Management by Objectives (MBO)

The latest development in the field of performance appraisal is appraisals by results. Results oriented appraisals are outcome of the modern management technique known as management by objectives (MBO). MBO has been described as a philosophy of management which seeks to minimize external controls and maximize internal motivations through joint goal setting between the managers and the subordinate and increasing the subordinates own control of his work. MBO can be described as process where by the superior and subordinate managers of an organizations jointly identify its common goals, define each individual's major areas of responsibility in terms of  results expected of him and use these measures as guides for operating the unit and assessing the contributions of each its members.'

Objectives:

• To foster the increasing competence and growth of the subordinates
• to serve as a device for organizational control and integration
• To measure and judge performance
• To serve as a basis for judgments about salary and promotion 
• To stimulate the subordinates motivation
• To classify both the job to be done and the exceptions of accomplishment
• To enhance communications between superior and subordinates.

The MBO process consist of following steps:

• Step 1: Joint Goal Setting 
• Step 2: Action Planning
• Step 3: Self Control
• Step 4: Periodic Progress Reviews