You will read the text about the performance of employees under the MBO system.

Date: 2015-10-07; view: 423.

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Case Questions

1. What deficiencies do you see in the planning statements made by the two sales managers?

2. What strengths do you see in the planning statements made by the two sales managers?

3. What might Ralph Taylor be doing wrong in his attempts to involve Bloom and Anderson in planning?

Management by Objectives (MBO) is a system which was first described by the American Peter Drucker, in 1954, in his book The Practice of Management. MBO has attracted enormous interest from the business world, and its principles have been applied in many of the world's largest companies. In his book, Peter Drucker emphasized that an organization and its staff must have clear goals. Each individual must understand the goals of the enterprise he works for, and must make a contribution to them. It is also vital, in Drucker's view, that the individual knows what his manager expects of him. He must know what sort of results he is expected to achieve.

If an organization uses the Management by Objectives approach, it must pay careful attention to planning. This is because each individual has clearly defined objectives. And these will contribute to the overall objectives of the enterprise. With MBO, individual and organization objectives are linked. A special feature of MBO is that the subordinate participates with his manager in developing objectives. After these have been worked out, his performance, in relation to the goals, can be assessed. MBO, therefore, focuses on results. The subordinate's performance is judged in terms of how well or badly he has achieved his goals.

Various kinds of MBO systems are used in organizations. Here is an example of how a program might work in a company.

The program consists of several stages. First, the subordinate's job is defined. Next, his current performance is evaluated. Then, new objectives are developed by the subordinate and his manager. Finally, the program is put into action. Later, there are periodic reviews of the person's performance, and his progress is checked

Let us consider these stages in more detail. At the first stage, the subordinate and his manager define the job separately. They also rank the tasks in the order of importance. Both parties then meet and discuss the statements they have made in writing. It is quite possible that they will not agree about certain aspects of the job. They discuss their differences of opinion. In the end, they both have a clearer idea of what the job involves.

At stage two, the subordinate and his manager examine each task. They try to decide how well or badly it is being performed. Again, they do this evaluation separately. They meet and discuss their assessments. All being well, the manager will have the chance to praise the subordinate for some of his work. On the other hand, the subordinate or the manager - or even both parties - may point out areas where there are problems - tasks which are not performed properly.

Developing objectives comes next. The subordinate and his manager try to develop goals which are challenging but realistic. The manager may set performance standards which can be measured or quantified. But this is not essential. The objectives probably spell out results that must be achieved. There will be dates by which the subordinate must achieve his goals.

The table below gives examples of objectives for an MBO program.