PRINCIPLES OF MANAGEMENT

 DEFINATION OF MBO.
 FEATURES
 MBO PROCESS
 SMART
 BENEFITS
 LIMITATIONS
 SUGGESTIONS FOR
IMPROVEMENT
 The full form of MBO is Management by
Objectives.
 Management By Objectives term was
first popularized by Peter Drucker in
1954 in his book 'The Practice of
Management'.
 It is a systematic and organized
approach that allows management to
focus on achievable goals and to attain
the best possible results from available
resources.
 MBO is a philosophy or a system, and
not merely technique.
 It emphasizes participative goal
setting.
 It clearly defines each individual
responsibilities in terms of results.
 If focuses attention on what must be
accomplished (goals) rather than on
how it is to be accomplished.
 It converts objective needs into
personal goals at every level in the
organization.
 It establishes standards or yardsticks
(goals ) as operation guides and also as
basis of performance evaluation.
 It is a system intentionally directed
toward effective and efficient
attainment of organizational and
personal goals.
Step 1: Setting of organizational purposes
and objectives
Usually objectives setting at top level with the
following sequence:
1. Defining the purpose of the organization
2. Setting long range and strategic e.g.
questions like whether to achieve growth
through expansion or diversification etc.
3. Setting short – term organizational
objectives
4. Setting divisional / departmental /
sectional objectives
Step 2: Identifying Key Result Areas (KRA)

 The organizational objectives and planning

come together to define KRA. KRA’s are
derived from different stake holders.
 KRA indicates-
 Priorities of organizational performance.
 Present state of health of an organization
 Top Management’s perspective.
 Examples of KRA are:

Profitability, market standing, innovation,

productivity, manager’s and worker’s
performance, financial and physical resources,
public responsibility.
Step 3: Setting subordinates Objectives

 All middle level managers are both superior and

subordinate except the top and lowest level.
 Organizational objectives are achieved through
 individuals
 Hierarchy of setting objectives-
 Superior’s recommendation to subordinates
 Subordinates in turn states his own objectives
 Setting of final objectives of subordinates in
consultation
 Bridging the gap between the objectives set
by superiors and stated by the individual
subordinate
Step 4: Matching of resources with objectives

 Once the objectives are set carefully they

indicate resource requirement.
 Proper allocation of resources ensures the
achieving of objectives.
 Need and economy of resources can be
viewed in a better way because of the
matching of objectives with resources.
Step 5: Appraisal

 Appraisal (assessment / evaluation) is an on –

going process with a view to find out any
deficiency in the working and also to remove
promptly.
 It is a system which checks that everything
goes smoothly as per the plan.
Step 6: Recycling

 Objective setting is a joint process which

occurs
 through the interaction between superiors and
 Subordinates.
 The change at any level affects the other
levels.
 Hence there is a requirement of objective
recycling
 Three aspects of recycling are-

ACTION PLANNING

PERFORMANCE REVIEW

OBJECTIVE SETTING 11
 MBO is often achieved using set targets.
 MBO introduced the SMART method for
checking the validity of the objectives which
should be SMART.
 Specific
 Measurable,
 Agreed
 Realistic, and
 Time-Specific or Time related
 Better management and utilization of
resources
 Aid in Planning
 Result oriented approach
 Impartial goals
 Higher morale
 Personal leadership
 Concentration on key result areas
 Employee motivation & Better Team
Work
 Development of personnel/satisfaction
 Objective Evaluation
 Sound Organizational Structure
 Time & Cost
 Failure To Teach MBO Philosophy
 Emphasis On Short-term Objectives
 Inflexibility
 Frustration
 Conflicting Objectives
 Higher Paperwork
 Lack Of Durability
 Support from all: The policy must receive
complete support from the managers as well as
the sub-ordinates.
 Training of managers: The managers should be
given adequate training in MBO philosophy
before the programme is introduced.
 Allocate adequate time and resources: A well-
conceived MBO programme requires three to five
years of operation before it provides fruitful
results.
 Information feedback: Superiors and
subordinates should have regular information
available to them as to how well subordinate’s
goal performance is progressing.
FOR GIVING US SUCH WONDERFRUL
OPPURTUNITY
TO
RESEARCH THIS PROJECT
OF
PRINCIPLES OF MANAGEMENT
WE WOULD LIKE TO THANK
OUR
PRINCIPAL DR. A.C.VANJANI
AND
PROFESSOR SALEEM KHAN.
 REEMA ARORA 06
 RISHIKA DEVNANI 13
 CHANDNI SABNANI 46
 SANMEEN SAHNI 48
 AKSHAY SHIVANI 54
 AANCHAL SHROFF 55