MBO stands for Management by Objectives. MBO is an approach of management that helps to focus on goals that are achievable and in getting maximum output from the resources that are available. It is an approach that is systematic and highly organized.

MBO was first proposed by Peter Drucker. He however emphasized that management by objective would work only if you knew your objectives.

MBO is used in companies that are knowledge based and where the management wants to harness the inherent creativity and initiative of the workforce.

MBO is “a process whereby superior and subordinate managers of an organization jointly define its common goals ,define each individual’s major areas of responsibility in terms of result expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.”- George Odiorne.

Decision making is an indispensable component of the

management process itself.

DEFINING THE JOB: The subordinate is asked to define his job and rank the task from most to least important .The superior does the same to define the subordinate’s job . This is done separately , so that the perceptions of each are not influenced by the other party. At the second session , the two get together and review the statements , which hopefully leads to enlightened discussions . MBO is based on two assumptions firstly , let people know what is expected of them and secondly , permit subordinates to set goals.

Superior -Subordinate Participation: MBO requires the superior and subordinate to recognize that the development of objectives is a joint project .

Joint Goal Setting: MBO emphasis's joint goal - settings that are tangible, verifiable and measurable .

Joint Decision on Methodology: MBO focuses higher attention on what must be accomplished (goals) rather than how it is to be accomplished (methods). Makes way to attain maximum result: MBO is a systematic and rational technique that allows management to attain maximum results from available resources by focusing on attainable goals.

Support from Superior: When the subordinate makes efforts to achieve his goals , the superiors' helping hand is always available .

Result-oriented approach. Verifiable and measurable goals. Impartial goals. Higher morale. Personal leadership. Stress on key result areas. Employee motivation.

Time consuming. Conflicting objectives. Higher paperwork. Lack of durability. Reward-punishment approach. Disputed target setting. Problem of co-ordination.

Decision-making is an essential part of modern management.

A manager’s major job is sound and rational decision-making. Decision-making pervades all managerial actions and is a continuous process.

Means and ends are linked together through decision making.

The word decision making is derived from the Latin word de ciso , which means ‘a cutting away or a cutting off, or in a practical sense ‘to come to conclusions’.

Identifying The

problem

AnalysingThe

problem

DevelopingAlternativesolutions

Process ofDecisionmaking

Follow upOf action

takenConvertising

DecisionInto action

SelectingThe bestsolution

Identifying the problem. Analyzing the problem. Collecting relevant data. Developing alternative solutions. Selecting the best solution. Converting decision into Action. Ensuring Feedback.