Management by Objective(MBO)

Posted By on September 15, 2014

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Human Resource Management (HRM)

Management by Objectives

Management by objectives (MBO) can also be referred as Management by Results or Goal Management, and is based on the assumption that involvement leads to commitment and if an employee participates in goal setting as well as setting standards for measurement of performance towards that goal, then the employee will be motivated to perform better and in a manner that directly contributes to the achievement of organizational objectives.

Advantages of Management by Objectives

1 . Since Management by objectives (MBO) is a result-oriented process and focuses on setting and controlling goals, if encourages managers to do detailed planning.

2.  Both the manager and the subordinates know what is expected of them and hence there is no role ambiguity or confusion.

3. The managers are required to establish measurable targets and standards of performance and priorities  for these targets. In addition, the responsibilities and authority of the personnel is clearly established.

4. It makes individuals more aware of the company goals. Most often the subordinates are concerned with their own objectives and the environment surrounding them. But with MBO, the subordinates feel proud of being involved in the organizational goals. This improves their morale and commitment.

5. Management by objectives (MBO) often highlights the area in which the employees need further training, leading to career development.

6. The system of periodic evaluation lets the subordinates know how well they are doing. Since MBO puts strong emphasis on quantifiable objectives,the measurement and appraisal can be more objective, specific and equitable.

7. It improves communication between management and subordinates.

Disadvantages of Management by Objectives

1. MBO can only succeed if it has the complete support of the top management.

2.  Management by Objectives (MBO) may be resented by subordinates. They may be under pressure to get along with the management when setting goals and objectives and these goals may be set unrealistically high. This may lower their morale and they may become suspicious about the philosophy behind MBO.

They may seriously believe that MBO is just another of the management’s ploys to make the subordinates work harder and become more dedicated and involved. The emphasis in the MBO system is on quantifying the goals and objectives. It does not leave any ground for subjective goals. Some areas are difficult to quantify and even more difficult to evaluate.

3.  There is considerable paperwork involved and it takes too much of the manager’s time. Too many meetings and too many reports add to the manager’s responsibility and burden. Some managers may resist the program because of this increased paperwork.

4. The emphasis is more on short-term goals. Since the goals are mostly quantitative in nature, it is difficult to do long-range planning because all the variables affecting the process of planning cannot be accurately forecast due to the constantly changing socio-economic and technological environment which affect the stability of goals.

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Human Resource Management (HRM)

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Posted by Akash Kurup

Founder and C.E.O, World4Engineers Educationist and Entrepreneur by passion. Orator and blogger by hobby