What Is Management By Objectives ?
MBO (Management By Objectives) is a management technique of setting specific goal and working together to achieve it. It helps to improve efficiency and productivity of the organization. It is a goal-oriented participative process in which all the members (superiors and subordinates) contribute equally to obtain organizational objectives.
In this post we are going to discuss major pros and cons of MBO.
Merits Or Advantages Of MBO
The main advantages of management by objectives can be described as follows:
1. Proper Planning
As we know that MBO is a goal oriented technique, it is planned properly
and goals and objectives are well defined. Roles and responsibilities are
properly assigned to the employees according to the skills and
capabilities.
2. Sound Decision Making
MBO encourages employees to take part in the decision making process.
Suggestions and ideas of all members are considered while making decision.
Therefore, it ensures sound decision making.
3. Proper Guidance And Support
Employees get proper guidance, direction and support from the superiors. It
helps to improve their performance at work.
4. Increased Employee Motivation
Because of participation in decision making, positive guideline, support
and effective reward system, it helps to increase employee motivation in the
organization.
5. Optimization Of Resources
Since MBO is result-oriented system, it helps to utilize available
resources optimally to get better output. Resource optimization helps the
organization to increase efficiency that leads to increase in the
productivity and profitability.
6. Improved Communication And Transparency
It helps to establish proper communication between superiors and
subordinates. Transparent communication helps to minimize misunderstanding
and conflict in the organization.
7. Teamwork And Collaboration
Another advantage of MBO is that it promotes sense of teamwork and
collaboration in the workplace because all the members work together to
obtain common targets or objectives.
8. Career Development Opportunity
Management by objectives evaluates efficiency and analyzes training needs
to enhance skills and abilities of employees. On the other hand, superiors
provide guidance and instructions to improve the performance. So, it is
helpful for the employees to gain knowledge and improve skills. Therefore,
it provides career development opportunity to the subordinates.
Demerits Or Disadvantages Of MBO
The main limitations or disadvantages of management by objective can be
described as follows:
1. Less Focus On Other Aspects
MBO mainly gives focus on the goal of the organization. It may neglect
other important aspects such as business norms, working environment,
environmental and social responsibilities etc.
2. Consumes More Time And Cost
It is costly and time consuming approach. It requires a lot of paper work
and takes additional time in meeting, discussion, goal setting, evaluation
of performance etc. Therefore, it is not suitable for small organizations
with fewer resources and employees.
3. Focused On Short Term Goals
MBO is suitable to obtain short-term goals. But in the long run, goals may
be invalid or irrelevant because of the changes in the business environment.
Therefore it may not be suitable to set long-term goal for the
organization.
4. May Create Frustration
It gives emphasize on achieving large targets that may create pressure and
frustration among the employees. It may reduce the quality of work.
Also Read Management by objectives and its features
5. Possibility Of Unfair Competition
Performance evaluation and reward system may create unfair competition
among the workers. It may disturb the working environment in the
organization.
6. Low Employee Morale
Very high target or difficult goal may discourage employees. In this
situation, employees may be demotivated that may decrease the morale.
Decreased morale leads to decrease in the performance and
productivity.
Pros And Cons Of MBO In Brief Pros * It facilitates proper planning and better decision making * It improves employees motivation and efficiency * It promotes better communication and transparency in the workstation * It encourages maximum utilization of human resources to achieve better result * It provides career development opportunity Cons * It ignores business norms, working environment and other important aspects * It gives focus on short term goals only * It consumes more time, cost, labor and resources * It may decrease employee morale due to increases frustration * It is inflexible system
