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IMPACT OF MANAGEMENT BY OBJECTIVE ON THE ORGANIZATIONAL PERFORMANCE

ABSTRACT

The research progresses a detail analysis of the concept of management by objective and portrays its impacts an organization performance. It elucidates the structure of management by objective through the systematic and organized approach that allows management to focus on achievable goals and attain best possible results from available resources. It provides detail analysis of organization performance measures as the overall central focus of management by objective. In-view of analyzing a practical perspective, a case study is conducted using the United Bank for Africa Plc. 

CHAPTER ONE

INTRODUCTION

The imperative of attaining organizational performance objectives constitute a fundamental phenomenon for the management of modern organization. Therefore, strategic measures are constantly formulated and implemented bottom-line to achieve key results. Management by objective is one type of management philosophy adopted to ensure that organizational programme objectives or results are attainable.

Peter Drucker (19454) defined management by objective as a dynamic system which seeks to integrate the company need to clarify and achieve its profit and growth goals with the managers need to contribute and develop him. Drucker first publicized these ideas in the practice of management in 1954 subsequently, MBO has been canvassed by other writers notably, McGregor and Humble. McGreor in the Human side of enterprise supported MBO on the grounds that it gave subordinate the opportunity to participate in good setting and performance appraisal and based on a theory Y philosophy. Humble in Improving Management Performance suggests that MBO focus on the key results areas where improved performance is likely to have a dramatic impact on organization performance. However, all writes are careful to emphasize two points first that MBO is not a management technique but a philosophy which if accepted requires a shift of managerial attitudes and perspective; second that MBO needs to be integrated with other organizational procedure and notably the budgeting process, performance appraisal, management development and management reward.

Management by objective (MBO) also known as management by results (MBR) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The term, management by objective was first popularized by Peter Drucker in his 1954 book, the practice of management.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of MBO is the measurement and the comparison of the employee actual performance with the standards set. Ideally when the employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

According to George S. Odiorne,  the system of management by objectives can be described as a process where the superior and subordinate jointly identify its common goals, define each individuals major areas of responsibility in-terms of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.

Objectives can be set in all domain of activities (production, marketing, services, sales, human resources, finance, information system etc).

Some objectives are collected for a whole department  in the whole company, other can be individualized.

Managers must determine the mission and the strategy goals of the enterprise.

The goal set by top level managers are based on the analysis of what can and should be accomplished by the organization within a specific period of time.

The functions of these managers can be centralized by appointing a project manager who can monitor and control activities of the various departments. If this cannot be done or is not desirable each manager’s contributions to the organizational goal should be clearly spelled out. Objective need quantifying and monitoring. Reliable management information systems are needed to establish relevant objectives and monitor their reach ratio in an objective way. Pay incentive (bonuses) are often linked to results in reaching the objectives.

The case study analysis shall aim to determine the impact of MBO on organizational performance of UBA Plc.

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