Question 2 OR (a)

MBO versus traditional goal setting; implementing MBO effectively

9 marks

Time to write
About 18 minutes
Topic
Objectives and management by objectives
Notes
Crux notes

Question

Question 2 OR (a) · 9 marks

In what way, the Management by Objectives approach is different from Traditional goal setting? Suggest the steps an organization should take for implementing the MBO approach effectively.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

18 minfor 9 marks

Read from the question

  • What…?Suggest…Two asks in one question: answer both.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Traditional goal setting and MBO explained 2 marks 4 min
  3. 2 Differences 3 marks 5 min
  4. 3 Steps for effective implementation 3½ marks 6 min
  5. 4 Conclusion ½ mark 1 min
  6. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks. End with step 4 in a line or two.

Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Traditional goal setting

In traditional goal setting, objectives are set by top management and passed downward through the hierarchy. Each level breaks the goals into sub-goals for the level below. Subordinates receive targets without taking part in setting them. Goals are often broad, such as a call to improve performance or increase sales, and are reinterpreted, and sometimes distorted, as they pass down. Appraisal tends to be based on superiors' judgement of traits and effort.

Picture itMBO versus traditional goal setting; implementing MBO effectively

1Manager and assistant sit across the calendar and set the quarter's targets together.

Participation of subordinatesParticipation of subordinates in setting their objectives.

2Mid-term, the two of them stand at the chart: where are we against the plan?

Periodic reviewPeriodic review and feedback on progress.

3Results in, the trophy and the increment letter change hands before the whole office.

Appraisal and rewardsAppraisal and rewards based on results.

Management by objectives

Management by objectives (MBO) is a system in which superiors and subordinates jointly set specific, measurable objectives for each unit and individual, consistent with organisational goals; work towards them with considerable self-control; review progress periodically; and appraise performance by results achieved.

How MBO differs from traditional goal setting

BasisTraditional goal settingMBO
DirectionTop-down onlyTop-down and bottom-up (joint)
ParticipationSubordinates receive goalsSubordinates help set their goals
Nature of goalsOften vague, generalSpecific, measurable, time-bound
Link between levelsGoals may be distorted as they pass downCascading, linked hierarchy of objectives
CommitmentComplianceCommitment through participation
ControlExternal control by superiorsSelf-control plus periodic review
FeedbackInfrequentRegular progress reviews
AppraisalBased on traits and judgementBased on results against objectives
RewardsLoosely linked to performanceLinked to achievement of objectives

Steps for effective implementation of MBO

  1. Top-management commitment. Senior managers must support MBO, practise it themselves and allow time for it.
  2. Clear organisational goals. The mission and overall objectives must be defined first, so that unit and individual objectives can be derived from them.
  3. Training and communication. Managers and employees must understand the philosophy and techniques of MBO, especially how to write measurable objectives and conduct reviews.
  4. Joint setting of objectives. Superior and subordinate agree on a limited number of specific, challenging but attainable objectives, with measures and deadlines, for each key result area.
  5. Matching authority and resources. Subordinates must have the authority, budget and information to achieve their objectives.
  6. Action plans and freedom. Subordinates plan how to reach their objectives and are given freedom to act.
  7. Periodic reviews. Regular meetings check progress, remove obstacles and revise objectives when conditions change.
  8. Performance appraisal and rewards. Results are evaluated against objectives and linked to rewards, recognition and development.
  9. Balance of quantitative and qualitative objectives, so that easily measured targets do not crowd out quality, teamwork or long-term goals.
  10. Avoiding paperwork overload and keeping the system flexible.
  11. Continuous improvement: lessons from each cycle feed into the next.

Example. A hospital introducing MBO first sets organisation-wide goals (shorter waiting times, lower infection rates), trains department heads, agrees specific targets with each, reviews them monthly and links annual increments to results.

Conclusion

MBO replaces imposed, vague targets with jointly agreed, measurable objectives and self-control. It succeeds when it is supported from the top, understood by all and used as a management philosophy rather than a form-filling exercise.

Where the 9 marks sit

#ComponentMarks
1Traditional goal setting and MBO explained2
2Differences3
3Steps for effective implementation3.5
4Conclusion0.5
Total9
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