The process of MBO is explained below:
(i) Defining Organisational Objectives: Initially, organisational objectives are framed by the top level employees of an organisation. The definition of organisational objectives states why the business is started and exists.
(ii) Goals of Each Section : Objectives for each section, department or division are framed on the basis of overall objectives of the organisation. Goals or objectives are expressed in a meaningful manner.
(iii) Fixing Key Result Areas: Key result areas are fixed on the basis of organisational objectives premises. Key Result Areas (KRA) are arranged on a priority basis. KRA indicates the strength of an organisation.
(iv) Setting Subordinate Objectives or Targets : The objectives of each subordinate or individual are fixed. It is preferable to fix the objectives at lower level in quantitative units. There should be a free and frank discussion between the superior and his subordinates.
(v) Matching Resources with Objective : The objectives are framed on the basis of availability of resources. If certain resources (technical personnel or scarce raw material) are not adequately available, the objectives of an organisation are changes accordingly.
(vi) Periodical Review Meetings: The superior and, subordinates should hold meetings periodically in which they discuss the progress in the accomplishment of objectives.
(vii) Appraisal of Activities: At the end of the fixed period for achieving the objectives, there should be a discussion between the superior and subordinates.