Management and Setting of Objectives

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What is Management by Objectives?

Management by objectives is a management system aimed at systematically integrating key managerial activities while aiming toward the effective and efficient achievement of organizational and individual objectives. The idea of management by objectives was coined in 1954 by Peter F. Drucker, who stressed on the fact that performance must be object oriented and this affects the health of an organization. McGregor, on the other hand, suggested that subordinates should be responsible for short-term objectives after approval from a superior, and the same subordinates should also evaluate performance against present objectives. Thus, self-appraisal and self-development create an environment for motivation.

Process of Management by Objectives:

Preliminary objectives placed at the top:

Objectives for a company are setup after initial planning and approval from the top managers. Planning involved is based upon research done in terms of the long-term goals of the company. After objectives have been planned out, the rest of the work is carried out by the subordinates taking into account the company's ability to carry out the work.

Clarifying Organizational Roles:

Clarifying is basically the relationship between the predicted outcome of a decision and the responsibility for attaining them. Reorganization may be required after analyzing a company's management structure.

Setting a Subordinate's Objectives:

The objectives of subordinates can be outlined by a superior after the long-term objectives have been planned out by senior management. The senior may assign work to a subordinate based upon the subordinate's personal ability, taking into account a possible timeframe for completion of the task, and after carefully allocating the resources for use. By thinking ahead and allotting the various resources accordingly, a manager saves time and money in the long run. This can be done by establishing a two-way relationship with the subordinate, and taking his/her opinion.

Recycling Objectives:

Objectives should neither be handed out by superiors to their subordinates, nor should they be created by subordinates on behalf of their superiors. Instead, setting up objectives should be a dynamic process, where senior management begins the work, discusses their work with subordinates, and after some give-and-take, the final set of objectives is planned out. This process is also known as recycling.

Guidelines for Setting up Objectives:

1. Objectives should be verifiable, i.e., the end product should be proof that the objectives have been successful.

2. Objectives should be reasonably challenging.

3. Objectives should completely focus on the job.

4. The list of objectives should be of reasonable length, so that it is doable and practical.

5. Certain objectives should be prioritized.

6. Objectives should also focus on improvement and personal development.

7. Objectives should be coordinated with those of other managers from different business subunits, while focusing on the main objective of the company.

8. Objectives should be finalized in writing and made familiar to all those involved.

9. Short-term objectives should be consistent with the long-term objectives within the company.

10. The principles used to plan out objectives should be clearly ideitified.

11. Objectives should provide feedback which proves that the objectives have worked successfully.

12. Objectives should be planned out such that the exact amount of resources and authority need is known beforehand.

13. The opinions of individuals chosen to carry out the objectives should also be considered.

14. Subordinates should have control over their assigned responsibility.

Additional Readings:

1. Functions of a Business Manager
2. Henry Fayol and Modern Management Theory
3. Modern Management Thoughts and McKinsey's 7-S framework
4. Industrial Planning
5. Management and Setting of Objectives
6. Principals of Organization
7. Matrix Organizations
8. Functions of the Human Resources and Accounting within an Organization
9. Differentiation between Motivation and Satisfaction
10. Barriers to Good Communication
11. Requirements of Effective Controls
12. Formal and Informal Organizations
13. Bonded Rationality

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