5 Major Limitations & Advantages of Management by Objectives (MBO)

Management by objectives (MBO) is a way of managing that focuses on the accomplishment of specific and well-defined objectives.

MBO assumes that people perform better when they know what’s expected and relate personal goals to organizational objectives.

Advantages of Management by Objectives (MBO)

Following are the advantages of Management by objectives (MBO)

Result-oriented approach

MBO is practical and result-oriented. MBO does not favour management by crisis. Managers are expected to develop individual and group goals.

Clearer goals

In MBO, goals are designed to be measurable. They highlight problem areas.

Impartial Appraisal

Employees are given the freedom to evaluate their own activities. Appraisal becomes highly objective and impartial.

Higher Morale

Participative decision-making and two-way communication encourage subordinates to communicate freely. This improves the morale of subordinates.

Personal Leadership

MBO helps individual managers to develop personal leadership. Such a manager enjoys a better chance to climb the promotional ladder.

Motivation

Since MBO focuses on providing clear target and their order of priority, employees are adequately motivated.

Key Result Areas

Those areas that are considered critical to the firm’s long-term success by the top management are called key result areas(KRSs).

Wasteful activities are avoided and objectives are achieved in time.

Limitations of MBO

Following are the limitations of MBO

Time-Consuming

Mbo is time-consuming. The superiors are required to hold frequent meetings in order to make employees familiar with the MBO programme. The periodic progress and final review sessions also consume time.

Increases paperwork

MBO increases a lot of paperwork such as training manuals, newsletters, instruction booklets, questionnaires, performance data and reports of the organisation. Employees are expected to fill in a number of forms thus increasing paperwork.

Organisational problem

Many times, MBO causes more problems than it solves. Subordinates aim for lower targets while superiors aim for higher ones. This results in developing administrative problems and spoiling relations.

Conflicting objectives

Sometimes a person’s goal might clash with someone else’s. manager aiming for high sales turnover may find no support from the production manager’s goal for production at minimum cost.

Under the circumstances, individuals follow actions that are best in their own interest but which may be damaging to the organisation.

Lack of durability

The initial period of MBO is motivating soon it loses its charm. The marginal benefits often decrease supported by the management.

At times, the programme is not supported by the management. As a result of this, the programme is withdrawn prematurely.

Problem of co-ordination

Considerable difficulties are faced in coordinating the objectives of the organisation with those of the individuals and the department. Managers also face problems of measuring unclear and unrealistic objectives.

Lacking of Training

Before introducing the MBO programme, managers should be given adequate training which often does not happen. This results in introducing the programme with untrained and ineffective managers which leads to poor response and participation from the employees.