Page 103 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 6: Management by Objectives and Styles of Management

6.3 Benefits of Management by Objectives Notes

MBO is hailed as the greatest innovation in years. Advocates argue that “it is the successor to
Taylor’s ‘mental revolution’-a new way of thinking about, and engaging in, collective effort”. It
is claimed that when an organisation is managed by objectives, it becomes performance-oriented,
it grows, develops and becomes socially useful in many ways:
1. Clear goals: MBO produces clear and measurable performance goals. Goals are set in an
atmosphere of participation, mutual trust and confidence.

2. Better planning: MBO programmes sharpen the planning process. Specific goals are
products of concrete thinking.
3. Facilitates control: MBO helps in developing controls. A clear set of verifiable goals
provides an outstanding guarantee for exercising better control.
4. Objective appraisal: MBO provides a basis for evaluating a person’s performance since
goals are jointly set by superior and subordinates.

5. Motivational force: Both appraiser and appraisee are committed to the same objective. It
forces managers to think of result oriented planning rather than planning for activities or
work.
6. Better morale: MBO encourages commitment rather than rote compliance. It is at functional
in terms of what top management demands and developmental in terms of people at
work.
7. Result-oriented philosophy: MBO is a result-oriented, practical and rational management
philosophy.

6.4 Limitations of Management by Objectives

MBO is not a panacea, a cure for all organisational problems. Quite often, many organisations
look at MBO as an instant solution to their problems. They fail to recognise that MBO demands
careful planning and implementation to be successful.
This technique, like all others, can be no better than the people who try to apply it. Some of the
problems preventing MBO from achieving its best results may be catalogued thus:
1. Pressure-oriented: MBO may prove to be self-defeating in the long run since it is tied with
a reward-punishment psychology. It is a clear violation of the integrity of subordinate’s
personality. MBO programmes sometimes, discriminate against superior performers. It
tries to indiscriminately force improvement on all employees and at times, may penalise
the very people who are most productive in the organisation.
2. Time consuming: MBO demands a great deal of time to carefully set objectives, at all levels
of the organisation. Initially to instill confidence in subordinates in the ‘new system’,
superiors may have to hold many meetings. The formal, periodic progress and final
review sessions also consume time.
3. Increases paperwork: MBO programmes introduce a tidal wave of newsletters, instruction
booklets, training manuals, questionnaires, performance data, reports into the
organisation. To stay abreast of what is going on in the organisation, managers may
demand regular reports and data in writing, resulting in ‘gruelling exercise in filling out
forms’. It has created one more ‘paper mill’. According to Howell, MBO’s effectiveness is
inversely related to the number of MBO forms.

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