1. Management By Objectives

2. An Introduction:
• The concept of MBO was given by: Peter Drucker in
1954.
• MBO is also known as “Management by results” and
“goal management”.
• The goals are set up in consultation with the
subordinates.
• According to John W. Humble: “MBO is a dynamic
system which seeks to integrate the company’s need to
clarify and achieve its profit and growth goals with
employees need to contribute and develop themselves. It
is a demanding and rewarding style of managing a
business.

3. Characteristics of MBO
• Mutual Goal Setting
• Compatibility
• Systematic
• Continuity
• Key Result Areas

4. Objectives of MBO
• To relate individual performance to organisational
goals.
• To increase the competence and growth of the
subordinates.
• To enhance communication between superiors and
subordinates.
• To serve as a basis for promotion.
• To stimulate subordinates motivation.

5. The MBO Process
Diagnosis
Final Goal
Review Setting
Interim Action
Reviews Planning

6. Diagnosis
• Understanding the organisation
• Obtaining commitment
• Defining jobs
• Training People

7. Goal Setting
• Organisational goals
• Departmental goals
• Individual goals
• Review by superior
• Joint Agreement

8. Action Planning
• Activities required
• Sequence of activities
• Roles and relations
• Time and resources

9. Interim Reviews
• Environmental changes
• Revise goals and action plans

10. Final Review
• Discussion
• Analysis
• Motivation
• Rewards
• Control

11. Approaches of MBO
• Top-down Approach
• Bottom-up Approach

12. Advantages of MBO
• Improved Planning
• Team Work
• Effective Self-control
• Objective Appraisal
• Motivation and Morale

13. Limitations of MBO
• Goal setting problem
• Time consuming
• Pressure oriented
• Undermining leadership
• Participation Problem
• Inflexibility