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

Summary

This 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.