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MBO and its Process

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Process of MBO
The following are the stages involved in the MBO process

1. Setting of organizational objectives
The first step in MBO is the definition of organizational objectives and purpose. Usually the objective setting starts at the top level of organization and moves downward to the lowest managerial levels. The setting objective include defining the purpose of organization, long range and short range organizational objectives, divisional or departmental objective an d individual manager‘s objectives.

2. Identification of Key Result Areas 

Organizational o0bjectves provide the basis for the identification of Key Result Areas(KRAs). KRAs are derived from thr expectations of various stakeholders and they indicate the priorities for organizational performance such as profitability, market standing, innovation, productivity, social responsibility etc

3. Setting subordinates‘ objectives 
The achievement of organizational goals is only possible through individuals. So each individual manager must know in advance what he is expected to attain. Every manager in the managerial hierarchy is both superior and subordinate (except the managers at top and bottom level). The process of objective setting begins with superior‘s proposed recommendations for his subordinate‘s objectives. In turn, the su8bordinate state his own objectives as perceived by him. Thereafter the final objectives for the subordinates are set by the mutual negotiation between superiors and subordinates.

4. Matching resources with objectives 
Resource availability is an important aspect of objective setting because it is the proper application of resources which ensures objective achievement. So there should be a matching between objectives and resources.

5. Appraisal 
Appraisal tries to measure whether subordinate is achieving his objective or not. Appraisal is undertaken as an on-going process with a view to find out deficiency in the working and also to remove it promptly in order to attain the objectives of organization.

6. Recycling 
Though appraisal is the last aspect of MBO process, it is used as an input for recycling objectives and other actions. Recycling process include setting of objectives at various levels, action planning on the basis of those objectives and performance review. Each of these three aspects gives base for others. This process goes on a continuous basis
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