Management by objective

mission
Corporate objective
Departmental objective
Individual objective
Definition
A system in which specific performance objectives are jointly determined by
subordinates and their supervisors, progress toward objectives is periodically
reviewed, and rewards allocated on the basis of that progress.

Peter Drucker
Principles
Common objective
On time result
Greater participation
Regular feedback
SMART
SMART goals[2] i.e. goals that are:
Specific
Measurable
Achievable
Relevant, and
Time bound

Features of MBO
Operational technique
Comprehensive technique
Participative
Result oriented
System approach
Concentration on key areas

Advantage of MBO
Unity of planning (BETTER PLANNING)
Organizational control (employee as well organizational)
Integration of goals
Facilitates coordination
Decentralization of authority
Analyze training needs
Self control
Higher productivity
Limitations
Difficulty in setting quantitative target
Emphasis on short term goals
Resistance to change
Lack of training
Lack of follow up
Costly process
Time consuming
Unnecessary paperwork
Limited application
Effective implementation of MBO
Top management support
Education
Active participation
Decentralization of authority

Steps in MBO
Process of MBO
Organizational objective
Departmental objective
Goals of individual
Check- points or key result areas
Review of progress
Performance appraisal and counseling
Forecasting
It is a planning tool used to predict future
environmental happenings that will influence
the operations of the organization.
Significance
It helps in effective planning
Reduces the area of uncertainty
It makes planning process dynamic
It helps in control

Steps
Understanding the problem
Developing the ground work
Selecting and analyzing data
Estimating future work
Planning and forecasting


Forecasting is the essence Planning
Limitation

Not with 100% accuracy
Based upon assumptions
Required lots of reliable information
Techniques of forecasting
Time series
Regression analysis
Historical perspective
Panel consensus
Delphi method