UNIT -4

MANAGEMENT BY
OBJECTIVES
MANAGEMENT BY OBJECTIVES
[MBO]

• It is a process whereby superiors and

subordinates jointly identify the common
objectives,
• set the results that should be achieved by the

MEANIN subordinates,
• assess the contribution of each individuals,

G and
• integrate individuals with the organization so
as to make he best use of organizational
resources.
• MBO is a system for integrating managerial
activities.
MANAGEMENT BY OBJECTIVES
[MBO]

• According to Koontz and O‘ Donnel,

• MBO is a comprehensive
managerial system that integrates
DEFINITIO many key managerial activities in a
N systematic manner, consciously
directed towards the effective and
efficient achievement of
organizational objectives.
 FEATURES OF MBO

1. It is an approach and philosophy to management and not merely a technique.

2. It gives emphasis on objectives.

3. It is concerned with the participation of concerned managers I objective setting

and performance reviews.

4. It reviews performance periodically.

5.Objectives in MBO provide guidelines for appropriate systems and procedures.

6. MBO establishes a community of interest and a shared sense of vision among all
the managers.
 PROCESS OF MBO

Recycling
Appraisal
Matching
Setting resources with
subordinates‘ objectives
Identificatio
n of Key objectives
Setting of Result
organizational Areas
objectives
 BENEFITS OF MBO

1.It helps in better managing the orgaisational resources and activities.

2.It organizational objectives are defined very clearly in MBO they help in
relating the organization with its environment.

3. It provides greatest opportunity for personnel satisfaction because of

their participation in objective setting and rational performance appraisal.

4.It stimulates organisational change and provides a frame work and

guidelines for organizational change.
 PROBLEMS AND LIMITATIONS OF MBO

2.Manager‘s failure to
1. Time consuming 3.Problems in
teach MBO
and costly process objective setting
philosophy

5.Danger of
6.MBO creates
4.More emphasis on inflexibility in the
frustration among
short term objectives organization in a
managers
dynamic environment
PERFORMANCE MANAGEMENT

Includes activities that ensure that

goals are consistently being met in an
effective and efficient manner.

Focus on the performance of an organization,

a department,
employee,
or even the processes to build a product or service, as well as many other areas.
USE OF PERFORMANCE MANAGEMENT

Can apply wherever people interact —

• schools
• churches
• community meetings, sports teams,
Used in workplace • health setting,
• governmental agencies,
• political settings anywhere in the world people
interact with their environments to produce
desired effects.
PERFORMANCE MANAGEMENT

• Armstrong and Baron defined Performance

Management
• strategic and integrated approach to
Definitio increasing the effectiveness of
organizations
n • by improving the performance of the
people who work in them and
• by developing the capabilities of teams
and individual contributors.
PERFORMANCE MANAGEMENT

Self- • It is a performance process

propelled • It can be applied by organisations
performanc or a single department or section
e process inside an organisation, as well as
an individual person.
(SPPP)
 Targeted Staff Encouragement
Development to staff

Performance
Rewards staff for
based
a job well done
conversations
ADVANTAGES
OF PM
 Documented history
of employee
performance

Underperformers
Allows for employee
identified and
growth
eliminated

ADVANTAGES
DISADVANTAGES OF PERFORMANCE
MANAGEMENT

Time Discouragement
Consuming

Inconsistent
Message Biases
UNDERSTANDING AND MANAGING GROUP
PROCESS

Group and Group Dynamics

GROUP

• Groups exist in every organization and they affect the behavior of their
members.

MEANING • Many groups may be created for specific purposes in the organization
• Besides this, there may be groups not created by the organization but
are created by the people themselves.
• These groups become essential for functioning of the organization.

DEFINITION • The aggregate of small number of persons who work for common goals,
developed a shared attitude, and aware that they are part of a group
GROUP DYNAMICS

• It refers to the study

MEANIN
of forces operating
G within a group.
 DEFINITION OF GROUP DYNAMICS

third, it deals with

internal nature of
Second, group groups, their formation,
First, it describes how a dynamics consists of a structure and
group should be set of techniques such processes, and the way
organized and operated. as role playing, they affect individual
sensitivity training etc. members, other groups
and the organization as
a whole.
GROUP PROCESS

Group • It is the process that goes on within a

Process group.

• A process can be defined as the

Process method used by the leaders to
convert the inputs into finished goods
GROUP PROCESS
WORK GROUP

• It is a group that interacts

MEANIN primarily to share information and
• to make decisions to help each
G member to perform within his
area of responsibility.
 CHARACTERISTICS OF A WORK GROUP

1.The members are skilled in all leadership and membership roles.

2.The members of the group are attracted to it and are loyal to its members
including the leader.

3.The members and leaders have a high degree of confidence and trust in
each other.

4.The values and goals of the group are a satisfactory combination and
expression of the relevant values and needs of its members.

5.The group is eager to help each member to develop to his full potential.
 CHARACTERISTICS OF A WORK GROUP

6.All the interaction, problem solving, decision making activities of the group
occur in a supportive atmosphere.

7.Each member accepts willingly and without dislike the goals and
expectations that the individual and the group establish for themselves.

8.The leader and members believe that each group member is possible to
accomplish the objectives.

9.The supportive atmosphere of the highly effective group stimulates

creativity.

10.There is high motivation in the group to use the communication process

so that it best serves the interests and goals of the group.
WORK GROUP BEHAVIOR AND PRODUCTIVITY

FUNCTION OF GROUP
Interact with other groups

They develop their own unique set of

characteristics including structure,
cohesiveness, roles, norms and processes.

Groups may co-operate or compete with other group, and

inter group competition can lead to conflict.

While people work in groups they develop ways of thinking and

behaving that are different from their individual behavior which is
required to perform job.
WORK GROUP BEHAVIOR AND PRODUCTIVITY

FUNCTION OF GROUP
They may do more or less work than they are supposed
to do and different ways which is prescribed.

Each member of the group contributes something

towards the accomplishment of the common goal.
 PRODUCTIVITY

Work group cohesiveness affects productivity.

The productivity of members of work group tends to

be more uniform.
This is due to high group cohesiveness, promotes high
control over the level of production of the individual member
and reduces the variation among those members.
The relationship of cohesiveness and productivity
depend upon the level of group‘s attitude towards
organizational goals.
TEAM CREATION AND MANAGEMENT

MEANIN • It is a permanent work group whose members must co-

ordinate their activities to achieve one or more common

G OF objectives.
• As achievement of team‘s objectives requires co-
ordination, team members depend on one another and
TEAM must interact regularly.

WORK • It generates positive synergy

TEAM through co-ordinate effort.
 TEAM

Teams have far-reaching impact in the today‘s work place.

They have become an essential part of the way business is being done.

A team is a group, but only some groups have the high degree of
interdependence and commitment to success we associate with a team.
 TYPES OF
TEAMS

Problem solving Self- managed Cross functional

teams work teams teams
 DIFFERENCE BETWEEN WORK GROUPS AND
TEAMS
Work Groups Teams

Individual accountability Individual and mutual accountability

Come together to share information and Frequently come together for discussion,
perspectives decision making, problem solving, and planning.

Focus on individual goals Focus on team goals

Produce individual work products Produce collective work products

Define individual roles, responsibilities, Define individual roles, responsibilities, and tasks to
and tasks help team do its work; often share and rotate them
CORPORATE PLANNING
INTRODUCTION

The process of planning can be adopted at

different levels within the organization

Plans can be formulated for the whole

organization or for only a part of the
organization.
INTRODUCTION

• The plans are formulated for the

MEANING whole of the organization

• Basic goals,
EMPHASIS • policies and the
• Strategies for the whole organization
 CORPORATE PLANNING

it also provides for any contingencies that may arise in the

future

Resources of the organization are matched with the

opportunities and threats provided by the external
environment.

Process of corporate planning takes place at the highest level

of management in the organization
PROCESS OF CORPORATE PLANNING

corporate planning can

be described as the
process which includes

organizing the
1. people, measuring the
2. work motivating with performance
establishing the
3. systems of the help of and controlling
organizational
the organization planning the progress
goals,
in order to process, made by these
achieve these plans.
goals
STRATEGIC PLANNING
STRATEGIC PLANNING

• Process of planning in which the

MEANIN managers try to find the ways in which
• the organizational goals can be
G achieved with the help of the resources
• that are available with the organization
STRATEGIC PLANNING

• Process of planning in which the

MEANIN managers try to find the ways in which
• the organizational goals can be
G achieved with the help of the resources
• that are available with the organization
STRATEGY PLANNING

TASK OF • Undertaken by central management of the organization

• Involves top management to decide - organizational
STRATEGIC goals and make plans
PLAN • through which these goals can be achieved

Resources in • Evaluated by Top Management

organisation

• Plans are made for a period

Period
• May extend up to 10 years
STRATEGIC PLANNING
1.Evaluation of the
organization
Strategic Planning
2.Strengths and
weaknesses,
Related with

3.Capabilities

4.Objective assessment of
the business environment.
NEED FOR STRATEGIC PLANNING

Reasons due to which the managers are required to be involved in strategic planning

1.Proper
use of
resources

3. Ensuring
2.Impact of
success of
external
the
forces
organization
OPERATIONAL PLANNING
OPERATIONAL PLANNING

• Also known as short-term planning or tactical planning

• Involves a period of one year

MEANING • Strategic plans are converted into specific and detailed

action plans
• These plans are designed with a view to sustain the
organization with its present products and markets

Persons • Middle Level Management or

Involved • Lower-level Management
OPERATIONAL PLANNING

• To support the strategic plans

• in case there is some difficulty in implementing the
strategic plans of the organization
• Example
PURPOS • Any change in the external or the internal environment of
the organization - Tactical plans are used to deal with

E these changes.
• Resources available with the organization should be used
patiently and
• at the same time a control mechanism should be
developed so that the efficient implementation of plans can
be ensured in order to achieve the organizational goals
STRATEGY FORMULATION
STRATEGY FORMULATION

• Process of choosing the most

appropriate course of action
MEANIN • for the realization of organizational
G goals and objectives and
• thereby achieving the
organizational vision

Choosing the Realization of

Achieving the
most organizational
organizational
appropriate goals and
vision
course of action objectives
PROCESS OF STRATEGY FORMULATION

1.Setting
6.Choice of
Organizations’
Strategy
objectives

2. Evaluating the
5. Performance
Organizational
Analysis
Environment

3. Setting 4.Aiming in
Quantitative context with the
Targets divisional plans
 DIFFERENCE BETWEEN OPERATIONAL
PLANNING AND STRATEGIC PLANNING:
 

POINTS OF STRATEGIC OPERATIONAL

DIFFERENCE PLANNING PLANNING

Duration • Longer Short-term plans

• More the duration of a
plan, the more
strategic it is
• It is referred to as
long-term plans

Scope Broad Scope Narrow scope

 DIFFERENCE BETWEEN OPERATIONAL
PLANNING AND STRATEGIC PLANNING:
 

POINTS OF STRATEGIC OPERATIONAL

DIFFERENCE PLANNING PLANNING
• Establishes the trends and the Decides the actions that are
Primary directions in which the required to implement the
organization wants to move strategic plans

Planning for Long Long range planning achieve the

long-term goals of the company.
Range (1 to 20 years or even more)