What is Management by Objectives (MBO)?

Management by Objectives (MBO) is a strategic approach to enhance the

performance of an organization. It is a process where the goals of the
organization are defined and conveyed by the management to the members of
the organization with the intention to achieve each objective.

An important step in the MBO approach is the monitoring and evaluation of

the performance and progress of each employee against the established
objectives. Ideally, if the employees themselves are involved in setting goals
and deciding their course of action, they are more likely to fulfill their
obligations.

Steps in Management by Objectives Process:

1. Define organization goals: Setting objectives is not only critical to the
success of any company, but it also serves a variety of purposes. It needs
to include several different types of managers in setting goals. The
objectives set by the supervisors are provisional, based on an
interpretation and evaluation of what the company can and should
achieve within a specified time.
2. Define employee objectives: Once the employees are briefed about the
general objectives, plan, and the strategies to follow, the managers can
start working with their subordinates on establishing their personal
objectives. This will be a one-on-one discussion where the subordinates
will let the managers know about their targets and which goals they can
accomplish within a specific time and with what resources. They can
then share some tentative thoughts about which goals the organization
or department can find feasible.
3. Continuous monitoring performance and progress: Though the
management by objectives approach is necessary for increasing the
effectiveness of managers, it is equally essential for monitoring the
performance and progress of each employee in the organization.
4. Performance evaluation: Within the MBO framework, the performance
review is achieved by the participation of the managers concerned.
5. Providing feedback: In the management by objectives approach, the
most essential step is the continuous feedback on the results and
objectives, as it enables the employees to track and make corrections to
their actions. The ongoing feedback is complemented by frequent formal
evaluation meetings in which superiors and subordinates may discuss
progress towards objectives, leading to more feedback.
6. Performance appraisal: Performance reviews are a routine review of
the success of employees within MBO organizations.

Management by Objectives – Steps

Benefits of Management by Objectives

 Management by objectives helps employees appreciate their on-the-job
roles and responsibilities.
 The Key Result Areas (KRAs) planned are specific to each employee,
depending on their interest, educational qualification, and
specialization.
 The MBO approach usually results in better teamwork and
communication.
 It provides the employees with a clear understanding of what is
expected of them. The supervisors set goals for every member of the
team, and every employee is provided with a list of unique tasks.
 Every employee is assigned unique goals. Hence, each employee feels
indispensable to the organization and eventually develops a sense of
loyalty to the organization.
 Managers help ensure that subordinates’ goals are related to the
objectives of the organization.

Limitations of Management by Objectives

 Management by objectives often ignores the organization’s existing
ethos and working conditions.
 More emphasis is given on goals and targets. The managers put
constant pressure on the employees to accomplish their goals and
forget about the use of MBO for involvement, willingness to contribute,
and growth of management.
 The managers sometimes over-emphasize the target setting, as
compared to operational issues, as a generator of success.
 The MBO approach does not emphasize the significance of the context
wherein the goals are set. The context encompasses everything from
resource availability and efficiency to relative buy-in from the
leadership and stakeholders.
 Finally, there is a tendency for many managers to see management by
objectives as a total system that can handle all management issues
once installed. The overdependence may impose problems on the MBO
system that it is not prepared to tackle, and that frustrates any
potentially positive effects on the issues it is supposed to deal with.

Key Takeaways
 Management by Objectives (MBO) is an approach adopted by
managers to control their employees by implementing a series of
concrete goals that both the employee and the organization aim to
accomplish in the immediate future and work accordingly to achieve.
  The MBO approach is implemented to ensure that the employees get a
clear understanding of their roles and responsibilities, along with
expectations, so that they can understand the relation of their activities
to the overall success of the organization.
 If the management by objectives strategy is not adequately set,
decided upon, and controlled by organizations, self-centered workers
can be likely to misinterpret results, wrongly portraying the
achievement of short-term, narrow-minded goals

TOTAL QUALITY MANAGEMENT

Definition:-
A core definition of total quality management (TQM) describes a
management approach to long-term success through customer satisfaction.
In a TQM effort, all members of an organization participate in improving
processes, products, services, and the culture in which they work.

PRIMARY ELEMENTS OF TQM

TQM can be summarized as a management system for a customer-focused
organization that involves all employees in continual improvement. It uses
strategy, data, and effective communications to integrate the quality
discipline into the culture and activities of the organization. Many of these
concepts are present in modern quality management systems, the successor
to TQM. Here are the 8 principles of total quality management:

1. Customer-focused: The customer ultimately determines the level of

quality. No matter what an organization does to foster quality improvement
—training employees, integrating quality into the design process, or
upgrading computers or software—the customer determines whether the
efforts were worthwhile.

2. Total employee involvement: All employees participate in working toward

common goals. Total employee commitment can only be obtained after fear
has been driven from the workplace, when empowerment has occurred, and
when management has provided the proper environment. High-performance
work systems integrate continuous improvement efforts with normal
business operations. Self-managed work teams are one form of
empowerment.

3. Process-centered: A fundamental part of TQM is a focus on process

thinking. A process is a series of steps that take inputs from suppliers (internal
or external) and transforms them into outputs that are delivered to
customers (internal or external). The steps required to carry out the process
are defined, and performance measures are continuously monitored in order
to detect unexpected variation.

4. Integrated system: Although an organization may consist of many

different functional specialties often organized into vertically structured
departments, it is the horizontal processes interconnecting these functions
that are the focus of TQM.

▪ Micro-processes add up to larger processes, and all processes aggregate

into the business processes required for defining and implementing strategy.
Everyone must understand the vision, mission, and guiding principles as well
as the quality policies, objectives, and critical processes of the organization.
Business performance must be monitored and communicated continuously.

▪ An integrated business system may be modeled after the Baldrige Award

criteria and/or incorporate the ISO 9000 standards. Every organization has a
unique work culture, and it is virtually impossible to achieve excellence in its
products and services unless a good quality culture has been fostered. Thus,
an integrated system connects business improvement elements in an attempt
to continually improve and exceed the expectations of customers, employees,
and other stakeholders.

5. Strategic and systematic approach: A critical part of the management of

quality is the strategic and systematic approach to achieving an organization’s
vision, mission, and goals. This process, called strategic planning or strategic
management, includes the formulation of a strategic plan that integrates
quality as a core component.

6. Continual improvement: A large aspect of TQM is continual process

improvement. Continual improvement drives an organization to be both
analytical and creative in finding ways to become more competitive and more
effective at meeting stakeholder expectations.

7. Fact-based decision making: In order to know how well an organization is

performing, data on performance measures are necessary. TQM requires that
an organization continually collect and analyze data in order to improve
decision making accuracy, achieve consensus, and allow prediction based on
past history.

8. Communications: During times of organizational change, as well as part of

day-to-day operation, effective communications plays a large part in
maintaining morale and in motivating employees at all levels.
Communications involve strategies, method, and timeliness.

Primary Elements of Total Quality Management

(TQM)
These elements are considered so essential to TQM that many organizations
define them, in some format, as a set of core values and principles on which
the organization is to operate. The methods for implementing this approach
come from the teachings of such quality leaders as Philip B. Crosby, W.
Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, and Joseph M.
Juran.