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MBO stands for Management by Objectives, which is a management approach where managers and employees work together to define and set specific, measurable, and achievable goals for an organization.

Features of MBO

These are the features of MBO explained below:

1. MBO as a Philosophy
2. MBO as an Approach
3. Organizational and Individual Goals Determination
4. Tangible Objectives
5. Top-Down and Bottom-Up Approach
6. MBO has Multiple Uses
7. MBO as a Performance Appraisal and Review
8. A Comprehensive System Approach
9. Guidelines for Appropriate System

MBO as a Philosophy

MBO is a philosophy of management. It is more than a set of techniques. It emphasises what is to achieve, not how to achieve. It suggests how the best use of available resources may be done to achieve the expected objectives.

Peter Drucker defines MBO may properly be called a ‘philosophy’ of management because it rests on a concept of human action, behaviour, and motivation. Finally, it applies to every manager, whatever his level or function, and to every organisation, whether large or small.

MBO as an Approach

MBO is an approach to management. Approach refers to various tools or techniques used in order to achieve objectives. MBO introduces several new techniques of management. It also enhances the relevance and utility of existing ones. It is thus, a joint application of a number of principles and techniques.

It works as an integrating device. Many principles and techniques of planning and control are used in an organisation in a normal situation, but in MBO the focus is more on these techniques.

Organizational and Individual Goals Determination

MBO is a participating and interactive process whereby superiors and subordinates jointly determine a common objective for the organisation and also define each individual’s areas of work and responsibility.

Tangible Objectives

MBO Emphasizes Participatively Set Objectives that are Tangible, Verifiable, and Measurable: Kreitner writes, “The common denominator that has made MBO approach so popular in both management theory and practice is the emphasis on ‘objectives’ that are both measurable and participative setting.

Top-Down and Bottom-Up Approach

MBO is a Top-down or Bottom-up Approach in Results Management: which aims at the optimum use of organisational resources. Thus MBO is a systematic and rational technique that allows management to attain maximum results from available resources. It allows the subordinate plenty of room to make creative decisions on his own.

MBO has Multiple Uses

MBO is a way of promoting managerial self-control and it applies to the total management system. It has multiple uses. There are various managerial sub-systems that can be integrated with the MBO process; they include performance appraisal, design of organisational structures, management development programmes, organisational change programmes, and budgeting.

MBO has Some Relationship with Every Management Technique and It is a Universal Tool: In fact, MBO provided the stimulus for the introduction of new techniques of management and enhances the utility of the existing ones.

MBO is the joint application of a number of principles and techniques. It works as an integrating device. It is a valuable management tool for profit as well as non-profit organizations. It is a simple, non-technical, operational management approach which can be applied to every type of organization.

MBO as a Performance Appraisal and Review

As a performance appraisal and review, MBO is intended to measure and judge performance, relate individual performance to organisational goals and foster the increasing competence and growth of the subordinates.

A Comprehensive System Approach

MBO has become a comprehensive system. It considers both the economic and human aspects of an organisation. It applies to managers and employees of any kind and size of organisation at all levels and in all functional areas.

Koontz and Weihrich define MBO to be effective and has to be viewed as a comprehensive system. It must be considered as a way of managing, and not an addition to the managerial job.

Guidelines for Appropriate System

MBO has a thrust achieved its objectives. Therefore it provides guidelines for appropriate systems and procedures. Resources allocation, the delegation of authority etc. are determined on the basis of objectives. Similarly, a reward and punishment system is attached to the achievement of objectives.

Finally we can say that the salient features of MBO are cascading organizational goals and objectives; specific objectives for each team/group and member; the participative decision-making process; explicit time period deadlines; and performance evaluation and feedback.

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