NURS420 Leadership and Management in Health Care

Topic 5.1
Management by Objectives
 Learning Outcomes
• On completion of the week’s activity, students
shall be able to:
• Define Management By Objectives
• Explain the purposes of MBO
• Discuss the essential steps of MBO process
• Explain the principles of MBO
• Describe the effective process of MBO
• Discuss the advantages and disadvantages of
Management By Objectives 2
 Management By Objectives

• Management By Objectives term was first

popularized by Peter Drucker in 1954 in his
book 'The Practice of Management'.
• Also known as management by results
(MBR)
• Is a process of defining objectives within an
organization so that management and
employees agree to the objectives and
understand what they need to do in the
organization in order to achieve them. 3
 Management By Objectives

• The process of setting objectives in the

organization to give a sense of direction to the
employees is called as Management by
Objectives.
• It refers to the process of setting goals for the
employees so that they know what they are
supposed to do at the workplace.

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 Management By Objectives
• Defines roles and responsibilities for the
employees and help them chalk out their future
course of action in the organization.
• Guides the employees to deliver their level
best and achieve the targets within the
stipulated time frame.

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 Purposes Of MBO
• Is concerned with goal setting and planning for
individual managers and their units.
• Is a process of joint goal setting between a
supervisor and a subordinate.
• Managers work with their subordinates to
establish performance goals that are consistent
with higher organizational objectives.
• Helps clarify the hierarchy of objectives as a
series of well-defined means-ends chains.
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 Steps of MBO Process
• Define organizational
goals
• Define employees
objectives
• Continuous monitoring
performance and
progress
• Performance evaluation
• Providing feedback
• Performance appraisal
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 Steps of MBO Process
• Organizational goals are developed based on
organizational missions.
• Specific goals are established for departments,
subunits, and individuals:
• In the top-down process, upper-level managers,
conferring with their immediate managerial
subordinates, formulate specific objectives for their
areas of responsibility. These in turn enter into the
formulation of objectives for the next level down, and
so forth.
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 Steps of MBO Process
• In the bottom-up process, operational goals
are proposed by lower-level managers on the
basis of what they think they can achieve.
These in turn are developed into tactical and
finally strategic plans.
• Action plans are formulated, describing what
is to be done, how, when, where, and by whom
in order to achieve a particular goals

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 Steps of MBO Process
• Individuals are given the responsibility of
reaching their objectives and that goals will
ultimately be met.
• Performance is appraised at the end of the
goal-setting cycle, typically at one-year
intervals. Praise, recognition, and rewards
should be given for effective performance

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 Types of Plans
• Single-use Plans
• Are developed to
achieve objectives
that are not likely to
be repeated in the
future.
• Single-use plans
include both
programs and
projects.
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 Types of Plans
• Standing Plans • Operational Plans
• Are used to provide • Are used to identifies
guidance for tasks specific results to be
performed repeatedly accomplished within
within the a given short term
organization. time period.
• The primary standing • Contain detailed
plans are information used in
organizational the lower levels in an
policies, rules, and organization.
procedures. 12
 MBO Principles
• Cascading of organizational goals and
objectives
• Specific objectives for each member
• Participative decision making
• Explicit time period
• Performance evaluation and feedback

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 Cascading of objectives
• MBO provides specific objectives for each
succeeding level:

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 Making MBO Process Effective
• Formulate Clear Objectives
• Encourage Active Participation in Goal Setting
• Support and Commitment of Top Management
• Educate and Train Managers about MBO
• Make Feedback Effective
• Take Care of Necessary Mechanism

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 Advantages of MBO

• Better utilization of resources

• Aid in Planning
• Development of personnel/satisfaction
• Better Team Work improves morale and
communication
• Concentration on Key Result Areas
• Objective Evaluation
• MBO is Result Oriented
• Sound Organizational Structure 16
 Disadvantages of MBO

• Incomplete Understanding of MBO

Philosophy
• Poor Planning and Lack of Guidelines
• Difficulty in Setting Objectives
• Inflexibility
• Increases Pressure and Frustration on the
Subordinates
• Short Term Nature of Goals
• Lack of Follow up 17
 References
• http://www.managementstudyguide.com/
management-by-objectives.htm
• http://www.edunote.info/2013/08/MBO-
process.html
• https://online.vmou.ac.in/oldweb/
studymaterial/4%20BBA%2001.pdf
• http://www.toolshero.com/management/
management-by-objectives-drucker/

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