MBO AND MBE

By:~ Bhuvan
 INTRODUCTION
Definition of MBO
Meaning
Effective participation of
individuals
Identifying common goals
Determination of objectives
 Quote on MBO
“MBO is a comprehensive
managerial system that integrates
many key managerial activities in a
systematic manner and that is
consciously directed towards the
effective and efficient achievement of
organizational and individual
objectives”.
~Koontz and Weihrich
Main principles of MBO

Clear understanding
Empowered employees
Features Of MBO
It is not only a technique but also
a philosophy
Setting objectives
Provides evaluation and
mechanism
Contd…,
Creates linkage between
organizational goals and
individual goals
Rewards are governed by the
results achieved
Continuous process
 MBO Strategy : Three
Basic Parts

 Assignment of objects
 Performance reviews
 Appraisal for employees
 Stages Of MBO
Defining objectives
Analyzing
Setting standards
Setting objectives
Aligning targets
Establishing the system
Advantages Of MBO
Targeted Planning
Participation and Collaboration
Motivation
Efficient Communication
Training and Development
Performance and Appraisal
Limitations Of MBO

Difficulty in teaching MBO

philosophy
Failure to provide guidelines to goal-
setters
Difficulty in setting goals
Emphasis on short term objectives
Danger of inflexibility
MBE
(Management by
exception)
Introduction*
*

Definition
Approaches to MBE
Basic
Intermediate
Advanced
SIX PHASES OF MBE
Assignment of values
Projection of meaningful measurements
Make observation
Comparison of actual values with
expected performance
Reporting the balance to management
Decision making
 Advantages of MBE
Availability of time
Opportunity to utilize talent
Increases confidence and motivation
Uses the best knowledge
It helps to identify problems before
they become big
Better organizational cohesiveness
and achievement of objectives
 Disadvantages of MBE

MBE is not puzzle solving

You must have the truth
You must stay in touch with
your people~Management by
walking around
 ~SUMMARY~
MBO
System of managing
Results in better managing
Effective control
Failure in explaining philosophy
Difficulty in goal setting
Contd…,
MBE
It’s the idea of minimizing
responsibility
Obtaining accuracy in results
Involves shaping company’s
future
Managers should be trained
properly