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Differentiate Between Traditional Goal Setting and Management by Objectives

Traditional goal setting involves goals set by organizational leaders that are then broken down and specified as they move to lower levels of the hierarchy. This works well in small companies where leaders are connected to all areas. Management by objectives (MBO) defines company goals that are then used to determine employee goals through a process involving establishing organizational goals, communicating them to staff, encouraging staff to set their own supporting goals, tracking progress, and assessing/rewarding employees. This aligns employee work to top priorities and increases productivity by giving employees more empowerment and incentive. MBO consists of a five step process and is generally more effective than traditional goal setting in larger organizations.

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Abdul Rehman Qureshi
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4K views

Differentiate Between Traditional Goal Setting and Management by Objectives

Traditional goal setting involves goals set by organizational leaders that are then broken down and specified as they move to lower levels of the hierarchy. This works well in small companies where leaders are connected to all areas. Management by objectives (MBO) defines company goals that are then used to determine employee goals through a process involving establishing organizational goals, communicating them to staff, encouraging staff to set their own supporting goals, tracking progress, and assessing/rewarding employees. This aligns employee work to top priorities and increases productivity by giving employees more empowerment and incentive. MBO consists of a five step process and is generally more effective than traditional goal setting in larger organizations.

Uploaded by

Abdul Rehman Qureshi
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Q1) Explain and differentiate between Traditional Goal Setting and Management by Objectives

(MBO). Also explain how both of these can be implemented within an organization.

Ans: MBO is the process of defining top business goals and using them to determine the goals of
employees. MBO procedures are designed to define the main goals of an employee, later graded
with group input.

This helps all company contributors to see their achievements in relation to the top priorities of
the company as they perform their tasks, strengthening the alignment between activity and
outcome, which increases productivity dramatically.

In Traditional goal setting, all goals are set by the organization's leaders. The workers at the
top of the hierarchy have a good view of the company's big picture and can outline where they
want to see the company go.

The main objectives are then broken down into sub-goals by the leaders of the company for each
segment of the corporation. They become more descriptive and tactical as the objectives move
down the hierarchy, while the objectives at the top are more visionary.

Traditional goal setting is successful when the goals are unified in their specified objectives at
each level of the organisation. If there is consistency and harmony, the group as a whole will
work together to achieve its objectives. This is generally successful, in small companies or ones
where there are not many layers of management. In order for conventional goal setting to be
successful, the company's leaders must be deeply connected with all areas of the company. It can
be easily be implemented in small organizations.

In MBO, Objectives are necessary to ensure that all contributors are productively investing their
time at work and working for a concerted result. If quarterly targets end up being too easy, they
can be adjusted during the review process to be more ambitious or vice versa.

MBO consist of five process:

 The first step is to either establish or update the whole company's organizational goals.
This broad overview should be drawn from the mission and vision of the firm.
 The second phase is to convey the organizational priorities to staff.
 Phase three stimulates workers' interest in setting individual goals. After the goals of the
company are discussed with workers, employees should be motivated from the top to the
bottom to help set their own goals to accomplish these broader organizational goals.
Because they have greater empowerment, this gives workers greater incentive.
 Step four includes tracking staff development. A key feature of the targets in phase two
was that they were observable in order to assess how well they were accomplished by
workers and managers.
 The fifth step is to assess the success of employees and reward them. This move requires
truthful input for each employee about what was accomplished and not accomplished.

MBO Examples for Company:

 Achieve sale of 1 million every month


 Expand sales by 5% every month.
 Increase market share
 Work on customer support and work on betterment.
 Increase employee engagement.
 Increase export by 10% every month.

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