Every company has its vision and mission. It will be effective only when the employees are actively involved in decision-making. The leaders and entrepreneurs set their vision and mission and to accomplish the same, it is essential to take the support of managers and non-managers. In this process, the concept of MBO plays a crucial role in aligning employees with organizational goals and objectives and ultimately accomplishing them.
What is MBO?
MBO is a management strategy. The concept was coined by Peter F. Drucker in his book titled 'The Practice of Management' in 1954. It integrates individual goals with organizational goals. It is here where the employees set their goals achieve their goals and take feedback for themselves. Precisely MBO is all about aligning the goals of employees with the goals of the organization.
MBO program helps both the managers and non-managers to have clarity of their roles and responsibilities as they are briskly involved in setting their goals and objectives. There is a vast difference between hearing the goals from others and setting the goals by themselves. Setting goals has better possibilities of achieving as the people know their strengths and weaknesses and set their goals based on their capabilities and competencies. When goals are imposed by others it makes things a little more complicated. Whereas when people themselves set goals it makes them more responsible and accountable as well.
SMART MBO
The employees must set their objectives in such a way that they must be SMART. SMART is the acronym for specific, measurable, achievable, realistic, and trackable. They should specify their goals to avoid ambiguity. For instance, by what percentage or by what means they want to achieve must be specified clearly. They must be able to measure the duration by which they will be able to accomplish their objectives. The objectives must not be set in such a way that the employees must have the competency and capability to achieve them. Setting objectives realistically but not based on fantasy motivates employees to work harder and smarter. Finally, the objectives must be trackable wherein the employees must be able to track the status of their performance. For instance, if they fail to reach the objectives in time, they must be able to analyze obstacles and overcome them same. It is a kind of feedback about their execution.
Merits of MBO
MBO ensures clarity in the minds of the employees about their organizational goals and objectives and tunes themselves accordingly. It provides a sense of satisfaction and confidence amongst the employees as they are involved in decision-making. It motivates and challenges them to take up higher roles and responsibilities.
It helps ensure that both employees and management are well-tuned and aligned with organizational goals and objectives. It helps in measuring the performance of employees as per the benchmarked standards. It provides better communication and promotes better coordination between superiors and subordinates. Let us look at the same succinctly.
Clarity in goals
Effective communication
Better coordination
Proper facilitation
More confidence among the people
Clear demarcation of roles and responsibilities
Higher morale among the people
Helps in delegating authority in large organizations.
However, the concept has been criticized by W. Edwards Deming who doubted the viability and application of objectives. We shall now look at the other side of MBO.
Demerits of MBO
It is a lengthy process
It may affect the main organizational goals
At times people may not be competent in setting their goals
It may lead to organizational politics as people impose certain goals on their peers that they may not be able to accomplish
Peter Drucker’s concept of MBO is here to stay in this 21st century. The globe is changing due to rapid growth in technology. Employees are clamoring for freedom and active participation in management. Advocating MBO helps the employees to have a sense of satisfaction and motivation as it enables them in the decision-making and management process actively.
Share if you care!
“Things You Don’t Know about Professor M. S. Rao” http://professormsraovision2030.blogspot.com/2015/10/things-you-dont-know-about-professor-m.html
Read my ‘Vision 2030 One Million Global Leaders’ URL: http://professormsraovision2030.blogspot.com/2014/12/professor-m-s-raos-vision-2030-one_31.html
Note: I had a brain hemorrhage. I was in bed for five months. My right hand has been numb and paralyzed. I am recovering. Thanks for empathizing with me. With gratitude. https://www.youtube.com/watch?v=BFJrSRLHPUk&ab_channel=ProfessorM.S.Rao
Life is great!
Professor M.S. Rao, Ph.D.
Founder of MSR Leadership Consultants, India
Amazon: http://www.amazon.com/M.-S.-Rao/e/B00MB63BKM
Vision 2030: https://professormsraovision2030.blogspot.com
LinkedIn: https://www.linkedin.com/in/professormsrao
Substack: https://professormsrao.substack.com
X: http://twitter.com/professormsrao
YouTube: https://www.youtube.com/@ProfessorMSRao
Meta: https://www.facebook.com/Professor-MS-Rao-451516514937414
See the Light in You: https://www.amazon.com/See-Light-You-Spiritual-Mindfulness/dp/1949003132
Thanks for reading!
Kindly share your thoughts and comments below. I’m sure someone out there will find your story useful.
Copyright©2025 MSR Leadership Consultants India. All Rights Reserved. Reproduction in whole or in part without permission is prohibited.
This nonprofit blog will share Professor M.S. Rao’s passion and vision to build one million students as global leaders by 2030. Please don't cut articles from my blog; redistribute them by email or post them on the web. The use of this material is free provided the copyright is acknowledged and a reference or link is made to the Blog http://professormsraovision2030.blogspot.com. Without permission, this material may not be sold, published, or used to provide business services to a third party.
No comments:
Post a Comment