Management By Objectives (MBO) :
MBO requires the management to set specific, measurable goals with each employee and then periodically discuss the latter’s progress towards these goals. This technique emphasises participatively set goals (that are agreed upon by the superior and the employee) that are tangible, verifiable and measurable. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished. It is, thus, a kind of goal setting and appraisal programme involving six steps:
Set the organisation’s goals: Establish an organisationwide plan for next year and set company goals.
Set departmental goals: Department heads at this stage take the broader company goals (Such as improving profits by 20 per cent, increasing market share by 10 per cent etc.) and, with their superiors, jointly set goals for their departments.
Discuss departmental goals: The departmental goals are now put to discussion in a departmental meeting with subordinates. The departmental heads would require the subordinates to set their own preliminary individual goals, focusing mostly on what they can do to achieve the department’s goals.
Define expected results : In the next step, the departmental heads and their subordinates agree on a set of participatorily set short term, and individual performance targets.
Performance reviews: Departmental heads compare each employee’s actual and targeted performance, either periodically or annually. While periodic review is intended to identify and solve specific performance problems, the annual review is conducted to assess and reward one’s overall contribution to the organisation. Because employees are evaluated on their performance results, MBO is often called a result – based performance appraisal system.
Provide Feedback: Both parties now discuss and evaluate the actual progress made in achieving goals, where things have gone off the track, how best to rectfy the mistakes made in the past, and how the employee could meet the targets next time, focusing attention on his strengths
Warm Regards,
Suthanthira Selvan.C