Concept of MBO

MBO is both a philosophy and a technique of management. It represents a rational and systematic approach to management wherein measurable goals are set up in consultation with subordinate managers and the contribution of each individual is judged in terms of such goals.  


An analysis of these definitions will reveal the following characteristic features of MBO.

Mutual Goal setting: Fundamental to the MBO process is the mutual setting of objectives between each position holder and his or her superior, and the use of these objectives as standards for evaluating the employeeÆs performance. Every manager establishes his targets and the means for attaining them in association with his superiors. There is active participation of lower level people.

Compatibility: MBO is a process of setting compatible objectives at all levels of the organisation. The process begins with the setting of overall organizational objectives at the top. Using these objectives as guides, positions at middle and lower levels of the hierarchy determine their objectives making them compatible with organizational objectives and with each other.

Measurable Objectives: MBO involves the setting of specific measurable objectives for a future time period. The idea is to assign each employee a specific target which is time bound. Setting measurable objectives may be simple in sales and production. But in other areas it is difficult to set objectives in specific terms.

Systematic: MBO is a formal process that beings with goal setting and continues through performance review. Managers and subordinates act together not only to set common goals but to review performance in the light of these goals.   


Management by objectives in intended primarily:

To measure and judge performance;

To relate individual performance to organizational goals;

To clarify both the job to be done and the expectations of accomplishment;

To foster the increasing competence and growth of the subordinates;

To serve as the basis for judgments about salaries and promotion;

To stimulate the subordinates motivation

Concept of MBO Concept of MBO

By Hassham

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