The Impact Of Management By Objective (MBO) On The Performance Of An Employee

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The Impact Of Management By Objective (MBO) On The Performance Of An Employee


One of the many problem facing the business community has been the problem of integrating the objectives of the employees with that of the organization for the achievement of the organization objectives. Even when such an integration has been made there should be a dear method or system of measurement of the contribution of employees to the organizational achievement. Organization that practice management by objectives seem to be on the positive threshold of solving this problem. Management by objective (MBO) is a systematic approach to managing an organization practicing the basic management functions of planning organization staffing leading and controlling. Management by objective is a result oriented all functional area (LOPA energy the distinguishing characteristic of management by objective (MBO) is its emphasis on results achievement of objective. It is based on a concept of human motivation. Accordingly it places emphases on the involvement of the employee in planning directing and controlling aspects of the job what will be done when will it be dome and how will it be done?

Chapter One


1.1 Background of the Study

The underlying belief is that this involvement of employee lead to commitment and if an employee is committed he can be directed to perform in manner that positively contributes to the achievement of organizational objects. The MBO afford both the superiors and subordinates the opportunity to sit together and jointly identify common goals of enterprise define individual major areas of responsibility term of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of it misers. Paul Hersey et al (1988) this leads to the four basic component of the MBO system.

  1. Setting performance objectives and standards for their accomplishment
  2. Developing action plans
  3. Coaching and counseling
  4. Annual performance appraisal

Management by objective should guard against misdirection of common organizational goal by various functional managers. Peter Durker (1981). The in depth in the assumption is that organization that is well vested and excellence among its managers. By jointly setting objectives between and the subordinate a mutual understanding results. Employee now accept the responsibility and works out action. Plan to meet performance standard set for the specific job. MBO has psychological background. In order to understand and benefit from MBO all employees who are includes in it must understand the psychological principles on which it is based. When MBO is introduced into a company a training course is therefore given which explains Maslow’s hierarchy of needs Hertzberg’s theory of motivational emphasize and Mc Gregor’s theory X and Y these emphasize the employees increase in job satisfaction when he feels a sense of achievement & involvement in his work. Unless MBO is carried out in this spirit it because merely another method by which subordinates can be controlled. Graham (1985)

For a business to grow responsibility is the only thing that will serve. Druker (1981).

Acceptance of responsibility removes fear and spur up employees with an internal self motivation for performance. When employee are motivated productivity increases.

Through management by objectives (MBO) responsible worker emerge there is the contention that (MBO) brought employee satisfaction. Nwachukwu (1988). Employees contribution is recognized and rewarded through job performance appraisal system which is an ingredient of management by objective (MBO)

One of the major problem contorting the Niger civil service are intangible 50 are their result that is to serve the people. This sound ambiguous and cannot easily be subjected to any quantitative and qualitative education. To determine when a civil service has become result oriented entails having specific limited dearly defined target to be accomplished within a given time Nwachukwu (1988).

Management by objective enable prudent utilization of resources setting of prionties and time as Druker (1977) puts it only its target and defined can resource be allocated to their attainment priorties and dragline be set and somebody be held accountable for result”

Employees can be denominated if an employees perceives that his contribution has not been equitable compensated rewarded or recognized.

Coaching and counseling are used to guide subordinates to be on the objective track.

In summary management by objective in the recent years has been one of the most striking developments in the managerial cut of getting result in an organization. Significant number of firms small enterprise to giant public corporation report accomplishment of a most astonishing and profitable nature. When MBO is correctly applied it enhance work simplification equitable compensation better utilization of equipment starting a new business inventory control and organization clarity (Mali 1972)

It is clear from the vast body of information and knowledge developing around (MBO) concept a dynamic management way of life is steadily maturing and will remain with as for sometime to come. This is informed by the fact that management practitioners themselves are increasingly concerned with improving ther own effectiveness with the use of management by objective ( MBO). The researcher work will examine the impact MBO on the performance of the company LOPA Enugu Co.

Being a theoretically oriented research work theories by eminent scholars as they affect the research topic will be discussed. The objectives scope and innovative material offered in this researcher paper should be of help to any manager at any organizational level who is interested in increasing the results and quality of output of his group or organization.

Additionally the paper would provide meaning techniques increase their individual resulted in the context of their job responsibilities. In only management employee are includes in the MBO system that is employees who are only salary group 10 and above even those without experience or the fresh recruits.

Conversely employees on salary group mine or below are excluded form MBO system irrespective of the many years of experience that have had on the job. These level of employees performed what the company referred to as “assigned tasks”. This study examined management staff of the company could make to the MBO system to facilitate accomplishment of the company’s goal and objectives.

A Brief Historical Background of the Company

LOPA energy company was co-operated and the year 1985 under the company’s allied matter act of 1965 amended in 1990 and registered the company’s name as LOPA energy Co Ltd ammonia processing plant.

The company got its registered number which is 176062 in 58 Awka Road Onitsha under the memorandum of association to design commission operate and supply all kinds of petroleum plant which includes liquidity petroleum gas (LPG) and also to set up and market all kind of chemicals petro chemical plants organic and inorganic.

The company is floated by chief Bony Alo and engineer Ansalem Alo on behalf of their other brother LOPA is located at Emene Enugu East.

The company has branch and gas plant at Abakiliki for the bottling of liquidity and gas plant petroleum gas (LPG) and ammonia factory and gas plant at Enugu. Soon after the completion of the company LOPA energy has a setback. The national fertilizer company of Nigeria (NAFCON) entered into an agreement with LOPA energy and offered the company and excusive leadership of her bye-product but (NAFCON) later reneged from that co-actual agreement. So the company become a still birth out of the wood and the problem were sowed until 1993. NAFCON was compelled by federal government of Nigeria (FGN) to supply the product to LOPA energy Co-Ltd and to respect with the company is agreement. Since then LOPA energy went into active business as a result of this LOPA constructed an ammonia bending plant for bending of anhydrous ammonia and the chemical name is NHZ.

So business blossomed on like a flower and in expansion of business LOPA energy increased in the production of LPG and this LPG is the cooking gas and brings to future dream. Now LOPA Enugu Co Ltd is the only company that is supplying liquidity petroleum gas (LPG)

1.2 Statement of the Study

Whether a business enterprise deliver a product or service depending on the work of the number of people whose effort must be marshaled and directed toward the a ultimate objective. The organizing of drilling and producing on the other hand and directing and motivating of employees on the other hand are two of most important of the many essential activities of LOPA energy management.

No enterprises has achieved significant economic and social development with our clearly set objectives and stipulated performance standard. This main problem addressed by this research was the relationship between management by objective (MBO) and its significance impact on employee performance at LOPA energy productivity is affected up front because of procurement of raw material the refinery which product liquidity because the product is not regular even the processing of raw material (NAFCON) The national fertilizer company of Nigeria closed down so they import the material up till now.

In from of sales company that patronizes LOPA energy has reduced as a result of importing of raw material. The product will be very costly because of the raw material is very made and used for the production the cost of the product will be high. Some of the company has closed down because of the expensive of the product (the any hydrous) which is used in some breweries for production of malt and for cooling. Productivity is affected when stimulating challenging and vigorous objective and performance standards are established and the performance adequately rewarded a measure of reinforcement

1.3 Purpose of Study

This study aimed at achieving the following objectives or purpose:

  1. To find out wither management by objective practiced in LOPA Enugu improve the overall performance of the company
  2. To find out the extent of management involvement in MBO as a tool for effective performance at LOPA Enugu
  3. To find out how management by objective (MBO) could applied at LOPA energy Co. Ltd to motivate the employee to work better.

1.4 Researcher Questions

Research questions are question posed by the researcher answer to which would lead to the solution of the problem

The research question are as follows

  1. Does management by objective (MBO) improve or enhance the overall performance of the company?
  2. To what extent does management involvement in MBO as a tool for effectives performance at LOPA energy?
  3. How does management by objective (MBO) applied at LOPA energy Co Ltd motivate the employees to work better.

1.5 Research Hypothesis

The hypothesis for the research work is formulated after thorough and careful review of work that are directly or indirectly related to the subject matter.

The hypothesis for this research work are as follows

  1. H0: Management by objective (MBO) does not improve the overall performance of the company
    H1: Management by objective (MBO) improve the overall performance of t he company
  2. H0: Management involvement in MBO does not work as a tool for effective performance at LOPA Enugu
    H1: Management involvement in MBO work as a tool for effective performance at LOPA Enugu
  3. H0: Management by objective (MBO) applied at LOPA energy does not motivate the employees to work better
    H1: Management by objective (MBO) applied at LOPA energy motivate the employees to work better

1.6 Significance of the Study

Management of LOPA energy in particular and other enterprise is Nigeria generally would find the result of this research very rewarding and variable when applying management by objective (MBO).

From this result they would know the particular problem jeopardizing the correct application of management by objective (MBO) and thereby take remedial action.

Consequently, the acceptance of this study and adoption of the researcher’s recommendation could assist management of LOPA energy other organization and public sectors in making sound and strategic decision to improve employee performance and productivity through careful result measurement appraisal rating and commensurate reward system.

1.7 Scope of the Study

The scope of this study is targeted at evaluating the trend and problems of MBO as a management technique with particular reference to LOPA energy situated at Emene in Enugu East L. G. A of Enugu State.

It is hoped that the study would be able to throw some light on the issue of an avenue for survival and growth of the company. This study will help to know what is jeopardizing the progress of the company

1.8 Limitation of the Study

The research work was conducted at LOPA energy Emene Enugu East. This research faced the following limitation:

1) Cost of Production

The production cost of research projects was becoming increasingly high at the time of writing this project due to generally high inflationary trend in the country.

2) Relevant Material

The institute of management and technology Enugu (IMT) like most Higher institution in the country lacked many text book journal and research material therefore materials were collected from other institutions and public libraries.

3) Volume of Research

In view of the cost of production of research material the research in five chapters

4) Time Factor

An academic research work is a prefect that requires a number of many years for such scope which calamites in motivational theories of productivity. A greater number or amount of the would be required to probe into know and unknown height of this topic but where a period of two months or even less was given for this study and within 2004/2005 academic session one has no doubt that the out come of this study is not exhaustive. Therefore to enhance an effective study this research was restricted to the company under the study (LOPA energy Co Ltd ammonia processing plant)

1.9 Definition of Terms

It is a fact that every discipline its own terminologies and language therefore in order to erase the confusion that arise to the leadership of study the researcher deemed it necessary to define some of the terminologies used in the study


To create circumstance in which a particular individual will acquire motivation


The causes of particular behaviour by individual (e.g. emotion) but for the purpose of this study the definition best suits the situation.

Motivation contains a system orientation in the individual to either reinforce the drive intensity and energy direction or to dissuade him from any course of action and to re order his effort.


The first term of sound management well managed productivity.

What is Productivity?

Productivity is the relationship between the outputs generated from a system and the input provided to create those out puts. Inputs in the general from of labour (human resource) capital (physical and financial capital asset) energy materials and data are borough into a system

Productivity is the relationship of the amount produced by a system during a given period of time and the quantity of resource consumed to create or produce those out put over the same period of time it is the ration of outputs (0/1)


Appraisal is the judgment of an employee’s performance in this job based on consideration other than productivity alone.


Appraisal is the desired effect is minim um effort

Chapter Five

Discussion, Recommandation and Conclusion

This chapter deals with the discussions recommendations and conclusions of the study which and its objective was to find out the impact of management by objectives ( MBO) on the performance of an employee and the overall performance of LOPA energy Co Ltd

In chapter two a review of related literature was taken. The review provided a frame work for analysis the primary data collected were presented and analyzed in chapter four which chapter three deals with research methodology.

5.1 Discussion of Findings

  1. Majority of the employees working in LOPA energy agrees that management by objective (MBO is being practiced in their company and only few said they were not sure of management by objective practiced in their company.
  2. An impressive number of respondents said that management by objective (MBO) has enhance the performance of an employee in their company.
  3. Most employee indicated that management by objective (MBO) has improved the overall performance of the company.

It is a know fact that management by objective (MBO) helps in the improvement of the company’s welfare.

5.2 Conclusion

The study has attempted to analyze the actual process of management by objective (MBO) experienced in LOPA energy Co Ltd as distinct from the theoretical & the companies MBO have been analyzed in the content of the actual inputs from the respondents who were the operators of the management by objective (MBO) programmed the company.

With a review of improving the effectiveness of the improving the management by objectives (MBO) programmed this conclusions suggests ways of educing the weakness of the programmed the suggestion processed in a straight way from the foregoing analysis shown in table one to thirteen. Certain strengths of the company’s MBO programmed have also been clarified by this study the company should build its future changes on these strengths.
Beginning with the strengths to the weakness one major conclusion derived from the finding of LOAP energy and has also improved the overall performance of the company other conclusions that can be drawn include:

  1. Trough MBO employees have clear vision of their job responsibilities
  2. MBO creates for the employees a climate and mood conducive to willing and dependable performance.
  3. Employees have a sense of belonging when they share in objectives setting which invariable means sharing in decision making.
  4. Objectives are made current through review meetings which also help employees to surmount obstacles in the parts of achievement.
  5. Employees are motivated to performance better through the nature of the nature of the variability of yearly set objectives.
  6. Most employee feel that their supervisors sometimes impose objectives on them when there is done in an autocracies manner the result are bound to be affected.
  7. There is no order as to who should write the objective first supervisor or subordinate among various operational units

Base on the fact established in the course of study without doubt LOPA energy Co Ltd operates management by objectives, which has improved the performance of its employees and the overall performance of the company. At this conclusion the researcher maintained that the purpose for conducting this research been accomplished.

5.3 Implication of the Research Finding

From the result of the research findings it is clear that MBO cannot work if those who are expected to set goals are not given the needed guideline. Also it is know fact that to ensure a network of mutually supportive goals is not the company will suffer the consequences afterward.

Furthermore verifiable goals afterward to set especially if they are to be for the entire organization long range etc. the right person reason may not be there for effective goal setting

5.4 Recommendation

Based on the finding of the study as analyzed and shown in chapter four the following recommendations become pertinent for effective application of management by objectives in LOPA energy CO ltd

  1. Experience employees who are below the company’s group level should be included in the MBO for several reasons such as creating a sense of belonging more commitment to work and commitment to develop subordinate on the job.
  2. The appraisal system should be reviewed to reassure employees that the final rating reflects their objective accomplished this is crucial since all from of monetary reward are tied to employees appraisal of performance.
  3. Supervisors should encourage joint setting of objectives through discussion and avoid action capable of suggesting to the subordinates that the objectives are being imposed on them.
  4. Supervisors should be the first to write objectives before supervise to ensure effective downward commendation of the company’s goals and objective to be accomplished

5.5 Suggestions for Further Research

  1. The researcher suggests that the same study should or could be carried out in the town for comprise and further improvement.
  2. This particular study could be reproduced but with different instrument for data collection data analysis and increased population
  3. A study could be carried out to determine other factors that affect MBO

Reasons why it is Good to Apply Management by Objective

There are many reasons why successful companies or organization should apply management by objectives. For a successful and standard company or organization to have a long life span there is need to apply management by objective. Because management by objective targeted on the area that will help to increase or improve the standard and the overall performance of the organization or company.

Consequently the acceptance of the study and adoption of researches. Recommendation could assist management of other company and public sector in making sound and strategic decision to improve employee performance and productivity though careful result measurement appraisal rating and commensurate reward system. Be careful result measurement appraisal rating and consummensurate reward system the employees will be trying best to be a star in that organization or company. Because through that, the employee’s will be promoted during promotion and it is according to how they are doing from there they will be climbing to the climax

By good application of management by objective new method of doing things will be introduced to the employee’s in that company. They will pick some employees that is working harder towards reaching organizational objectives and send them for training and will even conduct a seminar, teaching them how things are to be done, what and what are required of you (as clerk, personal manager, receptionist etc).

So there should be an application of management by objective for a successful company to grow and survive.

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