Page 67 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Management Practices and Organisational Behaviour

Notes 4. Objective appraisal: MBO provides a basis for evaluating a person’s performance since
goals are jointly set by superior and subordinates. By setting specific goals, MBO allows
persons to better control their own performance. The individual is given the freedom to
police his own activities. A pleasant and stimulating organisational climate prevails where
individuals are not subjected to domination and control from ‘upstairs’, and where they
are trained to exercise discipline and self-control. Management by self-control replaces
management by domination. Appraisals would be more objective and impartial since
employee performance is evaluated against, verifiable objectives.
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. It compels forward planning and living life in an anticipatory mode rather than
responding to events. Clarified roles reduce ambiguity and employee anxiety. It allows
managers increased opportunities to provide subordinates with a better fix on the job and
clarify the path to personal rewards.
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. The two techniques, participative decision-making and two-way communication,
encourage the subordinates to communicate freely and honestly. It minimises the possible
misunderstanding about what is expected of each individual and organisational subunit.
Participation, clarified goals, improved communication - all together have a tonic effect
on the psychology of subordinates.
7. Result-oriented philosophy: MBO is a result-oriented, practical and rational management
philosophy. Managers are forced to develop specific individual and group goals, develop
appropriate action plans, marshall the resources properly and establish needed control
standards. It helps manager to avoid management by crisis and ‘fire-fighting’.

3.5.6 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 instil 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.
4. Goal-setting problems: MBO works effectively when important measurable objectives are
jointly agreed upon. It works less, when: (i) Verifiable goals are difficult to set. (ii) Goals
tend to take precedence over the people who use it. MBO focuses on end results and it may

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