MBO & MBE.ppt
- 1. MANAGEMENT BY OBJECTIVES • MEANING • OBJECTIVE • PROCESS
- 2. MBO: MEANING • Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization. • It is a process where the goals of the organization are defined and conveyed by the management to the members of the organization with the intention to achieve each objective.
- 3. CONT… • An important step in the MBO approach is the monitoring and evaluation of the performance and progress of each employee against the established objectives. • Ideally, if the employees themselves are involved in setting goals and deciding their course of action, they are more likely to fulfil their obligations.
- 4. STEPS IN MANAGEMENT BY OBJECTIVES PROCESS • Define organization goals • Define employee objectives • Continuous monitoring performance and progress • Performance evaluation • Providing feedback • Performance appraisal
- 5. DEFINE ORGANIZATIONAL GOAL • Setting objectives is not only critical to the success of any company, but it also serves a variety of purposes. • It needs to include several different types of managers in setting goals. • The objectives set by the supervisors are provisional, based on an interpretation and evaluation of what the company can and should achieve within a specified time.
- 6. DEFINE EMPLOYEE OBJECTIVES • Once the employees are briefed about the general objectives, plan, and the strategies to follow, the managers can start working with their subordinates on establishing their personal objectives. • This will be a one-on-one discussion where the subordinates will let the managers know about their targets and which goals they can accomplish within a specific time and with what resources. • They can then share some tentative thoughts about which goals the organization or department can find feasible.
- 7. CONTINUOUS MONITORING PERFORMANCE AND PROGRESS • Though the management by objectives approach is necessary for increasing the effectiveness of managers. • It is equally essential for monitoring the performance and progress of each employee in the organization.
- 8. PERFORMANCE EVALUATION & FEEDBACK • Within the MBO framework, the performance review is achieved by the participation of the managers concerned. • In the management by objectives approach, the most essential step is the continuous feedback on the results and objectives, as it enables the employees to track and make corrections to their actions. • The ongoing feedback is complemented by frequent formal evaluation meetings in which superiors and subordinates may discuss progress towards objectives, leading to more feedback.
- 9. BENEFITS OF MBO Management by objectives helps employees appreciate their on-the-job roles and responsibilities. The key Result Areas planned are specific to each employee, depending on their interest, educational qualification, and specialization. The MBO approach usually results in better teamwork and communication.
- 10. CONT… It provides the employees with a clear understanding of what is expected of them. The supervisors set goals for every member of the team, and every employee is provided with a list of unique tasks. Every employee is assigned unique goals. Hence, each employee feels indispensable to the organization and eventually develops a sense of loyalty to the organization. Managers help ensure that subordinates’ goals are related to the objectives of the organization.
- 11. LIMITATIONS OF MBO Management by objectives often ignores the organization’s existing ethos and working conditions. More emphasis is given on goals and targets. The managers put constant pressure on the employees to accomplish their goals and forget about the use of MBO for involvement, willingness to contribute, and growth of management. The managers sometimes over-emphasize the target setting, as compared to operational issues, as a generator of success.
- 12. CONT… The MBO approach does not emphasize the significance of the context wherein the goals are set. The context encompasses everything from resource availability and efficiency to relative buy-in from the leadership and stakeholders. Finally, there is a tendency for many managers to see management by objectives as a total system that can handle all management issues once installed. The overdependence may impose problems on the MBO system that it is not prepared to tackle, and that frustrates any potentially positive effects on the issues it is supposed to deal with.
- 13. MANAGEMENT BY EXCEPTION (MBE) • Management by exception is a business management strategy that states that managers and supervisors should examine, investigate and develop solutions for only those issues where there is a deviation from • set standards, • norms, • business practices, • or any other financial goals like profits deviation, quality issues, infrastructure issues, etc. instead of examining and dealing with each routine business activities.
- 14. CONT… • This concept is a practice followed in the workplace where the employees are free to take certain decisions on their own which does not require the involvement of managers or seniors at higher levels. • This provides more workplace flexibility and creates a sense of belonging and accountability. • There are fixed standards based on which this process can be followed.
- 15. PRINCIPLES Delegation of authority – The concept is based on the approach of authority delegation to a certain level of employees so that they can handle them independently and take their own decisions. This leads to division of responsibility and increase accountability. Systematic approach – The method or approach followed in the process should be based on certain steps and there must be methods to keep track of deviations. The persons responsible to take decisions should be able to identify problems and devise solutions for the same.
- 16. CONT… Professionalism – For the purpose of delegation of work suitable training is provided to the concerned people so that they are able to handle the problems efficiently. This ensures increase in productivity and professional enhancement. This also leads to setting higher standards with increased potential to achieve them. Sense of leadership – This kind of workplace practice promotes a sense of leadership and responsibility towards the organization. The higher level professionals can concentrate of complex business issues while others can concentrate of achieving daily objectives.
- 17. CONT… Teamwork – It also helps in teamwork and partnership where the employees of all levels learn to adjust with each other while solving problems. This increases the professional standards and promotes peace and cooperation. Analysis – Since the process requires the decision makers to analyse and identify problems and devise solutions, it requires skill, experience and knowledge to do so. The capability to do such analysis is extremely important to achieve the objective of the business.
- 18. LIMITATIONS • Less focus on preventative measures Because management by exception relies on reacting to a problem, it can neglect to put preventative measures in place. This means that a company may be more prepared to handle a problem instead of keeping it from happening in the first place. However, many companies keep this in mind while using management by exception practices and take extra care to both react to and prevent problems.
- 19. REQUIRES CLOSE MONITORING In order to work efficiently, companies that implement management by exception need to establish close monitoring practices ensuring professionals alert the managers when a problem arises. Because these managers do not focus on daily operations, they rely on other professionals to keep them informed about any issues. However, most companies that use management by exception train their employees to use strong observation skills and hire responsible professionals to keep the management system efficient and accurate.
- 20. REQUIRES ADVANCED PROBLEM-SOLVING SKILLS Management by exception also requires all leaders within a company to have exceptional problem-solving skills. This helps them quickly address issues and find creative solutions. While this is an advanced skill, most management professionals are trained in problem-solving regardless of the company's management method.