Question

Management by objectives (MBO) is a method which uses objectives to motivate as well as to
control employees. Assume you are a senior manager of an insurance company supervising a
group of young insurance agents who have just joined the workforce. How would you apply the
MBO approach in your work? Explain.

Answer 1

Management by objective (MBO) is a strategic management technique that involves improving the performance of the organization by defining objectives that are agreed by both manger and employees. This approach has some basic steps which comprise determining organizational objectives, aligning the organizational objective to the employee's own objective by stimulating participative factor which inculcates motivation among them lastly monitoring employee's performance and rewarding them.

As a senior manager of the insurance company my work is to make them informed of the objective, vision, goal of the organization. This will clear any ambiguities regarding objectives and goals and will ensure the basic objective of the job clear to young agents.

Usually, as a manager employing the 'SMART' technique is useful to get this done, 'SMART' which involves communicating specific, measurable, acceptable, realistic, time-bound target with employees .e.g in the insurance company target which can be communicated are minimum insurance which should be done, the goal of the company future quarterly target, etc.

Next step as a manager I have to stimulate individual employees to set their own objectives. They will set their own objectives which will give them freehand choosing their work empowering them. As insurance agents they can take their own insurance target, their area of work, in which insurance field they want to work e.g life, house, vehicle insurance. So these objectives which are set by themselves will help them in achieving their objectives better.

The goals which are there can be measured and are specific and time-bound so as a manager I can monitor goals that are set like the number of insurance being sold, time took to sell them, how much target population has been covered by employees, etc.

These goals will set a reward mechanism that will inculcate motivation to work on organization goals. employees will get honest feedback from the manager which will again set a motivational loop to work on objectives.