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Management by Objectives (MBO) is a strategic management process that ensures organizations achieve their goals effectively by setting clear objectives and aligning them with employee performance. This concept was first introduced by Peter Drucker, who emphasized the importance of setting specific, measurable objectives in collaboration with employees.
According to Drucker, “MBO is a process in which objectives are supplied to every area where performance and results directly and vitally affect the survival and prosperity of the business.” Similarly, Bartol and Martin define MBO as a system through which “specific goals are set collaboratively for the organization as a whole and every unit.”
MBO involves defining goals, monitoring progress, and evaluating performance against predetermined objectives. By setting clear targets, both managers and employees can work towards the same vision, ensuring higher efficiency and productivity.
Controlling is the last and fundamental function of management. It ensures that organizational activities align with set objectives and that corrective measures are taken when necessary. Effective control requires the following:
Organizations employ various control techniques to ensure smooth operations and goal achievement. Some of the key controlling techniques include:
Budgetary control involves allocating financial resources to different departments, ensuring that expenses align with the organization’s financial plans. It provides a quantitative framework for managing expenditures and revenues, helping organizations plan for future growth.
Cost control ensures that expenses remain within predefined limits. It identifies areas where costs can be minimized without compromising quality. This technique is crucial for maintaining profitability and sustainability.
Proper documentation helps in maintaining records of financial transactions, project progress, and performance reports. It ensures that managers have access to reliable data for decision-making and taking corrective actions.
Financial control involves managing an organization’s financial resources effectively. It includes budgeting, expense tracking, and cost-saving measures to ensure financial stability and growth.
Quality control ensures that products or services meet predefined standards. By maintaining consistent quality, organizations can enhance customer satisfaction and build a strong market reputation.
This technique helps managers evaluate work efficiency by comparing actual performance against expected standards. It ensures that resources are utilized optimally and that production targets are met.
Statistical control involves using data analysis and graphical representation to monitor production performance. It helps managers make informed decisions and identify areas that need improvement.
MBO aims to align individual employee goals with the organization’s objectives, ensuring that all efforts contribute to overall success.
MBO motivates employees by involving them in goal-setting, which enhances their commitment, accountability, and productivity.
Traditional management follows a top-down approach where objectives are imposed on employees, whereas MBO involves collaborative goal-setting.
Controlling techniques help in cost reduction, quality assurance, efficiency improvement, and timely corrective actions.
Organizations can achieve effective budgetary control by setting realistic budgets, monitoring expenses, and adjusting financial plans based on performance analysis.
Management by Objectives (MBO) and effective controlling techniques play a vital role in organizational success. MBO ensures that all stakeholders work towards a common goal, while controlling techniques help monitor progress and take necessary corrective actions. By implementing proper control mechanisms, organizations can optimize performance, reduce costs, and maintain high-quality standards, ultimately leading to sustainable growth and success.
