Management by Objectives or MBO is a widely embraced management concept that aims at articulating the company's goals into clear and measurable targets and breaking such targets into specific objectives for each individual in the company. Though MBO was initially a tool to facilitate performance appraisals of employees, its scope has now extended much beyond performance appraisals. MBO is now widely used as a tool for strategic planning and exercise managerial control over the work of employees in an enterprise.
What is Performance Management?
Performance appraisal is the systematic, periodic and an impartial rating of an employee's excellence in the matters pertaining to his present job and his potential for a better job.
[...] By continually checking progress along the path of accomplishment at regular intervals, teams and people can easily get back on the right road when they see they have wandered. The monitoring of performance and progress on a continuous basis not only helps in getting things done, but also facilitates frequent reviews and interactions between superiors and subordinates. This helps to maintain harmonious relationships within the enterprise and improves the flow of communications Performance Evaluation and Reviews While monitoring of performance in the MBO system occurs on a real-time and continuous basis, the evaluation and review of performance usually takes place once or twice in a year, or at the end of the time required to fulfill the objectives. [...]
[...] ISBN 0060110953 http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20061120/NEWS/611200 312/1011/BUSINESS, retrieved A Management by Objectives History and Evolution. http://www.managepro.com/mbotopm.html, retrieved on 2009-04-01 Lawson K. Savery, J. Alan Luks, The relationship between empowerment, job satisfaction and reported stress levels: some Australian evidence. ISSN: 0143-7739, http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=8544717E 17A310B360272A66B62E7358?contentType=Article&hdAction=lnkhtml&contentId= retrieved on [vii] http://www.charleswarner.us/mbosales.htm. retrieved on 2009-04-01 [viii] Thomas J. Peters and Robert W. Waterman, Jr. (1982). In Search of Excellence. New York: Harper & Row. p.154. The Goal of Management; from MBO to Deming to Project Management and beyond http://www.managepro.com/mbotopm.html, retrieved on Cannie, J., (1979). [...]
[...] Around five to seven is the ideal number of objectives that would yield optimal results.[vii] Some examples of good objectives are: recruit 20 PHP programmers by 30.04 .2009” increase distribution channels to 30 outlets by 01.05 .2009” conduct a competency mapping exercise, identify areas of improvement and conduct skill enhancement programs to bridge the gap deficiency for all employees by 01.09 .2009” Though the financials need not be included in the objective statement, the major driving force behind the objectives would obviously be greater savings or greater profits for the enterprise. [...]
[...] Companies with CEOs who showed low commitment only saw a gain in productivity.[xv] With businesses now a days trying to cut flab and trying to make optimal utilization of the resources at their disposal, combined with the increased dependence on knowledge workers, the concept of Management by Objectives, that harps on accountability and responsibility suits well to ensue such a scheme of things. The importance of Management by Objectives is thereby likely to increase in the coming years. REFERENCES Flippo, Edwin. [...]
[...] The origin of Management by Objectives (MBO) dates back to the 1930's when Alfred P Sloan introduced such a concept in General Motors. Peter Drucker, the famous management guru, first adopted MBO as a management practice through his book Practice of Management”, published in 1954. Drucker said, "Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business” and “managers should avoid 'the activity trap', of getting so involved in their day to day activities that they forget their main purpose or objective."[iii] Since the time Drucker introduced MBO as a management tool, MBO has steadily grown in popularity to become one of the most successful approaches to management to date. [...]
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