What is the meaning of management by objective and advantages and disadvantages?

Management by objectives refers to strategic management that aims to enhance the performance of the business by clearly defining the objectives of an organization that is understood by the management and employees. According to several theories, management by objectives aims is setting goals and participation in planning and encouraging commitment among employees. But there are many management philosophies and types in the world of business. These types of management strategies differ from one another. In some cases, a few of the management can be mixed for better results for specific requirements. But the management by objectives method is one of the most common management types adopted by businesses. The popularity of this method is proven results beheading the adoption of this method of management by businesses. Management by the organization is a systematic and organized approach that emphasizes the achievement of goals. In the long run, this allows the management to change the organization’s mindset to become more result-oriented. The concept of management by objectives The core aims of management by objectives are the alignment of company goals and subordinate objectives properly, so everyone in the organization works towards achieving the same organizational goal. To identify the organizational goals, the superior managers usually follow the techniques such as goals, questions, and metrics. The process of management by objectives dividing goals into employees To set the objectives for the employees, the following steps are followed. The management divides the organizational goals into parts and assigns chunks to departmental managers. Senior managers and department managers perform several activities for the achievement of assigned goals of the organization. Further, the senior managers assign the objectives to the operational management. The operational management further divided their goals and objectives and identify the activities required for the achievement of the objectives. These sub-objectives and activities are further divided among the rest of the staff. When the process of dividing objects and assigning the goals is done then the management gives strong inputs to identify the objectives, time frame for completion, and tracking opinions. Each of the divided goals is tracked by the managers and gives periodic feedback to the objective owners. At the end of the agreed period (usually time is almost one year and more than that also), the achievement of the objectives is reviewed, and praise the performance. The basis of performance and outcome of the assessment is used to determine salary increments for the upcoming years and relevant bonuses. This process will help to motivate employees to work more focused on the achievement of goals. Responsibility of individuals Since individuals are empowered to carry outstretched tasks and responsibilities under MBO. Individuals’ responsibilities play a vital role in the success of MBO. In MBO, there is a link built between the strategic thinking of the upper management and the operational execution of the lower level of the hierarchy. The responsibility of achieving the objectives is passed from the organization to each individual in the organization. Management by objectives is mainly achieved through self-control. Advantages of management by objectives The term “management by objectives” was first coined by Peter Drucker in 1954. Drucker tried to attach the MBO level to results-oriented evaluations. The main purpose of MBO is to motivate people rather than control them. Management by objectives can simply be defined as a program that encompasses specific goals, participative set, for an explicit period, with feedback on goal progress. According to several economists, an MBO program or process consists of four common ingredients. These are specificity, participative decision making, an explicit period, and program feedback. A brief description of these follows. Specificity The objectives in MBO should be clear and precise that can be measured and evaluated. The clarity in terms of goals, cost reduction, communication, and other required things for achieving goals. The objectives and measures of the organization should be clear for the achievement of organizational goals. Participative decision In MBO goals are not imposed on people if they do not take participate in the decision. The superior and subordinate are jointly set objectives of the organization that will motivate employees to perform their best for achieving the goals. Explicit time Time is very important for every business and other businesses also. MBO emphasizes on the decided objects are complete within in specific period. Completion of the goals within a specific time not only saves a lot of time but also other goals and business activities. Performance feedback This is the final ingredient of the MBO program, this activity is feedback on performance. Feedback is very important for the improvement of any business activity. It includes continuous and systematic measurement and review of performance. Based on the corrective actions are taken to achieve the planned activities.