Материал: Management-and-Organization-Behavior

Review Questions

1.What is planning? Explain the objectives and principles of planning.

2.Explain the planning.process

3.Distinguish between long range and short range planning?

4.What are the different types of plans? Explain them.

5.“Failure to plan is planning to fail”. Discuss.

6.Take any two Indian companies and examine how they have succeeded or failed due to poor strategic planning.

7.Identify and explain the strategic planning process in an MNC like Google drawing from the public domain.

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Lesson – 6 : MANAGEMENT BY OBJECTIVES

Objectives

After reading this lesson, you should be able to:

ӹӹFamiliarize Yourself With The Process Of Mbo;

ӹӹUnderstand The Usefulness Of Mbo As A Managerial Tool;

ӹӹUnderstand The Sources Of Polices;

ӹӹAcquaint With The Formulation Of Polices; And

ӹӹExplain The Appropriateness Of Business Strategy.

Lesson Outline

ӹӹProcess Of Mbo

ӹӹPrerequisites Of Mbo

ӹӹAdvantages Of Mbo

ӹӹReasons Why Mbo Fails

ӹӹTypes Of Policies

ӹӹPrinciples Of Polices

ӹӹPolicy Formation

ӹӹStrategies

ӹӹAppropriateness Of Business Strategy

ӹӹReview Questions

Management guru Peter Drucker is credited with being the first to introduce Management by Objectives (MBO) as an approach for increasing organizational effectiveness. He observes that every manager, from the highest to the lowest levels in the organisation, should have clear objectives to pursue. According to him, such a process would enable each manager to have a clear understanding of what the organisation expects of him or her and how their individual objectives are integrated with the overall organizational objectives. George Odiorne has done substantial research work on MBO and further popularized the concept.

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To quote George Odiorne, “MBO is a process whereby the superior and subordinate managers of an organisation jointly identify the common goals, define each individual’s major areas of responsibility in terms of the results expected of him, and use these resources as guides for operating the unit and assessing the contribution of each of its members”.

Different goals are sought to be achieved by the introduction of MBO in organizations. MBO, as a management tool, thus, is so versatile that it is used;

ӹӹto integrate the organizational goals with the individual goals;

ӹӹas a motivational technique wherein individuals are driven towards the achievement of goals;

ӹӹto appraise the performance of managers; and

ӹӹto control the activities as they are performed.

Drucker suggests that objectives are to be specified in the key result areas of business (KRAs). A key result area may be understood as one the performance of which, directly and vitally affect the success and survival of the business. Accordingly, for a manufacturing firm production, productivity, profitability, market share, social responsibilities, employer and employee relations, manager and worker development, development of physical resources, constitute the important key result areas. It may be understood that the KRAs vary from business to business. Since MBO involves a systematic effort towards the achievement of objectives, utmost care has to be exercised in setting the objectives for all the key result areas.

Prerequisites of MBO

ӹӹMBO is not merely a goal-setting tool. It is a philosophy and has to be understood thoroughly by the managers concerned with achievement of objectives.

ӹӹTop management must be willing to implement the system wholeheartedly. Its support and encouragement are crucial for the success of MBO. The necessary democratic climate has to be created in the organisation for setting the goals in a realistic way.

ӹӹGoals have to be spelt out in specific and clear terms. To the extent possible, they must be made realistic because goals motivate employees towards better performance.

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ӹӹThe key result areas (KRAs) of the business have to be identified and appropriate goals have to be specified for these areas. All the important areas of the business must be covered with meaningful goals.

ӹӹIt has to be realized that goal-setting in the MBO process is not an end by itself. It is only a means to achieve organizational effectiveness. Otherwise, goal-setting becomes the primary task rather than their achievement.

ӹӹAppropriate organisation structure has to be designed with wellunderstood relationships among people such that every goal becomes some individual’s responsibility.

ӹӹBesides clarifying the organizational roles by adopting a suitable organisation structure, attention has to be paid on the resources required by the people to achieve the goals. Otherwise, goals by themselves, however effective they are, do no assure performance. Performance depends on the timely availability of resources. Nonavailability or inadequate access to the resources frustrates the individuals concerned with the achievement of goals.

Nature of Objectives

‘Objectives’ are the end points of management action. They provide meaning to the existence of an organisation. Objectives are the specific targets to be achieved by an organisation. They are the end-points towards which all management activities like organising, staffing, directing and controlling are directed. In other words, only after defining the basic objectives for which an organisation exists, can the manager determine the kind of organisation, the type of personnel and their skills, the kind of motivation and direction and the nature of control techniques which may be employed to achieve the ends.

1.Objectives may be in quantitative or qualitative terms. For example, in the areas of market standing, productivity and physical and financial resources quantification is possible. On the other hand, worker’s morale, social responsibility, etc. cannot exactly quantified. However, objectives in the latter category may be expressed in qualitative terms. Thus, quantitative objectives are gauged by ‘how much’ while qualitative objectives by ‘how well’.

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