Define management By Objectives (MBO). What are its advantages and disadvantages (weaknesses)?
Management by Objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of organisational and individual activities. (Weihrich and Koontz)
The term Management by Objective (MBO) was popularised by peter Drucker in his book, The Practice of Management, and may also be defined as the process whereby the superiors and subordinates jointly and mutually set the subordinates’ goals as well as how such performance will be measured, and how often it should be reviewed
THE USE OF MBO AND ADVANTAGES ACCRUING TO MBO
MBO is a modern tool that assists management in mutually setting goals with subordinates, thus yielding the following uses.
- It provides a basis for objective performance appraisal – use mutually agreed standards.
- It results in improvements of management and managing through better planning – and the results-oriented emphasis of goals.
- Clarification of the organisation: it forces managers to clarify organisational members’ Roles are built around Key Result Areas.
- Encouragement of personal commitment: It encourages people to commit themselves to the goals – the arguments being that they will have participated in setting them.
- Development of Effective Control: It aids in control by providing the basis of evaluation of actual results with expected (mutually set) Ensures focus is on specific accomplishments.
- Results in congruency through the mutual setting of goals that suit both the individual and the organisation’s requirements.
- It improves communication between managers and subordinates.
- Makes individuals more aware of organisational goals.
- Helps develop managers: Managerial talent can easily be scouted via the MBO system.
DISADVANTAGES (WEAKNESS) OF MBO:
Most of the weaknesses of the MBO centre on the fact that it is not conducive under autocratic management styles etc.
- Is not effective under autocratic management style
- It necessitates changes and thus may have drawbacks where there is resistance to change thus inflexibility may compromise MBO
- There is high requirement for interpersonal communication especially at the goal setting stage
- MBO is time-consuming especially at the goal setting stage
- Setting and co-ordinating objectives is a difficult task, especially if the goals have to be specific and quantifiable
- Managers need to understand MBO in order to make it effective
- This may be worse if he fails to derive guidelines to goal-setting. There may be a tendency to set short-run objectives at the expense of long-run goal congruency may be compromised
