management by objective (MBO)

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Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. MANAGEMENT BY OBJECTIVE (MBO)

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“avoid the activity trap” An approach and philosophy to management. Works as an integrating device. Objectives. Participation of concerned managers. Periodic review of performance. Provide guidelines for appropriate system and procedure. Focused on a result, not an activity. Negotiating a contract of goals. Features of MBO Concept of MBO

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MBO Principles Cascading of organizational vision, goals and objectives. Specific objectives for each member. Participative decision making. Explicit time period. Performance evaluation and feedback. Where to use MBO ??? Knowledge-based enterprise. To build employees management and self-leadership. MNC’s

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Process of MBO Setting of organizational Purpose & objective Key Result Areas Setting subordinate objectives Matching Resources With Objectives Appraisal

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MBO in action.. INTEL A Manager's Guide at Intel provides the following directions- Start with a few well-chosen over riding objectives. Set your subordinates objectives that fit in with your overriding objectives. Allow your subordinates to set their own key results to enable them to meet their objectives. MADURA COATS LIMITED Financial resources. Profitability. Development of organization. Management development. Labour relations. Diversification, and Cotton

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Balance between Management and Employee Empowerment Setting objectives. Organizing the group. Motivating and communicating. Measuring performance, and Developing people, including yourself. Individual Responsibility To create a link between top level and lower level. Responsibility for objectives. Important for knowledge based organizations. Today’s workers are self-managers.

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Benefits of MBO Better Managing. Clarity in Organizational action. Personnel Satisfaction. Basis for Organizational change. Focus. Limitations of MBO Time and cost. Failure to teach MBO Philosophy. Problems in objective setting. Emphasis on short-term objectives. Inflexibility. Frustration. Individuals are like ‘RATS IN MAZE’

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MBO in Organizations Glaxo Laboratories (India) Limited, now GLINDIA. Xerox Springfield Remanufacturing corporation DuPont

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Conclusion Necessity of performance management. For maximum utilization of resources. Benefits accrue to large sections of society. Resources have opportunity costs. Privately owned resources. Publicly owned resources. “What is not measured cannot be managed.”