureaucratic and time consuming (meetings, feedback)  Can encourage short-term rather a more focused long-term growth  Setting targets for certain specialized employees may be difficult
  31. 31. PROBLEMS AND LIMITATIONS OF MBO Difficulty of setting goals Failure to teach MBO philosophy Problems in objective setting Emphasis on short-term objectives Inflexibility Frustration
  32. 32. Is MBO OBSOLETE?
  33. 33.  High Volatility in Markets and Trends YES! BUT WHY?  Conservative Individual Goals  Having productivity measured is hard  Non Collaborative Goals = Inefficiency
  34. 34. Conclusion • MBO is used for different purposes. Some organizations use MBO to clarify the employee’s job , others use it to motivate employees while still other organizations apply MBO as a performance control mechanism to check performance. In this way MBO process is directly related to all the major functions of management. Thus, MBO is a result-oriented and rational philosophy. It permits management by results in place of management by crisis. Many organizations both in the private sector and the public sector have benefited a lot through the application of MBO.