Introduction to Management

Chapter Summary

Objectives are the important ends towards which organizational and individual activities are directed. Clear and verifiable objectives facilitate the effective and efficient management of organizations. Management by Objectives (MBO) is an effective planning tool that helps supervisors set objectives. MBO has come a long way since it was first suggested by Peter Drucker as a way of promoting managerial self-control. It has been used to appraise performance, to motivate individuals, and recently, for strategic planning.

MBO aims at achieving organizational objectives and enhancing employee commitment and participation. MBO is a cyclical process. It involves developing overall organizational goals, clarifying organizational roles, establishing specific goals for various departments and individuals, formulating action plans for various departments and individuals, implementing and maintaining self-control, carrying out periodic reviews, and conducting performance appraisal of employees.

MBO offers several benefits. It leads to better management of resources, clarity in organizational action and more satisfied personnel. It encourages personal commitment, provides a basis for organizational change and leads to the development of effective controls. However, MBO has its drawbacks. It takes up too much time and money and can be inflexible. Moreover, failure to teach the MBO philosophy and lack of proper guidance to goal-setters may lead to its unsuccessful implementation. In order to overcome these limitations and make MBO effective, the support of the top-level managers is essential. They must formulate clear objectives, encourage participation at all levels, and provide training to people who would be implementing the MBO program.

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