Management By Objective¶
Let me explain this information in a way that’s easy to understand. This is all about objectives (or goals) and a management technique called Management by Objectives (MBO). Here's a breakdown of the main ideas:
1. Objectives¶
Objectives are the goals an organization is trying to achieve. They guide all the activities like planning, organizing, leading, and controlling. Basically, everything managers do is aimed at reaching these goals.
Characteristics of Objectives:¶
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Hierarchy of Objectives: Just like a pyramid, objectives are organized from top to bottom. The higher-level goals support the lower-level goals. For example, a company’s main goal might be to increase profits, while individual departments might have smaller goals that contribute to this larger goal.
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Network of Objectives: All the different goals in an organization are interconnected. For example, the sales department’s goal of selling more products will contribute to the company’s overall goal of making a profit. So, different departments and teams work toward common objectives.
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Multiple Objectives: Organizations often have many goals at once, and managers need to balance them. For example, a company might want to make more money, improve customer satisfaction, and reduce costs all at the same time. Sometimes, focusing on one goal might affect another, so managers need to prioritize.
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Short- and Long-Term Objectives: Organizations set short-term goals (like goals for the next year) and long-term goals (like goals for the next 5 years). Short-term goals help reach long-term objectives, and both are important for a company's success.
2. Process of Setting Objectives¶
Setting objectives happens at different levels of management: - Top-level managers (like the CEO) set the big, company-wide objectives. - Middle-level managers (like department heads) set goals for their departments. - Lower-level managers set goals for their teams or individual workers.
There are two approaches to setting objectives: - Top-down approach: The higher-level managers set the objectives, and lower-level employees follow them. - Bottom-up approach: Employees suggest goals for their own work, and these goals are reviewed by higher-level managers.
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3. Management by Objectives (MBO)¶
MBO is a system where managers and employees work together to set, track, and achieve goals. This method was made popular by Peter Drucker in 1954. The idea is that employees and managers agree on specific goals, and everyone works toward them.
How MBO Works:¶
- Setting Objectives: Managers and employees sit together and decide on clear, measurable goals for the employee’s work. These goals are aligned with the company’s overall goals.
Example: If the company’s goal is to increase sales, a salesperson’s individual goal might be to sell 100 products per month.
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Developing an Action Plan: The employee then creates a plan for how they will achieve their goal, such as specific steps they’ll take to hit their sales target.
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Periodic Reviews: Managers and employees meet regularly to check progress. If something isn’t working, they adjust the plan to stay on track.
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Performance Appraisal: At the end of a period (like a year), the manager reviews the employee’s actual performance and compares it to the goals they agreed on. This helps determine if the employee met their objectives.
Benefits of MBO:¶
- Clear Goals: MBO helps everyone know exactly what they’re working toward. Managers and employees have a common understanding of what needs to be achieved.
- Better Planning: MBO forces managers and employees to think carefully about how they will achieve their goals and what resources they need.
- Better Performance Reviews: Since goals are measurable and agreed upon, it’s easier to evaluate an employee’s performance fairly.
- Improved Morale: Employees feel more motivated because they’re involved in setting their own goals.
Problems with MBO:¶
- Pressure: MBO can sometimes create too much pressure on employees to meet their goals, especially if there are rewards or punishments tied to them.
- Short-Term Focus: Sometimes, MBO focuses too much on short-term goals at the expense of long-term objectives.
- Goal-Setting Issues: If goals are too difficult to measure, or if managers focus too much on numbers and not on the quality of work, MBO might not work well.
Summary:¶
- Objectives are the goals an organization wants to achieve. They are arranged in a hierarchy and are connected like a network.
- Management by Objectives (MBO) is a method where managers and employees work together to set clear goals. They regularly review progress and evaluate success based on these goals.
- MBO can improve motivation, performance, and planning, but it can also create pressure and lead to short-term thinking if not done properly.
So, MBO is a way to make sure that everyone in an organization is working toward the same goals and that progress is tracked regularly!
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