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What do you understand by MBO?
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Management by objectives approach is designed to overcome the limitations of the more traditional system. This is result-oriented appraisal. The approach of merit rating is based on the quantitative measurable performance goals often agreed jointly by superior and subordinates. Instead of asking the superior to rate his subordinates under this approach each subordinate is requested to set for himself short-term goals by which may improve his own efficiency and that of his department. The senior executive will also help his subordinates to set goals for themselves. Senior officer will discuss with his subordinate what is required to meet their goals and adjust them consistent with goals of other subordinates and the organisations as a whole. This approach was suggested by Peter F. Drucker.
Prof. Reddin defines M.B.O. as under "MBO is the establishment of effectiveness areas and effectiveness standards for managerial positions and the periodic conversion of these into measurable time bound objectives linked vertically and horizontally and with future planning." According to S.K. Chakravarty, "MBO may be defined as a result centred, non-specialist operational managerial process for the effective utilisation of material, physical and human resources of the organisation, by integrating the individual with the organisation and organisation with environment." Thus, concept of MBO incorporates the better parts of the different theories of motivation. It recognises Maslow's Self Fulfilment Need. It is based on McGregor Theory of Y. It also honours Herzberg's motivational factors of achievement, recognition, challenging work and responsibility. It also accepts the concept that people prefer to be assessed according to criteria or standards which they feel as realistic and unreasonable.
Under modern democratic managerial style, employees are themselves required to appraise or evaluate their performance, i.e., through self-appraisal studies and the manager or leader is merely a guide or his adviser enabling the employee to rate his merits. Hence, merit rating by the superior is now replaced by self-appraisal studies. MBO is the best device for employee appraisal.
