FOM

UNIT-2(5)
MBO V/S MBE
Faculty-Dr. Kirti Punia
Dpt. Mgmt Studies
RLAC, UoD
MBO
◦ This concept was originated by “Peter F. Drucker” in the year 1954 in his book – The Practice of
Management and he is also known as the Father of MBO (Management by Objectives.
◦ MBO involves a company’s management team combining resources to acquire all or part of the company
they manage. Most of the time, the management team takes full control and ownership, using their
expertise to grow the company and drive it forward.
◦ Management by Objectives (MBO) is a well-established and effective approach to performance
management that has helped countless teams to achieve their goals and objectives.
◦ Management by Objectives, is a strategic tool used to boost the performance of an enterprise. Herein, the
business goals are clearly defined by the management and are shared with every team member with the
motive of achieving every objective. MBO is also known as Management by Planning.
MBO Features
◦ It is key part of Performance Management
◦ It gives motivation to employees.
◦ Helps in boosting morale and passion of the employees
◦ Goals gives clear direction to the employees
◦ It is a strategical and tactical tool to increase productivity in an enterprise
◦ There is a top down collaboration between senior and subordinates
◦ It helps in continuous improvement and feedback.
MBO Process
MBE
MBE
◦ MBE is a management approach in which managers focus on identifying and addressing exceptions or
deviations from established standards or goals. This approach is used to identify and resolve problems or
inefficiencies in the organization.
◦ Management by exception (MBE) is a workplace practice that allows employees to work more
independently and only involve their managers on specific issues or “exceptions” to normal operations.
The practice uses both active and passive management.
◦ MBE allows managers to lead their company efficiently by delegating tasks. Managers can focus on
achieving the company’s vision while other employees can work on daily tasks to keep the company
operational. This allows all company employees to stay productive and specialise in certain tasks
◦ The main disadvantage of MBE is, only managers have the power over really important decisions, which
can be demotivating for employees at a lower level. 2. Furthermore, it takes time to pass the issues to
managers. Managing employees who deviate from the normal procedures
Features MBE
Process MBE
Difference MBO/ MBE
Focus: MBO focuses on setting and achieving specific, measurable goals, while MBE focuses on identifying and addressing
exceptions or deviations from established standards or goals.
Proactivity vs reactivity: MBO is a proactive management approach, while MBE is a reactive management approach.
◦ Participation: In MBO, managers and employees work together to set and achieve goals, while in MBE, managers focus on
identifying and addressing exceptions or deviations.
◦ Emphasis: MBO emphasizes goal setting and achievement, while MBE emphasizes problem identification and resolution.
◦ Time frame: MBO focuses on long-term goals and objectives, while MBE focuses on identifying and addressing short-term
exceptions or deviations.
◦ Feedback: MBO includes regular feedback and evaluation to measure progress towards goals, while MBE focuses on
identifying and addressing exceptions or deviations as they occur.
◦ Management level: MBO is typically implemented at the organizational level, while MBE is typically implemented at the
operational level.
◦ Outcome: The outcome of MBO is achieving specific, measurable goals, while the outcome of MBE is identifying and
addressing problems or inefficiencies in the organization
Difference