Tamilnadu Samacheer Kalvi 12th Commerce Notes Chapter 3 Management By Objectives (MBO) and Management By Exception (MBE) Notes
→ Management By Objectives (MBO) is a management system in which each member of the organisation effectively participates and involves himself.
→ It creates self-control and motivates the manager into action before somebody tells him to do something.
→ Prof. Reddin defines MBO as, “the establishment of effective standards for managerial positions and the periodic conversion of those into measurable time bound objectives linked vertically and horizontally and with future planning”.
→’ An attempt is made by the management to integrate the goals of an organisation and individuals. This will lead to effective management.
→ MBO tries to combine the long run goals of organisation with short run goals.
→ The MBO process is characterised by the balance of objectives of the organisation and individual.
→ The definition of organisational objectives states why the business is started and exists.
→ Objectives for each section, department or division are framed on the basis of overall objectives of the organisation.
→ Key result areas are fixed on the basis of organisational objectives premises.
→ The objectives of each subordinate or individual are fixed.
→ Subordinates are induced to set standards themselves by giving an opportunity.
→ The objectives are framed on the basis of availability of resources.
→ The available resources should be properly allocated and utilized.
→ The superior and subordinates should hold meetings periodically in which they discuss the progress in the accomplishment of objectives.
→ The discussion is related with subordinates’ performance against the specified standards. The superior should take corrective action.
→ The problems faced by the subordinates should be identified and steps should be taken to tackle such problems.
→ Management By Exception (MBE) is a style of business management that focuses on identifying and handling cases that deviate from the norm.
→ General business exceptions are cases that deviate the normal behavior in a business process and need to be cared for in a unique manner, typically by human intervention.
→ With an insignificant or no deviation, no action is required and senior managers can concentrate on other matters. If actual performances deviates significantly, the issue needs to be passed to the senior managers, as an “exception has occurred”.
→ The top management executive should review the organisation’s objectives to frame the objectives according to the changing situation.
→ MBO emphasises only on short-term objectives and does not consider the long term objectives.