Chapter 5 – Management by Objectives

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Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book ‘The Principle of Management’. It is a systematic and organized approach that allows management to focus on achievable goals and to attain best possible results from available resources.

Characteristics of MBO:

  • MBO emphasizes participation in setting goals that are tangible, verifiable and measurable
  • Focuses on what should be accomplished (goals) rather than how it should be accomplished (methods).
  • By concentrating on key result areas translates the abstract philosophy of management in to concrete phraseology.
  • Allows management to attain maximum results from available resources by focusing on achievable goals.

Process of MBO:

Chapter 5_1.jpg

Limitation of MBO:

  1. Performance pressure
  2. Time consuming
  3. Increase paper work
  4. Goal setting problems
  5. Organisational problems

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