MBO and Performance Analysis for Individual and Organizational Development


Management by objectives is a process by which management at different levels and their subordinates work together in identifying goals and establishing objectives consistent with the organizational goals and attaining them. Performance is measured against objectives and deviations are discussed. Superiors and subordinates review the existing objectives and establish the fresh objectives for the new time span after the deviations are discussed.

MBO is essentially a method of self-evaluation. Goal-setting is a highly participative process with self-established role prescriptions. Here job analysis would not cover all the activities of tasks performed by the superior and subordinate under MBO. Role analysis should be undertaken covering the task performed by employee under MBO programs.

Role Analysis

Analysis should e extended to include various roles played by an employee in view of the criticism leveled against job analysis. A role would consist of the total pattern of expected behavior, interactions and sentiments for an individual holding an assigned job. The concept of role is something more than the job. Generally, the job incumbent is expected to play different roles while discharging his duties. An example of this is a manager is expected to play the role of protector of the interests of his subordinates. Similarly, the subordinates are expected to maximize the productivity/sales/profit. Sometimes the employees are expected to play informal roles which would not be included in job analysis.

A boundary spanning job is one whose incumbent is commissioned to deal with some significant element of the outer environment. Role analysis of personnel holding boundary spanning jobs provides a good example of potential value in the making of personnel decisions. In his position the incumbent of credit officers at a job of a bank has to deal with different types of borrowers with different backgrounds. Likewise the incumbent of a personnel job has to deal with trade union leaders or regional and central unions, government officials, police officers, managements of various organizations and management associations. Such roles often need verbal skills, sensitivity to the values of external people and personnel, public relations, counseling and conciliation skills and extra ordinary inter-personal relations.

These different roles of the employee, conflict with each other and that conflict is called role conflict. Employees have to play different roles, in addition to just performing their duties, as listed in job description. Hence, it is felt, that job analysis covers all these activities of the personnel. It should be extended to role analysis. The job designers should take the emerging concept of role analysis into consideration in designing or redesigning the jobs.

Organizational Development through Management by Objectives (MBO)

Management by Objectives (MBO) program begins with the top management providing clear statement of organizational purpose or mission so that individual member can align their goals with critical organizational objectives. This statement can then serve as a guide for developing long range goals and strategic planning.  Departmental and individual goals can then be derived from organizational  goals.

Organizational Development through MBO approach generally involve the following stages:

  1. Formulating Long Range Goals: Guided by the organization’s mission statement, senior management defines critical long term objectives and determine how available resources will be used to accomplish these goals. This process then leads to strategic planning activities which describe how the organization will cope with its changing environment.
  2. Developing Specific Objectives: In this step, broad organizational objectives are translated into specific measurable outcomes with clearly stated time-frames Although organizational objectives may include areas such as profitability, market share, and quality, all objectives must be stated in clear terms.
  3. Developing Departmental Objectives: Once organizational objectives are clearly specified, each division or department must develop a set of specific goals that will enable the organization to achieve its objectives. Again, these departmental goals must be clearly stated in terms of measurable outcomes.
  4. Setting Group and Individual Goals: This step is focused on developing and implementing group and individual level goals in a coordinated manner. This process encourages vertical and horizontal communication in the organization since individual’s must clarify their roles and take responsibility for specific results. Individuals goal setting is done in a collaborative manner and will include both, personal and professional development objectives. Research indicates that individual goals produce the most positive results when they are challenging and specific.
  5. Formulating and Implementing Action Plans: Although clearly stated goals provide a precise description of desired outcome, action plans are needed to provide a way of attaining goals. Action plans systematically identify the methods, activities and resources required to accomplish objectives.
  6. Reviewing Goal Progress: Finally, mangers must review progress towards achieving the goal by meeting with subordinates in a group or individually. During these meetings, managers and subordinates discuss problems and difficulties involved in completing the goals and evaluated individual performance based on degree to which targeted goals were actually achieved. These meetings may also provide an opportunity to review and modify goals that have become outdated or unobtainable. Once this assessment is complete, the focus shifts from past performance to planning future goals and action plans. Together, mangers and subordinates develop mutually agreed upon goals and formulated a strategy to achieve them.

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