The MBO Cycle

The four steps or stages of the MBO process arc also called the MBO cycle. Since MBO combines planning and control, the MBO cycle follows very closely the planning-control cycle.

Step-1: Setting objectives: A hierarchy of challenging, fair, and internally consistent objectives is the necessary starting point for the MBO cycle because it serves as the foundation or all that follows. All objectives. According to the principles of MBO, should be reduced to writing and kept aside for future reference during steps 3 and 4. Setting objectives under MBO starts at the top of the managerial pyramid and filters down. One layer at a time.

The main contribution of MBO to the objective-setting process is its emphasis on participation and involvement of subordinates. There is no place in MBO for either a domineering manager ordering people or a passive manager leaving all at the discretion of the subordinates. Rather MBO calls for a negotiation of objectives between superiors and subordinates on a give-and-take basis.

Step-2: Developing action plans: With the development of action flans and addition of these statements to the objectives participative set, the planning phase of MBO comes to an end. Managers. At each level. Bad to develop plans that incorporate the objectives established in step-1. It is the responsibility of higher managers to make sure that plans of their act subordinates complement rather than conflict with one another.

Step-3: Periodic review: Attention now turns to step-3 as plans go to action requiring the following-up and monitoring of performance. e-to -face meetings between superior and subordinate at 36- and 9nth intervals should be held regularly. These periodic check-ups help s sec whether a particular set of objects cuss is still valid or needs revision updating under the changed circumstances. Periodic check-Lips Also dividedvide managers with excellent opportunities to give subordinates cited sand well-considered feedback.

Step-4: Performance appraisal: According to Kreitner. "At end of e complete cycle of MBO. Typically one year after the original goal. Are at the final performance is matched with the previously agreed upon objectives. The pairs of superior and subordinate managers who mutually t the objectives one year earlier meet face to face once again to discuss w things have turned out. MBO calls for emphasis on results. Not on responsibilities or excuses." Krcitncr further adds that the control side of  the MBO cycle is completed when success is rewarded with promotion, incentive payments or other suitable benefits and failure is noted to take corrective action in the future. At the time of evaluating performance during steps 3 and 4, managers need to keep in mind the following behavioral principles: