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The document discusses the importance of objectives in management, defining them as essential goals that guide planning, organizing, directing, and controlling within an organization. It outlines the features, advantages, and the process of setting objectives, emphasizing the concept of Management by Objectives (MBO) introduced by Peter Drucker, which involves joint goal-setting between managers and employees. The document also highlights the steps in MBO, including setting objectives, developing action plans, reviewing progress, and performance appraisal, while addressing its advantages and limitations.

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19 views

im2

The document discusses the importance of objectives in management, defining them as essential goals that guide planning, organizing, directing, and controlling within an organization. It outlines the features, advantages, and the process of setting objectives, emphasizing the concept of Management by Objectives (MBO) introduced by Peter Drucker, which involves joint goal-setting between managers and employees. The document also highlights the steps in MBO, including setting objectives, developing action plans, reviewing progress, and performance appraisal, while addressing its advantages and limitations.

Uploaded by

prabumy037
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNIT II

FUNCTIONS OF MANAGEMENT - I
OBJECTIVES
Objectives may be defined as the goals which an organisation tries to
achieve. Objectives are described as the end- points of planning. According to
Koontz and O'Donnell, "an objective is a term commonly used to indicate the end
point of a management programme." Objectives constitute the purpose of the
enterprise and without them no intelligent planning can take place.
Objectives are, therefore, the ends towards which the activities of the enterprise are
aimed. They are present not only the end-point of planning but also the end
towards which organizing, directing and controlling are aimed. Objectives provide
direction to various activities. They also serve as the benchmark of measuring the
efficiency and effectiveness of the enterprise. Objectives make every human
activity purposeful. Planning has no meaning if it is not related to certain
objectives.
Features of Objectives

• The objectives must be predetermined.

• A clearly defined objective provides the clear direction for managerial effort.

• Objectives must be realistic.

• Objectives must be measurable.

• Objectives must have social sanction.

• All objectives are interconnected and mutually supportive.

• Objectives may be short-range, medium-range and long-range.

• Objectives may be constructed into a hierarchy.


Advantages of Objectives

• Clear definition of objectives encourages unified planning.

• Objectives provide motivation to people in the organization.

• When the work is goal-oriented, unproductive tasks can be avoided.

• Objectives provide standards which aid in the control of human efforts in an


organization.

• Objectives serve to identify the organization and to link it to the groups upon
which its existence depends.
• Objectives act as a sound basis for developing administrative controls.

• Objectives contribute to the management process: they influence the purpose


of the organization, policies, personnel, leadership as well as managerial
control.
Process of Setting Objectives

Objectives are the keystone of management planning. It is the most important


task of management. Objectives are required to be set in every area which directly
and vitally effects the survival and prosperity of the business. In the setting of
objectives, the following points should be borne in mind.
• Objectives are required to be set by management in every area which
directly and vitally affects the survival and prosperity of the business.
• The objectives to be set in various areas have to be identified.

• While setting the objectives, the past performance must be reviewed,


since past performance indicates what the organization will be able to
accomplish in future.
The objectives should be set in realistic terms i.e., the objectives to be set
should be reasonable and capable of attainment.
• Objectives must be consistent with one and other.

• Objectives must be set in clear-cut terms.

• For the successful accomplishment of the objectives, there should be effective


communication.

MANAGEMENT BY OBJECTIVES (MBO)

MBO was first popularized by Peter Drucker in 1954 in his book 'The
practice of Management’. It is a process of agreeing within an organization so that
management and employees buy into the objectives and understand what they are.
It has a precise and written description objectives ahead, timelines for their
motoring and achievement.
The employees and manager agree to what the employee will attempt to achieve in a
period ahead and the employee will accept and buy into the objectives.
Definition

“MBO is a process whereby the superior and the mangers of an organization


jointly identify its common goals, define each individual’s major area of
responsibility in terms of results expected of him, and use these measures as guides
for operating the unit and assessing the contribution of each of its members.”
Features of MBO
1. MBO is concerned with goal setting and planning for individual managers and
their units.

2. The essence of MBO is a process of joint goal setting between a supervisor and
a subordinate.

3. Managers work with their subordinates to establish the performance goals


that are consistent with their higher organizational objectives.
4. MBO focuses attention on appropriate goals and plans.

5. MBO facilitates control through the periodic development and


subsequent evaluation of individual goals and plans.
Steps in MBO:

The typical MBO process consists of:

1) Establishing a clear and precisely defined statement of objectives for the employee

2) Developing an action plan indicating how these objectives are to be achieved

3) Reviewing the performance of the employees

4) Appraising performance based on objective achievement

1) Setting objectives:

For Management by Objectives (MBO) to be effective, individual managers must


understand the specific objectives of their job and how those objectives fit in with
the overall company objectives set by the board of directors.
The managers of the various units or sub-units, or sections of an organization
should know not only the objectives of their unit but should also actively
participate in setting these objectives and make responsibility for them.
Management by Objective (MBO) systems, objectives are written down for each
level of the organization, and individuals are given specific aims and targets.
Managers need to identify and set objectives both for themselves, their units, and
their organizations.
2) Developing action plans

Actions plans specify the actions needed to address each of the top organizational
issues and to reach each of the associated goals, who will complete each action and
according to what timeline. An overall, top- level action plan that depicts how each
strategic goal will be reached is developed by the top level management. The
format of the action plan depends on the objective of the organization.

3) Reviewing Progress:

Performance is measured in terms of results. Job performance is the net effect of an


employee's effort as modified by abilities, role perceptions and results produced.
Effort refers to the amount of energy an employee uses in performing a job.
Abilities are personal characteristics used in performing a job and usually do not
fluctuate widely over short periods of time. Role perception refers to the direction
in which employees believe they should channel their efforts on their jobs, and
they are defined by the activities and behaviors they believe are necessary.

4) Performance appraisal:

Performance appraisals communicate to employees how they are performing their


jobs, and they establish a plan for improvement. Performance appraisals are
extremely important to both employee and employer, as they are often used to
provide predictive information related to possible promotion. Appraisals can also
provide input for determining both individual and organizational training and
development needs. Performance appraisals encourage performance improvement.
Feedback on behavior, attitude, skill or knowledge clarifies for employees the job
expectations their managers hold for them. In order to be effective, performance
appraisals must be supported by documentation and management commitment.

Advantages

• Motivation – Involving employees in the whole process of goal setting and


increasing employee empowerment. This increases employee job satisfaction
and commitment.
• Better communication and Coordination – Frequent reviews and interactions
between superiors and subordinates helps to maintain harmonious relationships
within the organization and also to solve many problems.
• Clarity of goals

• Subordinates have a higher commitment to objectives they set themselves


than those imposed on them by another person.
• Managers can ensure that objectives of the subordinates are linked to the
organization's objectives.

Limitations

There are several limitations to the assumptive base underlying the impact
of managing by objectives, including:
• It over-emphasizes the setting of goals over the working of a plan as a driver of
outcomes.

• It underemphasizes the importance of the environment or context in which the


goals are set. That context includes everything from the availability and quality
of resources, to relative buy-in by leadership and stake-holders.
• Companies evaluated their employees by comparing them with the
"ideal" employee. Trait appraisal only looks at what employees should
be, not at what they should do.
When this approach is not properly set, agreed and managed by organizations, self-
centered employees might be prone to distort results, falsely representing
achievement of targets that were set in a short-term, narrow fashion. In this case,
managing by objectives would be counterproductive.

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