One of the many problem facing the business community has been the problem of integrating the objectives of the employees with that of the organization for the achievement of the organization objectives.
Even when such an integration has been made there should be a dear method or system of measurement of the contribution of employees to the organizational achievement. Organization that practice management by objectives seem to be on the positive threshold of solving this problem.
Management by objective (MBO) is a systematic approach to managing an organization practicing the basic management functions of planning organization staffing leading and controlling.
Management by objective is a result oriented all functional area (LOPA energy co.ltd). the distinguishing characteristic of management by objective (MBO) is its emphasis on results achievement of objective. It is based on a concept of human motivation. Accordingly it places emphases on the involvement of the employee in planning directing and controlling aspects of the job what will be done when will it be dome and how will it be done?
The underlying belief is that this involvement of employee lead to commitment and if an employee is committed he can be directed to perform in manner that positively contributes to the achievement of organizational objects. The MBO afford both the superiors and subordinates the opportunity to sit together and jointly identify common goals of enterprise define individual major areas of responsibility term of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of it misers. Paul Hersey et al (1988) this leads to the four basic component of the MBO system.
a)Setting performance objectives and standards for their accomplishment
b)Developing action plans
c)Coaching and counseling
d)Annual performance appraisal
Management by objective should guard against misdirection of common organizational goal by various functional managers. Peter Durker (1981).
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