Quick Summary
MBO improves participation and goal clarity. MBE saves managerial time by drawing attention to unusual deviations. One is mainly about setting objectives together; the other is about monitoring exceptions.
Management by Objectives
Meaning
MBO is a method where superiors and subordinates jointly decide goals, define responsibilities, and review results.
Steps in MBO
1. Set organisational objectives 2. Fix departmental objectives 3. Discuss and set individual goals 4. Prepare action plans 5. Review performance periodically 6. Appraise results and take corrective action
Benefits
- Clear goals
- Better participation
- Improved motivation
- Easier performance appraisal
- Better coordination
Management by Exception
Meaning
MBE means managers focus on important deviations from plans while routine matters are handled at lower levels.
Process
1. Set standards 2. Measure actual performance 3. Compare with standards 4. Identify major deviations 5. Report exceptions to management 6. Take corrective action
Benefits
- Saves managerial time
- Highlights priority problems
- Encourages delegation
- Improves control efficiency
MBO vs MBE
| MBO | MBE |
|---|---|
| Focuses on objectives | Focuses on deviations |
| Participative approach | Control-oriented approach |
| Used for planning and appraisal | Used mainly for control |
| Encourages goal commitment | Directs attention to major exceptions |
Important Questions
One Mark
1. Expand MBO. 2. Expand MBE. 3. Which method focuses on deviations from standards?
Short Answer
1. State any three benefits of MBO. 2. Write the steps in MBE. 3. Distinguish between MBO and MBE.
Long Answer
1. Explain the steps in Management by Objectives. 2. Explain the process and benefits of Management by Exception. 3. Compare MBO and MBE.
Common Mistakes
- Writing MBO as a control-only method.
- Explaining MBE without mentioning deviations.
- Confusing objectives with standards.
- Missing the participative nature of MBO.
Revision Checklist
- [ ] Meaning of MBO and MBE
- [ ] Six steps of MBO
- [ ] Six steps of MBE
- [ ] Benefits of both
- [ ] MBO vs MBE table