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Management By Objective (MBO) and Its Features

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MBOManagement By Objective (MBO) and its features
Principles of Management (POM)
Third Semester | Second year
BSc.CSIT | Tribhuvan University (TU)

Management By Objective (MBO)
The term “management by objectives” was first popularized by Peter Drucker in his 1954 book ‘The Practice of Management’. Management by objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization. It is a management system in which the objectives of an organization are agreed upon so that management and employees understand a common way forward. “MBO is a program that encompasses specific goals, participatively set for the explicit time period with feedback on goal progress.” – Stephen P Robbins

Management by objectives aims to serve as a basis for:

  • greater efficiency through systematic procedures,
  • greater employee motivation and commitment through participation in the planning process,
  • controlling organizational activities and
  • planning for results instead of planning just for work.

In management by objectives practice:

  • specific objectives are determined jointly by managers and their subordinates,
  • progress toward agreed-upon objectives is periodically reviewed,
  • end results are evaluated and
  • rewards are allocated on the basis of the progress.

The objectives must meet five criteria, they must be:

  • arranged in order of their importance,
  • expressed quantitatively, wherever possible,
  • realistic,
  • consistent with the organization’s policies, and
  • compatible with one another.

Features of Management By Objective (MBO):

  • Collaborative goal setting: The manager and subordinate jointly sets goal and agree on how they will be measured. Goals are specific, measurable and challenging.
  • Specific time period: Each goal has a specific time period in which it is to be completed.
  • Periodic performance evaluation: Periodic performance evaluation is done with the focus on result.
  • Feedback: Feedback is provided to employees for self-control purpose.
  • Rewards are linked to goal achievement
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