Vilcu Radu, group 399

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.
Vilcu Radu, group 399

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.
Vilcu Radu, group 399

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.

5. Most managers may not be sufficiently skilled in interpersonal interaction

such as coaching and counseling, which is extensively required.

6. The integration of MBO system with other systems such as forecasting and
budgeting etc., is very poor. This makes the overall functioning of all systems
more difficult.

7. Group goal achievement is more difficult. When the goals of one

deportment depend on the goals of another department, cohesion is more
difficult to obtain. For example, the production department cannot produce a
set quota if it is not sufficiently supplied with raw materials and personnel.