MANAGEMENT BY OBJECTIVE

Ø  MANAGEMENT BY OBJECTIVE
PRINCIPLE OF MANAGEMENT/BUSINESS ORGANIZATION AND MGMT
MANAGEMENT BY OBJECTIVE

PRINCIPLE OF MANAGEMENT/BUSINESS ORGANIZATION AND MGMT
MANAGEMENT BY OBJECTIVE

◦     ALSO KNOWN AS MGMT BY RESULT WAS FIRST POPULARIZED BY PETER DRUCKER IN 1954 IN BOOK” THE PRACTICE OF MANAGEMENT”

◦     IS A MANAGEMENT MODEL THAT AIMS TO IMPROVE THE PERFORMANCE OF AN ORGANIZATION BY CLEARLY DEFINING THE OBJECTIVES THAT ARE AGREED TO BY BOTH MANAGEMENT AND EMPLOYEES

◦     GEORGE S ORDIIORUE,” THE SYSTEM OF MANAGEMENT OBJECTIVE CAN BE DESCRIBED AS A PROCESS WHEREBY THE SUPERIOR AND SUBORDINATE MANAGERS OF AN ORGANIZATION JOINTLY IDENTIFY ITS COMMON GOALS,DEFINE EACH INDIVIDUAL’S MAJOR AREAS OF RESPONSIBILITY IN TERMS OF RESULTS EXPECTED OF HIM AND USE THESE MEASURES AS GUIDES FOR OPERATING THE UNIT AND ASSESSING THE CONTRIBUTION OF EACH OF ITS MEMBERS.

v      FEATURES

1.     IS NOT MERELY A TECHNIQUE BUT A PHILOSOPHY OF MGMT

2.     VARIOUS OBJECTIVES OF THE ORGANIZATION AND OF INDIVIDUALLY ARE COLLECTIVELY DECIDED BY SUPERIORS AND SUBORDINATES

3.     THE CORPORATE,DEPARTMENTAL AND INDIVIDUAL OBJECTIVES ARE USED TO MEASURE THE PERFORMANCE

4.     REGULAR REVIEW OF PERFORMANCE

5.     DEGREE OF DELEGATION OF AUTHORITY,FIXATION OF RESPONSIBILITY,ALLOCATION OF RESOURCES ETC. ALSO BECOME A BASIS FOR REWARD AND PUNISHMENT IN THE ORGANIZATION

◦     MANAGEMENT BY OBJECTIVE-RESULT MGMT

◦     RESULT MGMT IS A SYSTEM IN WHICH EACH EMPLOYEE IS DETERMINING PERSONAL OBJECTIVES AS WELL AS THE MEANS THROUGH WHICH THESE ARE TO BE ACHIEVED.

◦     COMPONENT OF RESULT MGMT:-

A.    SUPERIOR AND SUBORDINATE TO GATHER ESTABLISH THE OBJECTIVES IN KEY AREA

B.    ACTION PLAN AND THEIR SEQUENCE IS DECIDED

C.    COMPARING OF ACTUAL WITH THE BUDGETED OBJECTIVE

◦     PROCESS OF MBO

1.     SETTING OF OBJECTIVE AT THE TOP: GOALS ARE SET AT THE TOP LEVEL BY TAKING INTO ACCOUNT THE VISION AND MISSION OF THE ORGANIZATION. AND THEN THESE ARE MODIFIED BY DISCUSSION WITH THE SUBORDINATES

2.     CLARIFYING ORGANIZATIONAL ROLES:-CLEAR CUT ASSIGNMENT OF TASK AND FIXATION OF RESPONSIBILITIES

3.     SETTING SUBORDINATE OBJECTIVE: THE SUBORDINATE MANAGER SHOULD BE INFORMED OF GENERAL OBJECTIVES,PLANNING PREMISES AND STRATEGIES AND BY DISCUSSION WITH THE SUBORDINATES GOALS ARE FIXED,RESOURCES ARE DECIDED.

4.     RECYCLING OF OBJECTIVES:-DENOTES A JOINT AND INTERACTIVE PROCESS. CAN NOT BE SET IN ISOLATION. LIKE THE OBJECTIVE OF MARKETING DEPARTMENT SHOULD MATCH WITH THOSE OF MANUFACTURING,FINANCE DEPARTMENT ETC

5.     EVALUATION

6.     GIVE REWARD

◦     BENEFITS

1.     MOTIVATION: BY INVOLVING EMPLOYEE IN THE WHOLE PROCESS OF GOAL SETTING . IT WILL INCREASE JOB SATISFACTION AND COMMITMENT

2.     BETTER MANAGING:-RESULTS IN IMPROVING AND BETTER MGMT

3.     BETTER COMMUNICATION AND COORDINATION: IMPROVE THE RELATION BETWEEN SUPERIOR AND SUBORDINATES

4.     CLARITY OF GOALS

5.     ENCOURAGING MORE COMMITMENT ON THE PART OD SUBORDINATES

6.     MANAGERS CAN ENSURE THAT OBJECTIVES OF THE SUBORDINATES ARE LINKED TO THE ORGANIZATION’S OBJECTIVE

7.     COMMON GOALS FOR WHOLE ORGANIZATION

8.     BETTER CONTROL

v      LIMITATION

A.    FAILURE TO TEACH THE PHILOSOPHY: SUCCESS DEPEND ON THE UNDERSTANDING OF THE MANAGERS BUT WHEN MANAGERS DO NOT WANT TO UNDERSTAND THEN IT IS NO USE

B.    IF THE GOAL SETTER ARE NOT GIVEN PROPER GUIDELINES IT WILL BE FAILURE

C.    DIFFICULTY IN SETTING GOALS

D.    EMPHASIS ON SHORT TERM GOALS

E.     DANGER OF INFLEXIBILITY

v      PREREQUISITE FOR INSTALLING MBO

1.     DEFINING PURPOSE

2.     SUPPORT FROM TOP MGMT

3.     TRAINING FOR MBO

4.     PARTICIPATION

5.     FEED BACK