Management by Objectives (MBO)

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Management by Objectives (MBO)

• Peter Drucker

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Distinction between Aims and Objectives

• Aims long term vision. Sometimes called
  mission. Example to be the No. 1 Grocery
  retailer in the UK
• Objectives specific items that will help
  achieve aims. Example to increase customer
  satisfaction through availability and online
  shopping facilities.

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THE NATURE PURPOSE OF MBO

• MBO is concerned with goal setting and planning
  for individual managers and their units.
• The essence of MBO 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 organisational objectives.
• MBO helps clarify the hierarchy of objectives as
  a series of well-defined means-ends chains.

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THE PROCESS OF MBO
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THE MBO PROCESS

• If MBO is to be successful, it must start at the
  top of the organization ? top managers must
  communicate why they have adopted MBO, what they
  think it will do, and that they are committed to
  it.
• Employees must be educated about what MBO is and
  what their role in it will be.
• Managers must implement MBO in a way that is
  consistent with overall organizational goals.

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THE MBO PROCESS

• Collaborative goal setting and planning are the
  essence of MBO. This involves several steps
• Managers tell their subordinates what
  organisational and unit goals and plans top
  management has established.
• Managers meet with their subordinates on a
  one-to-one basis to arrive at a set of goals for
  each subordinate that both develop and to which
  both are committed.
• Goals are refined to be as verifiable as
  possible and achievable within a specified period
  of time.

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THE MBO PROCESS

• Goals must be written and very clearly stated.
• Plans developed to achieve the goals must
  directly relate to each goal ? managers must play
  the role of counselors in the goal-setting and
  planning meeting.
• The meeting should specify the resources that he
  subordinate will need to implement his/her plans
  and work effectively toward goal attainment.

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THE MBO PROCESS

• Conducting periodic reviews as subordinates are
  working toward their goals is advisable.
• At the end of the period, the manager meets with
  each subordinate to review the degree of goal
  attainment. The reasons for both success and
  failure are explored. The employee is rewarded on
  the basis of goal attainment.

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Kingsbrook MBO?

• Review what you see as MBO for Kingsbrook.
• Work down the hierarchy and try to imagine what
  the goals are for each sub-ordinate.