Skip to main content

Management by objective (MBOs):


The theory of management by objective is very popular among the managers of the business organization. The theory sets goals to improve the performance of the firms by clearly identifying and defining the goals agreed by the employees and the top management of the business organization (Smith, 2008; Manning, 2017). The theory of the management by objective believes that the organizational performance is closely linked with the mutual acceptance of the goal setting and acceptance by the management and the employees itself. The constructs of Management by objectives (MBOs) are detailed as under:

Goals specificity:
The 1st step in the goal-setting theory approach in the MBOs is specifically setting the goals with a clear line of direction of improving the organizational performance. The theory focuses that the goal set by the employees and management must be very specific.
Participative decision making:
The 2nd step in the goal-setting to improve the performance of the organization stresses the participative decision-making style. The theory explains that the goal-setting of the firm to improve its performance shall be made in the participative style. This participative style of decision making agrees both the management and the employees to work for a unified goal and in the same direction.

Monitor/review progress:
The 3rd step of the MBOs monitors and reviews the progress of the business organization in terms of the progress. The progress of the set goals is assessed periodically and possible improvement are added and communicated among the employees and management.
Performance feedback:
The 4th and the last step of MBOs is related to the performance feedback of the set goals to both the management and the employees of the organization to seek corrective measure and setting the future goals.
Thus, the management by objective is basically a win-win approach to the goal setting, performance, and achievement in the organizations. This participative style is applied assuming that the employees are responsible and work for the organizational benefit.

Contingency Factors:
The contingency factor approach believes that the things happening in the organizations are not predictable accurately rather they can be estimated and the decisions to achieve the goals. The setting of the goals and the corrective actions taken are dependent upon the prevailing situations and availability of resources. The research studies argued that the business organization must keep the risk factor margins in the goal setting and planning of the organization. The research empirically found that the firms with contingent factors likely to achieve the goals successfully compared to the firms following the mechanistic structure (Montagna, 2016; Lam and Siwingwa, 2017; Omotosho and Anyigba, 2019).

Common contingency plans:
The common contingency plans of the firms include temporary work activities that include meeting the staffing shortfall by pooling a temporary workforce, on the job training programs to work for professional development and dealing with the employee turnover issues.
Diversity revenues streams:
The diversity revenue streams include the possible measures of risk to be taken to deal with the financial risks. This is normally addressed by forming portfolios. The portfolios formulation is the result of the risk management and considering the contingent factors which are not removable but can be mitigated
.
Conclusion:
The goal-setting and the generic planning framework is the key activity that every organization conducts before carrying out the business operations. In this research study, the Miles and Vergen landmark of study that discusses the three best conditions that satisfy the goal setting. The Miles and Vergen concluded that the features including the SMART goals and values lead to improve the performance of the business organization. The analysis further revealed that in addition to the SMART goals the formulation of the goals must be positively established. The study also discussed the four steps of the management by objective which found that the goals and objectives must be agreed by the employees and management with mutual consent to improve the performance of the organization. The goal-setting shall be in participative style and performance shall be monitored and communicated periodically in the organization. Finally, the contingency factors theory believes that the things are not accurately predictable in the organizations; therefore, the contingent approach to risk management may result in achieving the goal.
References:

Comments

Post a Comment

Popular posts from this blog

Capitalization in Finance

What is Capitalization Capitalization includes share capital, debentures, loans, free reserves, etc. Capitalization represents permanent investment in firms excluding semipermanent loans. Capitalization is often distinguished from the capital structure. The capital structure could be a broad term and it deals with qualitative side of finance. whereas capitalization could be a slender term and it deals with the quantitative side. Capitalization is mostly found to be of following types- Normal Over Under Overcapitalization Overcapitalization could be a state of affairs within which actual profits of an organization aren't adequate enough to pay interest on debentures, on loans and pay dividends on shares over an amount of your time. this example arises once the corporate raises additional capital than needed. a section of capital continually remains idle. As a result, the speed of come back shows a declining trend. The causes will be- High promotion cost - once an...
Post a Comment
Read more

Capital Structure

Meaning of Capital Structure Capital Structure is named because of the quantitative relation of various forms of securities raised by a firm as semipermanent finance. The capital structure involves 2 decisions- Types of securities to be issued are equity shares, stock and long haul borrowings (Debentures). Relative magnitude relation of securities could also be determined by the technique of capital gears. On this basis, the companies are divided into two- Highly meshed firms - Those firms whose proportion of equity capitalization is little. Low meshed firms - Those firms whose equity capital dominates total capitalization. Factors determinant Capital Structure Trading on Equity-  The word “equity” denotes the possession of the company. transaction on equity suggests that taking advantage of equity share capital to borrowed funds on cheap basis. It refers to additional profits that equity shareholders earn due to the provision of debentures and stock. it's supporte...
Post a Comment
Read more

realistic ideas for passive income

When it involves generating passive financial gain, it may be troublesome to understand wherever to begin. Additionally, several guides or articles that provide tips for making multiple financial gain streams aren't double-geared towards young adults or students and focus totally on older demographics UN agency earn full-time  incomes. However, once I was in faculty, I used to be perpetually searching for new ways that to form cash as a student. I used to be conjointly fascinated with varied passive financial gain ideas, and that i found it frustrating that the majority of the resources I stumbled across weren't possible for college students. So, to assist alternative young adults and students with similar money goals, I’ve set to interrupt down some passive financial gain ideas for college students that have low barriers to entry and may manufacture some come back.   Let’s get to it! 1. Print On Demand Stores One of the foremost widespread beginner passive financial gain mode...
1 comment
Read more