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
