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CMA Foundation · Fundamentals of Business Economics and Management · Planning, Organizing, Staffing and Leading

In the Management by Objectives (MBO) approach, which step comes first in the cycle?

The first step in Management by Objectives is setting clear organisational objectives and cascading them down to units and individuals. Only after objectives are fixed can performance be measured, reviewed, rewarded and corrected, so appraisal, rewards and corrective action all come later in the cycle.

  1. AAppraising the actual performance of employees
  2. BSetting clear organisational objectives and cascading them to unitsCorrect
  3. CRewarding employees for the results achieved
  4. DTaking corrective action on deviations

Explanation

MBO begins with defining organisational objectives, which are then translated into departmental and individual objectives. Performance review and rewards occur only after objectives and action plans exist. Appraisal and corrective action are later steps, so they cannot be first.

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