MANAGEMENT BY OBJECTIVES
CARHLA FUNG
What is MBO?
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources.
It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization.
Philosophy
People perform better when they know what is expected of them and can relate their personal goals to organizational objectives
Definition of MBO
George Odiorne• “A process whereby superior and
subordinate managers of an Organisation jointly define its common goals, define each individual's major areas 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."
MANAGEMENT BY OBJECTIVES
Core Concepts of MBO
Managers should "avoid the activity trap“
All managers should:•participate in the strategic
planning process, in order to improve the implementation of the plan, and
• implement a range of performance systems, designed to help the organization stay on the right track.
According to Peter Drucker... Managers who continuously focus on the “now” and the
“emergency” result in being ineffective. The perception is that focusing and putting all energy into a “crisis” which happens every week or every month is effective behavior, as a ton of actionables and resources are committed to the cause;
Unfortunately, everyone starts to lose the main direction of what the organization wants from them. The more crises and “fires” occur, the more the management team trails off the path that has been set to be successful. Teams begin to get burned out and confused, managers continue to believe that dealing with “drives” is the right thing to do and executives begin to get frustrated on why their plans are not being executed. A downward spiral for all those involved in any organization.
Managerial Focus
MBO managers focus on the result, not the activity.
Focus on the result, not on the activity
Features of MBO
Supervisor-subordinate participation
Joint goal-setting Joint decision on methodology Makes way to attain maximum
result Support from superior
Steps in MBO Planning
GO
AL
SETTIN
G Define the organizational objectives. – To be determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members.
Developing Objectives:
• Specific• Measurable• Attainable• Relevant• Time-bound
In addition…
Objectives are written down for each level of the organization, and individuals are given specific aims and targets. •To ensure that people know what
the organization is trying to achieve, what their part of the organization must do to meet those aims, and how, as individuals, they are expected to help.
Provide is focus•Objectives must be precise and
keep their number small.
Common errors to avoid when developing objectives
Writing too many outcomes or too complex outcomes
Having too high or too low standards
Using too long or too short a time period
Identifying outcomes that are not measurable, or outcomes for which the cost of measurement is too high
Setting Objectives
GUIDELINES Have a specific time frame Be behaviourally stated Be objectively evaluated Identify positive rather
than negative outcomes Maintain and adhere to the
organization's standards of practice and/or policies
CHARACTERISTICS Sets limits on the time for
behavior to change Is a clear and concise form
of communication Controls change Can be used by any level
of staff Varies from the global to
the very specific Documents problems
beyond the manager's control
Aids in analytic thinking Encourages staff
development Improves skill in planning
Example
By March 30, 2011, the nurse manager will:•Set up June-December in-service
topics as prioritized by the staff•Accomplish all staff performance
evaluations by a specified deadline
•Perform documentation reviews in view of institutional standards
•Evaluate staffing patterns and rotate once to each shift
Steps in MBO Planning
GO
AL
SETTIN
GDefine the organizational objectives. – To be determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members.
MA
NA
GER
-S
UB
OR
DIN
ATE
INV
OLV
EM
EN
TAfter the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting.
MATC
HIN
G G
OA
LS
AN
D R
ESO
UR
CESManage
ment must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates.
IMPLE
MEN
TATIO
N O
F PLA
NAfter objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors.
REV
IEW
&
PER
FOR
MA
NC
E
APPR
AIS
AL
This step involves periodic review of progress between manager and the subordinates.
The Five-Step MBO Process
MBO Principles
Cascading of organizational goals and objectives
Specific objectives for each member Participative decision making Explicit time period Performance evaluation and feedback
MBO Strategy : Three Basic Parts
All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers.
Performance reviews are conducted periodically to determine how close individuals are to attaining their objectives.
Rewards are given to individuals on the basis of how close they come to reaching their goals.
Six MBO Stages
Define corporate objectives at board level Analyze management tasks and devise formal
job specifications, which allocate responsibilities and decisions to individual managers
Set performance standards Agree and set specific objectives Align individual targets with corporate
objectives Establish a management information system
to monitor achievements against objectives
Advantages
Continuously emphasize on what should be done in an organization to achieve organizational goals
MBO process secures employee commitment to attaining organizational goals
Creates a vested interest in the employee to accomplish goals because employees are able to set their own goals
Defensive feelings are minimized, and a spirit of teamwork prevails.
Advantages
FOR NURSES Standard of evaluation is
based on the characteristics of a specific person and job
Nurses have input and some control over their future
Nurses know the standard by which they will be judged; nurses have knowledge of the manager’s goals, priorities, and deadlines;
Nurses have a greater understanding of where they stand with the manager in relation to relative progress
There is a better basis for evaluation than personality traits;
MBO emphasizes the future which can be changed, instead of the past and it stimulates higher individual performance and morale.
FOR MANAGERS• Reservoir of personnel data
and performance information for updating personnel files
• An indication of personnel development needs within the agency
• Basis for promotion and compensation
• A relationship with the staff that makes the manager a coach rather than a judge
• Better managerial planning and use of the employee.
• Directs work activities toward organizational goals, facilitates planning, provides standards for control and provides objective appraisal criteria, reduces role conflict and ambiguity and uses and motivates human resources
Limitations• Not easy to implement and requires hard work
for maintenance• Process must be taught and reinforced for
managers to become and remain proficient in applying the principles of the system
• MBO assumes that staff members and managers will define suitable standards that will serve the agency; it presumes that managers understand their limitations
• Some staff nurses may not want to be involved in setting goals;
• Although managers really set goals; staff nurses may set their goals according to what they know their managers expect
• MBO stresses results but does not supply the methods for achieving them;
• Nurses can become frustrated if they believe that increasingly higher goals will be expected of them
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