Advantages and Disadvantages of MBO (Management by Objectives)
MBO is a result goal-oriented management model that aims to increase overall organizational performance by setting goals with the participation of both management and employees. MBO tries to balance the objectives of both organization and employees to achieve more incredible performance. Following are some of the noted advantages and disadvantages of management by objectives (MBO):
Advantages of MBO:
Management by objectives provides numerous advantages that can certainly bring employees the best performance and ensures results achievement. Some pros of MBO are:
Effective Planning and Decision Making
MBO is one of the new and effective models of planning and decision-making that includes the participation of both employees and management.
Planning and decision to be effective require a combination of suggestions that carefully analyze what will happen if the plan is made and executed. MBO ensures the participation of employees in such processes where the expertise, skills, and knowledge of both subordinates and management result in a better choice. It believes two heads are better than one.
Clear Roles and Responsibilities
One of the advantages of management by objectives is that it offers no ambiguity in the roles and responsibilities of employees.
MBO is characterized by providing clear roles and responsibilities to each member of the organization where they are aware of what the company objectives are and what they should have to do. Further, the clarity in given tasks also ensures the timely achievement of the desired results.
Since MBO is a participatory approach managers and employees spend time together in goal setting process. They surely communicate being in that course.
Such participation requires regular meetings and communication between them. Employees get a chance to talk to their superiors or managers about related concerns. Such a process is desirable to maintain good communication between managers and employees.
Ensure Team Spirit
From setting effective goals and objectives to successfully implementing them the role of great teams is desirable. MBO also expresses the importance of team spirit while setting and executing the process to reach the targets.
Employee Morale and Commitment
While setting objectives in the MBO process the participation of employees is greatly valued. The goal is set with the mutuality of both managers and employees. The objective is set by combining the personal objectives of employees and the objectives of the organization.
When employees know their concerns are included in the overall organizational goals they take it as their personal goals. This increases the motivation of employees towards the company and shows their greater commitment.
Employees Learn Leadership and Decision Making Skills
Employees are great learners when they have helpful and skillful coaches (managers). For MBO to be successful managers need to have skill sets that successfully manage the employee’s diverse opinions.
Since in the process of MBO, employees regularly participate in important meetings and discussions they are likely to imitate or learn new skill sets that further improve their performance. From such skills, leadership and decision-making are two common skills employees learn through the MBO program.
One of the goals of MBO is to improve performance at all levels of the organization. It is obvious that organizations perform more when every member gets a clear direction.
In the MBO model employees are clear about their duties and how their actions will affect the MBO. The clarity in employees’ responsibilities, motivation, and commitment are great factors to bring greater performance.
Further, management by objectives provides various tools that help managers and employees to do better.
Initially, the MBO program is used as the performance appraisal tool. It is an effective tool to evaluate employees’ performance and provide regular feedback to improve their performance.
MBO opens a way for employees to show their talents and excel in their skill sets. Under MBO, employees also learn about the other areas for which they might need new training.
The management shows a genuine interest in the improvement of subordinates’ skills and talents and gives them the chance to sharpen those areas that require more work, which helps employees advance in their careers.
Greater Goal Achievement
MBO is a strategic management tool that is mostly focused on setting goals & targets and achieving them as soon as possible. Usually, it makes short period goals that are quantifiable.
As MBO ensures the making of effective plans and decisions. With effective utilization of resources, clear roles & responsibilities, and ensuring commitment from the employees along with increased performance the desired goals are also achieved in the stipulated time under MBO.
Disadvantages of MBO:
Along with providing numerous advantages to the company MBO also has its drawbacks that can negatively affect the company’s performance. Some cons of MBO are:
Over-Focused on Goals
One of the main disadvantages of MBO is that it is over-focused on organizational goals and targets only. It frequently disregards other aspects of a business, such as corporate culture, worker conduct, a positive work environment, environmental concerns, and opportunities for involvement and social work in the community.
Pressure on Team Members
As MBO has set goals that are short-time employees may feel strained to meet those goals in the required time.
Employees are asked to meet those goals as soon as possible for this they might take shortcuts, as shortcuts are not always a viable option this might degrade the quality of work.
Costly and Time-Consuming
Running the MBO program is a costly and time-consuming process. For MBO, regular meetings and communication are necessary. In the meeting process, discussions between managers and employees require more time to finalize.
It is not always that the objective is finalized in one meeting, the meeting may be extended. Evaluating all participant’s opinions takes time as well as organizing such events do also cost some money to successfully perform.
It can also be said that management by objectives is the management tool for short-term goals. Usually, the goals and objectives that fall under MBO are not more than one year.
Although the MBO is efficient in achieving those short period goals – for the sustainable development of the company consideration of long-term goals is necessary.
Acceptance At All Levels
For a successful MBO program acceptance from all levels of management is required. If one of these levels shows a negative attitude toward the MBO program it can’t be done. From these three levels, acceptance or interest from top-level management in MBO is mostly required.
Requires Skills Set
Coaching and counseling are the two most essential skills managers need for an effective MBO program. A successful MBO relies on the manager’s skills, and any gap in these skills the MBO may not provide the expected benefits.
MBO relies significantly on leadership to establish a sense of direction, despite its deep roots in teamwork. The potential advantages of the MBO program model won’t be achieved if a manager lacks the necessary skill set.
Though MBO is deep-rooted in collaboration, there could also be a power clash between managers and subordinates. In order to define goals, supervisors and employees collaborate. However, because of the supervisor’s position of power within the organization, there are occasional tensions between the two parties.
Employees might not feel safe or at ease sharing their honest opinion about the objectives a manager suggests, which could result in the employee setting unattainable objectives.