MBO | What is Management By Objective? | Advantages and Disadvantages of MBO

Educationleaves

31 Jan 202104:12

Summary

TLDRThis video from educationleaves.com explores Management by Objectives (MBO), a management practice that enhances organizational performance by setting clear goals agreed upon by both management and employees. MBO, popularized by Peter Drucker, is defined as focusing on results rather than activities, improving motivation, commitment, and communication. The process involves defining organizational and employee objectives, monitoring performance, evaluating performance, and providing feedback. MBO offers advantages like better planning and management training but requires proper knowledge and realistic goals to avoid failure.

Takeaways

🎯 Management by Objectives (MBO) is a management practice aimed at improving organizational performance by clearly defining goals and subordinate objectives agreed upon by both management and employees.
🔑 The full form of MBO is 'Management by Objectives', which was popularized by Peter Drucker in his book 'The Practice of Management'.
🚀 MBO improves employee motivation by setting specific work goals, enhancing commitment, and fostering better communication between employees and management.
📊 The process of MBO focuses on results rather than activities, also known as Management by Results (MBR).
📝 The MBO process involves defining organizational goals, employee objectives, continuous monitoring, performance evaluation, feedback, and performance appraisal.
🛠 MBO helps in formulating better management training programs based on performance reviews, thus improving the management team's effectiveness.
💡 MBO encourages managers to simplify plans and activities for optimal results and increases employee commitment to achieving their goals.
📈 MBO aids in more effective planning and provides management with greater confidence in managing tasks.
🚨 A potential disadvantage of MBO is that it may fail if the manager lacks proper knowledge about the philosophy of MBO.
🏆 Goals set within MBO should be attainable and realistic; unrealistic goals can decrease employee confidence.
⏳ Setting up goals in MBO requires time, patience, study, and experience, which can be a challenge if not managed properly.

Q & A

What is the full form of MBO?
-The full form of MBO is Management by Objectives.
What does MBO aim to improve in an organization?
-MBO aims to improve the motivation of employees by setting specific goals, commitment, and communication between employees and management.
What is another term for Management by Objectives?
-Another term for Management by Objectives is Management by Results (MBR).
Who popularized the concept of MBO?
-Peter Drucker popularized the concept of MBO in his book 'The Practice of Management'.
What is the primary focus of the MBO process?
-The primary focus of the MBO process is on results rather than the activities involved.
What are the steps involved in the MBO process?
-The steps in the MBO process are: defining organizational goals, defining employee objectives, continuously monitoring performance and progress, performance evaluation, providing feedback, and performance appraisal.
How does MBO help in formulating management training programs?
-MBO helps in formulating better management training programs based on performance reviews and feedback from employees.
What are some advantages of MBO?
-Advantages of MBO include simplifying plans for better results, increased employee commitment, better management training programs, more effective planning, and increased management confidence.
What are the potential disadvantages of MBO if not implemented properly?
-Potential disadvantages of MBO include failure if the manager lacks proper knowledge of MBO philosophy, setting unrealistic goals that decrease employee confidence, and the time-consuming process of setting up attainable goals.
How does MBO contribute to a positive and work-friendly environment?
-MBO contributes to a positive and work-friendly environment by allowing organization members to see their accomplishments as they achieve each objective, which reinforces a sense of achievement and motivation.
What is the importance of performance appraisal in the MBO process?
-Performance appraisal in the MBO process is important as it allows supervisors to review the performance of employees regularly, which helps in evaluating their contributions and making informed decisions regarding their compensation and development.

Outlines

00:00

📈 Introduction to Management by Objectives (MBO)

This paragraph introduces the concept of Management by Objectives (MBO), a management practice aimed at enhancing organizational performance through clear goal setting. MBO is defined as a method that boosts employee motivation by setting specific work goals, improving commitment, and facilitating better communication between employees and management. The process focuses on results rather than activities, often referred to as Management by Results (MBR). It was popularized by Peter Drucker in his book 'The Practice of Management.' The paragraph outlines the process of MBO, which includes defining organizational and employee objectives, continuous monitoring, performance evaluation, feedback, and performance appraisal, emphasizing the benefits of a results-oriented approach.

Mindmap

Keywords

💡Management by Objective (MBO)

Management by Objective (MBO) is a management practice aimed at enhancing organizational performance by clearly defining goals and objectives that are agreed upon by both management and employees. It is central to the video's theme as it outlines the process and impact of MBO on motivation, commitment, and communication within an organization. The script mentions that MBO was popularized by Peter Drucker and focuses on results rather than activities.

💡Objectives

In the context of MBO, 'objectives' refer to the specific goals set for employees that align with the broader organizational goals. These objectives are crucial for guiding employee efforts in a strategic manner and are a key component of the MBO process. The script emphasizes the importance of defining employee objectives after ensuring they are informed of the general objectives and strategies.

💡Performance Monitoring

Performance Monitoring is the continuous observation of employee progress towards their objectives. It is essential in the MBO process to ensure that employees are on track and to provide timely feedback. The script highlights its importance not only for line managers but also for evaluating the performance and progress of employees.

💡Performance Evaluation

Performance Evaluation in MBO is the assessment of how well an employee is performing in comparison to the set objectives. It helps employees understand their standing within the organization. The script mentions performance evaluation as a means for employees to gauge their performance relative to others.

💡Feedback

Feedback is a critical part of the MBO process, where input from clients or other stakeholders is used to monitor and improve the actions, products, or services of an organization. The script identifies feedback as a main component of MBO that allows for the correction or enhancement of organizational practices.

💡Performance Appraisal

Performance Appraisal is a regular review of an employee's performance within an organization. It is used to assess the employee's contributions and to review their compensation. The script describes performance appraisal as a supervisor's tool to evaluate an employee's performance periodically.

💡Motivation

Motivation, in the MBO context, refers to the drive and enthusiasm of employees to achieve their set objectives. MBO is designed to improve motivation by setting clear and specific goals that employees can work towards. The script explains that MBO improves employee motivation by allowing them to see their accomplishments as they achieve each objective.

💡Commitment

Commitment in MBO is the dedication and loyalty of employees to the organization's goals and objectives. By setting clear objectives, MBO aims to increase employee commitment, ensuring that they are fully engaged in their work. The script mentions that MBO improves commitment by allowing for better communication between employees and management.

💡Peter Drucker

Peter Drucker is a renowned management consultant and author who popularized the concept of Management by Objectives in his book 'The Practice of Management'. His work is foundational to the understanding of MBO as presented in the video script.

💡Advantages

The advantages of MBO as discussed in the script include forcing managers to simplify plans for better results, increasing employee commitment, aiding in the formulation of better management training programs, enhancing effective planning, and providing more confidence in task management. These advantages highlight the positive outcomes of implementing MBO within an organization.

💡Disadvantages

The script also outlines potential disadvantages of MBO, such as the need for proper knowledge of MBO philosophy to avoid failure, the requirement for goals to be attainable and realistic, and the time and effort required to set up goals. These points serve as cautionary advice for organizations considering the implementation of MBO.

Highlights

Introduction to Management by Objectives (MBO) and its significance in improving employee motivation and commitment.

MBO's full form is 'Management by Objectives', focusing on setting specific work goals to enhance organizational performance.

MBO's alternative name, 'Management by Results (MBR)', emphasizing the focus on outcomes over activities.

Peter Drucker's role in popularizing MBO through his book 'The Practice of Management'.

Definition of MBO as a management practice aimed at increasing organizational performance through clear goal setting.

The process of MBO, starting with defining the organization's goals to guide employee efforts strategically.

Involvement of employees in defining their objectives, ensuring alignment with organizational goals.

The importance of continuous monitoring of performance and progress for both managers and employees.

Performance evaluation as a key component of MBO, allowing employees to understand their standing within the organization.

The role of feedback from clients in the MBO process to monitor and improve organizational actions.

Performance appraisal as a regular review mechanism for employee performance within organizations.

Advantage of MBO in forcing managers to simplify plans for optimal results.

Employee commitment to achieving their best as a result of MBO's goal-setting process.

MBO's contribution to formulating better management training programs based on performance reviews.

The effectiveness of MBO in enhancing planning within organizations.

MBO's ability to instill more confidence in management when handling tasks.

The potential failure of MBO if the manager lacks proper knowledge about its philosophy.

The necessity of setting attainable and realistic goals in MBO to maintain employee confidence.

The time-consuming nature of goal setting in MBO, requiring patience, study, and experience.

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