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Sunday, May 17, 2009

Explain the concept of Management by objectives (MBO).Describe some of the schemes and failures associated with MBO in your organization

Explain the concept of Management by objectives (MBO).Describe some of the schemes and failures associated with MBO in your organization or any organization you are familiar with. Briefly Describe the organization you are referring to.

Ans. MBO has gained immense popularity during the past two or three decades. The crowing literature and increasing practice in organizations in different countries confirm this. In Indir also, many managers have client about MBO. In many organizations, MBO has become the way of management process.

The key concepts in MBO are emphasis on results than activities, objectives for specific managerial positions, participatory or joint objective setting, Identification of key result areas and establishment of periodic review system. In periodic preview -Periodic review of performance is an important feature of MBO. The performance review is held regularly, normally once year . It emphasis initiative and active role by the manager who is who is responsible for achieving objectives. Th3 review is future oriented because it provides basis for planning and corrective actions.


1. Better Managing : MBO helps in better managing the organizational resources and activities. Resources and activities are put in such a way that they result into better performance. There are five elements about what Improves performance.

(1)Clarity objectives
(2) Role Clarity
(3) Periodic feedback of performance
(4) Party corporation by managers in the management Process
(5) Realization that there is always scope for Improvement of
performance in every situation

2. Clarity in Organization action: MBO tends to provide Ok key Result areas where organizational efforts are needed. Since organizational objectives are defined very clearly, they help in relating the organization with its environment. A key factor in objective setting is the external environment in which organization operates. Therefore, any change is the external environment factors is taken care of at the levels of objective setting itself. This it provides basis for large-range planning in the organization. The organization can look forward to what it Intends to do in future, in short run as well as in the long run. All these factors lead to define the organization properly in the environment context as well as in the context of its various competition.

3. Basis for organizational change : MBO Stimulates Organizational change and provides as framework and guidelines for planned change, enabling the top management to Initiate, plan, direct and control the direction and speed of change. To cope up with change, the organization has to change itself appropriately.


1. Time and Cost: MBO is not as simple as it looks to to be it is a process which requires large amount of the most scarce resource in the organization time of the senior managers. This is particularly so at the Initial stages, when MBO is seen as something over and above the normal work. Sometimes managers get frustrated and feel over burned. Further, MBO generates paper work because large number of forms are to be designed and put into practice. Therefore, here is a problem of communication overload. However, such problems are transitory and emerge only at the initial stages. Once MBO becomes a part of the organizational life, these problems disappear.
2. Problem in objective setting: MBO requires verifiable Objectives against which performance can be measured. However, setting such objectives is difficult as least in some areas. Objectives are more in the form of statement rather than in quantitative form. Of course, some objectives can be qualified and can be broken in terms of time period but others back this characteristics for further course of action.
3. Emphasis on short term objectives : In order to be more precise, here is tendency to emphasis on short- term objectives usually for a year or even Len. No doubt, on is may help in performance appraisal but there is always a larger in embhasing short-term objectives at the cost of long-term objectives. Sometimes, an organization’s short-term and long-term objectives may be incompatible because of certain specific problems.
4. Failure to Tech MBO Philosophy : MBO is philosophy of managing an
organization in new way. However, managers fail to understand and
appreciate this new approach. They have a number of debts about MBO, how the performance is to be apprised, and how organization will benefit. MBO demands rigorous analysis as an integral element of the management process but the organization may not be used to rigoue. Frequently both the base data and the expertise for analysis are not available and one would not know if something was achieved. This is done on a systematic basis and managers seldom appreciate this. They take MBO as another tool for control moreover, their old way of thinking puts difficult in introducing MBO because they may not appreciate the full view of MBO.

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