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MBO is a process where managers work with their subordinates to set performance goals that are consistent with higher organizational objectives. The essence of MBO is joint goal setting between supervisors and subordinates. MBO helps clarify organizational objectives and ensures goals are set and progress is reviewed at all levels from individual employees to top management.
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- 1. 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 organizational objectives. MBO helps clarify the hierarchy of objectives as a series of well-defined means-ends chains. 02/03/11 LAU - HRI / The Second HR Workshop
- 2. 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 organizational objectives. MBO helps clarify the hierarchy of objectives as a series of well-defined means-ends chains. 02/03/11 LAU - HRI / The Second HR Workshop
- 3. Model of the MBO Process 02/03/11 LAU - HRI / The Second HR Workshop Step 1: Setting Goals Step 2: Developing Action Plans Step 3: Reviewing Progress Corporate Strategic Goals Departmental goals Individual goals Step 4: Appraising Overall Performance Appraisal Of Overall Performance Corrective Action Review Progress Action Plans
- 4. THE PROCESS OF MBO 02/03/11 LAU - HRI / The Second HR Workshop
- 5. 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. 02/03/11 LAU - HRI / The Second HR Workshop
- 6. THE MBO PROCESS Collaborative goal setting and planning are the essence of MBO. This involves several steps: Managers tell their subordinates what organizational 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. 02/03/11 LAU - HRI / The Second HR Workshop
- 7. 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. 02/03/11 LAU - HRI / The Second HR Workshop
- 8. 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 . 02/03/11 LAU - HRI / The Second HR Workshop
- 9. THE EFFECTIVENESS OF MBO - STRENGTHS Organizations create a powerful motivational system for their employees by adopting MBO. Through the process of discussion and collaboration, communication is greatly enhanced. With MBO performance appraisal may be done more objectively. MBO focuses attention on appropriate goals and plans. 02/03/11 LAU - HRI / The Second HR Workshop
- 10. THE EFFECTIVENESS OF MBO - STRENGTHS MBO helps identify superior managerial talent for future promotion. MBO provides a systematic management philosophy that can have a + effect on the overall organization. MBO facilitates control through the periodic development and subsequent evaluation of individual goals and plans. 02/03/11 LAU - HRI / The Second HR Workshop
- 11. THE EFFECTIVENESS OF MBO - WEAKNESSES The major reason for MBO failure is lack of top management support after deciding using it, its implementation is delegated to lower management goals and plans cascading throughout the organization may not be those of top management. Some firms may overemphasize quantitative goals and burden their systems with too much paper work and record keeping. 02/03/11 LAU - HRI / The Second HR Workshop
- 12. THE EFFECTIVENESS OF MBO - WEAKNESSES Some managers will not or cannot sit down and work out goals with their subordinates they “assign” or “suggest” goals and plans to their people resentment and lack of commitment to the MBO program . MBO well articulated objectives clarity of purpose, but also a certain rigidity organization must be flexible to survive more fluid and yielding objectives loss of clarity. 02/03/11 LAU - HRI / The Second HR Workshop
- 13. 02/03/11 LAU - HRI / The Second HR Workshop MBO Benefits and Problems Benefits of MBO Problems with MBO 1. Manager and employee efforts are focused on activities that will lead to goal attainment. 2. Performance can be improved at all company levels. 3. Employees are motivated 4. Departmental and individual goals are aligned with company goals. 1. Constant change prevents MBO from taking hold. 2. An environment of poor employer-employee relations reduces MBO effectiveness. 3. Strategic goals may be displaced by operational goals. 4. Mechanistic organizations and values that discourage participation can harm the MBO process. 5. Too much paperwork saps MBO energy.