The Effective Application Of Management By Objectives In Organizations (A Study Of First Bank Nigeria Plc, Benin-Agbor Road, Benin City)

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The Effective Application Of Management By Objectives In Organizations (A Study Of First Bank Nigeria Plc, Benin-Agbor Road, Benin City)


Goal setting, participation in decision making, and objective feedback has each been shown to increase productivity. As a combination of these 3 processes, management by objectives (MBO) also should increase productivity. The literature on MBO indicates that various problems have been encountered with implementing MBO programs. One factor was predicted to be essential to success: the level of top-management commitment to MBO. Proper implementation starts from the top and requires both support and participation from top management. Managers always have been challenged to produce results, but the modem manager must produce them in a time of rapid technological and social change. Managers must be able to use this rapid change to produce their results; they must use the change and not be used or swallowed up by it. Both they and the organizations they manage need to anticipate change and set aggressive, forward-looking goals in order that they may ultimately begin to make change occur when and where they want it to and, in that way, gain greater control of their environments and their own destinies.

Table of Contents

  • Cover Page
  • Title Page
  • Approval Page
  • Dedication
  • Acknowledgement
  • Table of Contents
  • Abstract

Chapter One


  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Significance of the Study
  • 1.6 Scope of the Study
  • 1.7 Limitation of the Study
  • 1.8 Definition of Terms

Chapter Two

Literature Review

  • 2.1 Introduction
  • 2.2 Theoretical Framework of the Study
  • 2.3 Application of Management by Objective
  • 2.4 Management of Objectives and Results Model
  • 2.5 Psychological Background of Management by Objectives
  • 2.6 Steps in Management by Objectives Process
  • 2.7 Management of Objectives – Objective Setting
  • 2.8 Management by Objectives Characteristics
  • 2.9 Assessing Mbo Effectiveness
  • 2.10 Weakness in Management by Objectives
  • 2.11 Dangers and Precautions of Mbo
  • 2.12 Elements of the Management by Objective System

Chapter Three

Research Methodology

  • 3.1 Research Design
  • 3.2 Sources of Data
  • 3.3 Population of the Study
  • 3.4 Sampling Design and Determination of Sample Size
  • 3.5 Method of Data Collection
  • 3.6 Questionnaire Design, Distribution and Collection of Responses
  • 3.7 Method of Data Presentation and Analysis

Chapter Four

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Data Analysis
  • 4.3 Presentation According to the Key Research Questions

Chapter Five

Summary, Conclusion and Recommendations

  • 5.1 Summary of Findings
  • 5.2 Conclusion
  • 5.3 Recommendations
  • References
  • Appendix
  • Questionnaire

Chapter One


1.1 Background of the Study

Management 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 action. Management by objectives can be described as a managerial method, where by the superior and the subordinate managers in an organization identify major areas of responsibility, in which they will work, set some standards for good or bad performance and the measurement of results against those standards Derek (2005:156).

Management by objective 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 given impetus to its development as a system. Management by objectives refers to a structured management technique of setting goals for any organizational unit.

George S. Odiorne (1981: 1), in his book management by objectives defined this concept 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 member. Besides, Odiorne points out that management by objectives is a “system of management”, an overall frame work used to guide the organizational unit and outline its direction. He went further to point out that “the superior and subordinate jointly identify objectives”. In other words, it is a participative management procedure that requires commitment and co-operation. The definition deals with identifying the “results” that are expected. Thus, management by objectives concentrates on the output of the organization evaluating people by assessing their contribution to this output.

Management by objectives is a strategy, whereby the management sets specific goals for the employees to accomplish within a fixed time period. Management by objective is a dynamic system which seeks to integrate the company with the need to clarify and achieve its profit and growth goals with the managers need to contribute and develop himself. It is a demanding and rewarding style of managing a business.

Management by objectives can work in any size of organization if the procedures are understood and managers are patient in letting the system set in first. Management by objective is an effective planning, control and development system.

Management by objective was defined by Koontz and O’ Donnell (1968:485), as a technique or system or method of management where by the superior and subordinate managers of an organization agree on its broad goals, translate these goals into a chain of specific short term goals, define each individual’s major areas of responsibility in terms of result expected, continually review the accomplishment as the sole basis of assessing and rewarding them,

Management by objectives gives the employee the opportunity to participate in decision making, the limits within these limits. It assumes that the employee has been properly selected and trained, and is informed that the employee will be responsible for achieving the desired results in the organization.

Organizations are ubiquitous. According to Mullins (2005:256), organizations are designed by people to overcome individual limitations and achieve individually. Hence, organization become a means of survival for the people and exerts an important daily influence on the life of the people and the way they live. The major decider for the survival of any organization is the presence of capable men and women with the right technique to combine the organization resources (man, machine, materials and money) to achieve organization goals.

It is appropriate to note that management of companies in Nigeria lack sufficient techniques to make them manage effectively. Some of these tools are not used; and when used, they are not properly utilized. Management by objective is not only a managerial strategy to achieve a well co-ordinated managerial goal, but it is also a popular management technique, that cut across or pervade all human activities namely; business areas, educational, government, health care and non profit organization.

Most of the techniques, system, tools of management are hardly understood, resulting in losses and damages to the organization. Besides, it is the wrong use of technique and unwillingness of top management to utilize the right tool to solve the management problems.

It is on these trends that the researcher intends to find out the prospect and problems of effective application of management by objectives, by companies in Nigeria. In order to investigate some of the above problems, one of the leading financial institutions in the country, First Bank of Nigeria Plc Benin—Agbor Road, Benin City has been chosen.

1.2 Statement of the Problem

It is pertinent to note that management of companies in Nigeria, lack sufficient technique to make them manage well. Some of these tools are not used and when used they are not properly utilized. Management by objective is not only a managerial strategy to achieve a well co-ordinated managerial goals, but it is also a popular management technique that cut across or pervade all human activities namely; business areas, educational, government, health care and non-profit organization.

Most of these objectives are hardly understood resulting in losses, breakage’s and so on. The worse are business in the medium range where most banks fail. Most companies hand down objectives to subordinates without adequate explanation, hence failure of management by objectives in such cases. Management by objectives will remove all of these problems mentioned above and subordinates will now formulate objectives, set targets according to their strength and weaknesses, no stoppages, no delays, no losses to the companies. This will help subordinates to formulate realizable goals.

1.3 Objectives of the Study

The broad objectives of the study are to find out the prospects and problems of effective application of management by objectives in companies in Nigeria.

The specific objectives of the study includes: –

  1. To determine problems affecting the effective application of management by objectives in an organization.
  2. To determine the level of managers commitment to achieving organizational objectives.
  3. To find out the level of participation of both managers and employees in the setting of goals to be achieved in the organization.
  4. To determine whether employees are given appropriate authority and responsibility for achieving the set objective.
  5. To recommend strategies for effective utilization of management by objectives.

1.4 Research Questions

In pursuit of the research objective of the study, the following research questions have been formulated.

  1. What are the problems militating against effective application of management by objective in an organization?
  2. To what extent do both managers and employees participate in the setting of goals to be achieved in the organization?
  3. To what extent are employees given appropriate authority and responsibilities for effective management by objective?
  4. To what extent do motivation determines employee’s performance towards achieving the objectives of the

1.5 Significance of the Study

Practicing management by objective will make the management of First Bank of Nigeria to be more assertive in their decision making. It will assist the subordinate in First Bank of Nigeria, Benin-Agbor Road, to be able to identify themselves with the objectives of the company and the role they will play.

It will assist subordinates to be able to formulate their individual or group objectives, which are reliable. This will result in total commitment to objective; and efficiency and effectiveness will result.

1.6 Scope of the Study

This research work is limited to First Bank of Nigeria Plc Benin-Agbor Road, Benin City, and how different organizations can be managed better, by the managers setting the goals and all the company members working towards achieving the goals.

1.7 Limitation of the Study

There are many factors that act as constraint to the effort of the researcher in the course of writing this project. Most prominent of the factors are:

(a) Time:

The research work is a big task and as such requires time and energy, which was not on the researcher’s side.

(b) Finance:

This is another limiting factor. Due to limited financial resources available, the researcher cannot procure all the needed material is for this project. For instance, to get books from the library, the researcher has to pay library, which the researcher does not have all the time.

(c) Cost:

The cost of transportation to and from First Bank of Nigeria Plc Benin-Agbor Road is very high for the researcher.

(d) Secrecy:

Nigerians dislike activities that tend to probe them. They tend to avoid researcher because they feel their activities that are not meant for public consumption would be exposed through research work.

1.8 Definition of Terms

Management By objectives (MBO):

Management by objectives refers to a formal set of procedures, that begins with goal setting and continues through performance review. Managers and those they supervise act together to set common goals.


This is used to describe the selected group of people at the helm of affairs in any organization. They work with and through others in realizing the objective of the organization.


This means an establishment/entity with an explicit or implicit objective.


Worker can be defined as a person with effort of any kind, physical of mental skilled or unskilled, artistic or scientific usually for a reward.


Performance is an action or achievement considered in relation to how successful or non-successful a worker contributed in organization productivity.


The gradual growth of something so that it becomes more advances, stronger a new event or stage that is likely to effect what happens in a continuing situation. It could be in political and economical.


Public Limited Company


First Bank of Nigeria


This is the ability or strength of the employee to bring the result intended to achieve the organizational goals.


The quality of being capable of utilizing the material recourses to achieve the desired goal.


These are workers employed to perform jobs in an organization under an obligation, which they expect income as exchange for effort contribution to the growth of the organization.


They are the employer of labour, who might therefore said to be the controller of the activities of the establishment.


The process of being able to use a company’s natural resources such as adverts, covering of event, publicity of event for the attainment of profit maximization.

Chapter Five

Summary of Findings, Conclusion and Recommendations

In this chapter the findings of this study were presented, conclusions were made and finally necessary recommendations were made in line with the findings.

5.1 Summary of Findings

The following findings were made after the data collected from the field survey had been presented and analyzed.

  1. That the major problems militating against effective utilization of management by objectives in an organization are.
    1. Non Commitment of the top managers
    2. Non Participation of employees
    3. Inappropriate Remuneration
  2. That motivation determines employee’s performance in terms of achieving set objectives.
  3. That management by objective helps to obtain total commitment of all the employees to work together in order to achieve a common goal.
  4. The finding revealed that the following factors improve performance of the workers.
    1. Good and prompt salary
    2. Promotion as when due
    3. Good Relationship with management
    4. Recognition of Achievement
  5. That organization that adopts management by objectives usually achieves its set objectives.
  6. That the practice of management by objective facilitates the emulations of team spirit and work in an organization. The benefits of team spirit in modem day management cannot be overemphasized. It helps group over individual’s advances collective goals and slums selfish or sectional interests.
  7. That the process of management by objectives is an underlying motivational ingredient to lower managers.
  8. The fact that lower managers are involved in annuls at the group objectives not only gives them a feeling of belonging but imposes upon them, a commitment to work towards it’s effective realization.
  9. That management by objective encourages systematic planning of organization efforts.
  10. Inbuilt in the process of evolving group and sectional objectives as demanded by management by objectives is the exercise of planning.

5.2 Conclusion

This study revealed a lot of positive implications and relevance of management by objective to modern day management of organization especially in Nigeria in practical terms, the operations of management by objectives requires that each manager of a unit draws up his department objectives with his subordinates in line with the centrally stipulated corporate objectives and missions. These unit objectives when approved by the management, clearly define responsibilities and expected results and are shared and distributed throughout the organization as a basis for performance and rewards. The objectives set in the process of management by objectives help provide a yardstick for appraisal, compensation and control.

Once the objectives are agreed upon, everyone knows what is expected of him, thereby making appraisal and reward easy and known what is more, it facilitates control of organizational operations as deviations can be easily identified and connections made.

5.3 Recommendations

  1. Management by objectives in its ideal form operates in such a way that for the corporate goals to be realized manager should consult his subordinates in drawing up unit objectives, which goes up the hierarchy from where it is modified, collected, approved and distributed throughout the organization.
  2. There should be regular training and re-training of employees in order to achieve the corporate objectives.
  3. Managers should endeavour to build a true team and weld individuals efforts together.
  4. Their efforts must all pull in the same direction and their contribution must fit together to produce a whole without friction and without duplication of effort.
  5. Managers and employees should periodically meet, in order to review progress towards the realization of objectives.
  6. There should be autonomy in implementation of plans. Once the objectives have been agreed upon, the individual enjoys wide discretion in choosing the means for achieving the objectives without being second guessed by higher ranking manager.

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