Management by Objectives (MBO):

          A system in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed and rewarded are allocated on the basis of that progress[Robbins and Decenzo, Fundamentals of Management].

          Management by Objectives is a specific type of goal setting process similar to SMART [Management, Michael A. Hitt, J. Stewart Black, Lyman W. Porter].Management by Objectives (MBO) is a systematic application of goal setting and planning to help individuals and firms be more productive [Essentials of Management, Andrew J. Management, 7th edition].

          Management by Objectives (MBO) is a "synergetic approach to organizational management" which "emphasizes the importance of a supervisor and employee working together in order to craft individual goals (Stanley 2004).

          "Management by Objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources.

          Management by Objectives (MBO) tends to surge organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO (Management by Objectives) includes on-going tracking and feedback in the process to reach objectives.

 

Common Elements of Management by Objectives (MBO):

Source: Robbins and DeCenzo, Fundamentals of Management, Sixth edition.

 

1. Goal Specificity: Firstly specific goals are set which when achieved should bring forward the results that support organizational, operational, tactical, strategic objectives and plan.

 

2. Participative Decision Making: Goals when set by the participation of subordinates allows them to achieve goals that are difficult. However the goals set must be accepted by the subordinates as it impacts positively from motivation to performance of the employee.

 

3. Explicit Performance Period: Time period must be set so as to ensure everything works out within the specified time frame. Explicit time period also allows employees to carry out actions in a proper planned manner so as to meet the deadline.

 

4. Performance Feedback: Periodic performance feedback helps employees evaluate whether they are on target or off target so that they can retain or adjust their behaviour. Their performance is greatly affected in accordance to the quality of feedback provided.

 

Introduction:

          Industrial management in the early stages primarily used Management by Objectives (MBO) at higher management level. But, it is used at ground level these days to insure productivity. It encompasses clear objective at a group level and periodic measurement of employee’s performance. Due to fierce competition prevailing not only at a national level but at a global level, quality management has surged to its peak. Hence, emanate the need for implementation of effective MBO (Management by Objectives) system which is in fact an effective goal setting technique for management.

          Management by Objectives (MBO) indeed is also an appraising technique to value employee performance. Management by Objectives (MBO) involve employee participation, goal specificity, performance feedback, reward based on performance, job description, participative decision making. Preponderance of organization is dramatically affected in terms of productivity because of better employee performance. Hence, Management by Objectives (MBO) offers a clear goal, specifies job responsibilities and reduce ambiguity through continuous performance feedback.

          It not only influences employee’s performance but also promote organizational productivity on the whole. Commitment towards the goal attainment improves job satisfaction as well as group productivity. Employees should be energetic who operate all their capability so as to attain the specified goal. According to Antoni, C. (2005) Management by Objectives (MBO) is an effective tool for leading self-regulating teams.

          An extensive use of MBO (Management by Objectives) style is indicated by recent research. Traditional management approaches are no longer in trade these days because of explicit use of MBO (Management by Objectives) which flourished employee as well as organizational productivity. However, operational part of Management by Objectives (MBO) is viewed more complicated and difficult to follow in many ways. Management by Objectives (MBO) is ideal from the point of view of control and effectiveness. Research is a means to covers practical problems in the organization.

 

Literature Review on Management by Objectives (MBO):

          Antoni, C. (2005) study supported Management by Objectives (MBO) by stressing on commitment of group toward attainment of their goal so as to promote employee satisfaction and boost productivity of job. In fact job satisfaction was all because of group planning and group productivity. These results thus promote Management by Objectives (MBO) as a tool to influence teams that are self-regulated. The team must however be competent enough to carry out the notch of goal attainment by carrying out designated tasks as well as goal requirements.While setting the goal factors affecting the achievement of goal should also be taken into account. Else employees might blame these factors as an excuse to the goal attainment and simply not endeavour for their accumulation. Managers are greatly induced by the MBO (Management by Objectives) in order to come up with a competent goal with the interaction with the employees present in the organization. However these goals should be fragmented on each level of management to finalize hierarchical clarity of goals so as to make them attainable at each level and finally make them the goal of the organization as a whole (Carroll and Tosi, 1973).

          Research by O’Leary-Kelly et al, 1994 suggested that higher goal specificity brings about better results. Group commitment is highly influential in order to practically attain the goal. If the group is not putting their efforts to achieve what they have set themselves to do for then every action is in vain (Locke and Latham, 1990). Goal commitment is the degree of the significance of the goal as sited by the group members and the effort that they put forward to attain it and which is greatly influenced by the associated feedback (DeShon and Landis, 1997).

          Each and every group member determination is what influence goal commitment (Klein et al, 1999). The only crucial variable for goal setting at an individual or group level is through strong determination and commitment (Tubbs, 1993). Extensive research concludes only direct and no reasonable effects of goal commitment (Donovan and Radosevich, 1998; Erez and Zidon, 1984; Hollenbeck and Klein, 1987).

          Task independence is the key to influence group’s commitment and goal where task is how group members work together to accomplish the task as well as influence each other’s task (Campion et al, 1993). Task complexity however is another key term to evaluate group’s commitment and goal by forcing them device special strategy to accomplish action (Weldon and Weingart, 1993). Simple tasks doesn’t require group thinking as it is easy to access, however complex tasks comes along with a lot of choices that are difficult to compare. The determination as well as direction which determine individual behaviour is influenced by goal at an individual level (Locke and Latham, 1990). On the other hand, good communication, co-operation, commitment, effort and planning are required to higher group goal setting (Weldon and Weingart, 1993).Antoni (2005) developed Management by Objectives (MBO) model at team level by using goal setting theory. It focused on performance and satisfaction of the employee through effectiveness of group goal and goal commitment that eventually leads to organizational productivity. The crucial findings of this research are mentioned below:

 

1. Job satisfaction, employee performance, organizational productivity is directly proportional to group effectiveness under the stimulus of MBO (Management by Objectives). However, there are several external factors like rapid environmental changes, freedom to decision making, team competencies that hampers MBO (Management by Objectives) system.

 

2. Group goals can be predicted however the commitment of employees towards goal accomplishment can’t be determined. The key factor towards goal attainment is hidden in the group member’s commitment towards their goals.

 

3. Job satisfaction can be influenced by effective planning and proper effort but not productivity.A meta-analysis of 30 studies on Management by Objectives (MBO) by Roggers and Hunter (1992) in a public sector brought positive results in every case. Top management commitment was correlated with the productivity gains:An average gain of 12.3 percent for low commitment.To 63.3 percent gain for high commitment.

 

Research Methodology:

          Generating high productivity factors with superior performance is a challenging task. However, employees are the most valuable resource of the organization, as claimed by the corporate world delights the significance of Management by Objectives (MBO). Some of the organization overlooks the value of MBO (Management by Objectives). This research focused the importance of Management by Objectives (MBO) directly and covers how it brings about the difference in employee pledge, performance and organizational productivity on the whole. It also examined the degree by which MBO (Management by Objectives) brings about staff satisfaction their commitment toward the attainment of the goals.