Essentials of Planning and Managing by Objectives

113evolving Concepts in Management by Objectives 11Management by objectives (MBO) is now practiced around the world. Yet, despite itswide application, it is not always clear what is meant by MBO. Some still think of it as anappraisal tool; others see it as a motivational technique; still others consider MBO aplanning and control device. In other words, definitions and applications of MBO differwidely. We define management by objectives as a comprehensive managerial system thatintegrates many key managerial activities in a systematic manner and is consciouslydirected toward the effective and efficient achievement of organizational and individualobjectives. This view of MBO as a system of managing is not shared by all. While some stilldefine MBO in a very narrow, limited way, we prefer to see it as a comprehensive goal-driven,success-oriented management system as shown in Figure 4-4. Besides being used forperformance appraisal, as an instrument for motivating individuals, and in strategicplanning, there are still other managerial subsystems that can be integrated into the MBOprocess. They include human resource planning and development (staffing as well asindividual and organization development), career planning (building on personal strengthsand overcoming weaknesses), the reward system (paying for performance), budgeting(planning and controlling), and other managerial activities important for a specific position.These various managerial activities need to be integrated into a system. In short, MBO, to beeffective, must be considered a way of managing as shown in Figure 4-4, and not an addition tothe managerial job. 12Benefits and Weaknesses of Management by ObjectivesAlthough goal-oriented management-is now one of the most widely practiced managerialapproaches, its effectiveness is sometimes questioned. Faulty implementation is often blamed,but another reason is that MBO may be applied as a mechanistic technique focusing onselected aspects of the managerial process without integrating them into a system.Benefits of management by objectivesThere is considerable evidence, much of it from laboratory studies, that Shows themotivational aspects of clear goals. But there are other benefits, such as the following: