MANAGEMENT OF ORGANIZATIONS IN TODAY BUSINESS ENVIRONMENT

CHAPTER ONE

INTRODUCTION

1. Background to the Study

Management of organizations in today business environment needs a lot of tools to be able to administer effectively in the day to day running of the business. Management by objectives is one of such tools. It is a way of getting improved results in managerial method whereby the superior and the subordinate managers in an organization identifies major areas of responsibility, and set some standards for performance and the measurement of results against those standards (Derek 2005). Nwosu (2008) described management by objective (MBO) as a technique of management that attempts to relate organizational goals to individual performances and development through the involvement of all levels of management. MBO is thus a management technique that involves the application of collective objectives, action, vision, insight, and inspiration in organizations in such a way that fundamental changes in direction, development, productivity, perceptions or beliefs occur in both the employees and the organization.

Management by Objectives (MBO) is a theory of management proposed by Drucker (1956). It relies on the defining of objectives for each employee and then comparing and directing employee performance against the objectives that have been set. Greenwood (2001) defined MBO as a broader term that encompasses managerial decisions and actions that help to ensure that an organization formulates and maintains a beneficial fit with its’ environment and consistent with its objectives and goals. Tahir (2008) described MBO as involving the establishment and communication of organizational goals, the setting of individual goals in line with the organizational goals, the periodic and final review of performance in relation to the organizational goals.

Management by objectives is also called managing by objectives. However, there have been certain individuals who have long placed emphasis on management by objectives and by so doing have management by objectives refers to as a structured management technique of setting goals for any organizational unit. Odiorne (2011) defines MBO as a system of management whereby the superior and subordinate jointly identify objectives, define individual major areas of responsibility in terms of results expected, and use these objectives and expected results as guides for operating the unit and assessing the contribution of each of its members.

MANAGEMENT OF ORGANIZATIONS IN TODAY BUSINESS ENVIRONMENT