Question

Management by objectives (MBO) is a method whereby managers and employees define goals for every department, project, and person and use them to control subsequent performance. Four major activities must occur in order for MBO to be successful.

a. Please describe the four essential steps in the management by objectives (MBO) process.

b. Please give real example for each steps

Answer 1

Ans-a) The four main steps of MBO(management by objectives) are mentioned below:-

1) Set organisational goals- The first step includes laying down clear, specific and measurable objectives for the organisation as a whole and also with respect to each department or unit within the organisation. It is should be done with a proper analysis of external and internal environment of the organisation.

Also,the objective should infuse down to each unit and employees at all levels as it helps to create a conducive environment and working towards the goal become easier for everyone.

b) Real example of set organisational goals- For example- An automobile company which is planning to increase its sales of small cars by 20% in next three months. They set a goal of increasing sales of cars by 20% in next three months.

2) Defining performance targets- The subordinate and employers both keep data of the performance done by the subordinate. With help of this they can measure their actual performance by comparing performance standard to actual performance. This is a very important step as it helps the subordinate to review their work and also gets a motivation after doing so.

b) Real example of Defining performance targets- Suppose the company wish to increase its sales by 30% and give their works extra work to do so that they can achieve their target. By defining the performance targets they can motivate employees and increase specialisation.

3) Performance reviews - Frequently the manager of the companies review their subordinate and checks everything is done according to time. They check the new capabilities of the workers and give reviews after the work. It helps in motivating the employees.

b) Real example of performance review- In production department of automobile company, there is an inspector who work to ensure that the actual work performance is in accordance with the planned performance. He reviews all the work done by the workers and give performance reviews to their immediate managers.

4) Providing feedback- When managers give reviews to the emplloyes, feedback is provided so that they can regulate their performance as according to feedback. Feedback can be positive or Negative both. On the basis of this rewards are decided.

B) Real example- Automobile companies provide feedback to its production department that their production is not going as per the plans. So from this feedback they will do their work with some extra speed.