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Process and advantages of Management By Objective (MBO)

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process of MBOProcess and advantages of Management By Objective (MBO)
Principles of Management (POM)
Third Semester | Second year
BSc.CSIT | Tribhuvan University (TU)

Process of Management By Objective

  1. Setting organizational Purpose and Objectives: First definition of organizational purpose and objectives are set.
  2. Cascade Objectives Down to Employees: To support the mission, the organization needs to set clear goals and objectives, which then need to cascade down from one organizational level to the next until they reach to everyone. To make MBO goal and objective setting more effective, goals and objectives must be: SMART(Specific, Measurable, Agreed upon, Realistic, Time bound).
  3. Setting subordinates’ objectives: The organizational objectives are achieved through individuals. Therefore, each individual must know in advance what he/she is expected to achieve. Through a participative process, every person in the organization will set his or her own goals, which support the overall objectives of the team, department, and the objectives of the organization. In an MBO system, employees are more self-directed than boss-directed.
  4. Monitor Progress: The goals and objectives are SMART, they are measurable. Managers have to create a monitoring system that signals when things are off track. This monitoring system has to be timely enough so that issues can be dealt with before they threaten goal achievement. Set up a specific plan for monitoring goal performance.
  5. Evaluate and Reward Performance: As goals are SMART, the evaluation aspect of MBO is relatively straightforward. Employees are evaluated on their performance with respect to goal achievement. Fix goal achievement to reward, and perhaps compensation, and provide the appropriate feedback.

Repeat the Cycle: The cycle begins again, with a review of the strategic, corporate goals in the light of performance and environmental monitoring.

Advantages of Management By Objective (MBO)

  • Motivation: It Involves employees in the whole process of goal setting, thus it increase employee empowerment. This increases employee job satisfaction and commitment.  It motivates people by aligning their objectives with the goals of the organization.
  • Better communication and Coordination: Frequent reviews and interactions between superiors and subordinates help to maintain harmonious relationships within the organization and also to solve many problems.
  • Better management: It helps to manage organizational resources and activities in better way. Resources and activities are put in such a way that they result into better performance.
  • Clarity of goals: Collaborative goal setting helps to clarify goals of subordinates.
  • Higher commitment: Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person.
  • Link to organization’s objectives: Managers can ensure that objectives of the subordinates are linked to the organization’s objectives.
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