Management By Objectives (MBO)

1. Definition of Management By Objectives (MBO)

• MBO is a process in which managers / employees set objectives for the employee, periodically evaluate the performance, and reward according to the result.
• MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods).

2. Classification of Objectives

• Corporate objectives
• Functional objectives
• Individual objectives

3. Conditions of Management By Objectives

An objective must be satisfied SMART conditions:

• Specific,
• Measurable,
• Achievable,
• Relevant, and
• Time-Specific.

4. Advantages of MBO

• It is based on the assumption that the individual (employee) knows more than anyone else about her/his own capabilities, needs, strengths, weaknesses and goals.
• A further advantage of MBO is that the emphasis is on the future rather than on the past. Appraisal thus becomes a means to a constructive end.

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