Management by objective

MBO
 Goal-Setting Theory
 Many believe that everyone
already sets goals
 But this is not true
 When groups do set goals, output
invariably increases over groups
that do not set goals.
 Goal setting and
incentives
 Incentives improve performance –
but
 Only if they cause individuals to
set and commit to attaining
specific goals
 Why does goal setting
effect performance?
 Goals focus activity
 Goals regulate expenditure of effort
 Difficult goals lead to more
persistent effort than do easy goals
 These 3 are critical to the MBO
process
 What is MBO?
 We set goals and then performance is
judged based on how well we
accomplish these goals.
 Intellectually – this seems like the
way to go – and has for years
 But?
 The goals must be:
 Mutually agreeable to employee
and supervisor
 Demanding (stretching) but
achievable
 Within the control of the employee
 Reviewed periodically for
modifications based on events
 The goals must also be:
 Clearly defined
 Simple to understand
 Written
 Problems with MBO
programs
 Employees get systematically
more credit or blame than
deserved
 Bias still exist in rating.
The end