Advantages And Disadvantages Of MBO | What is Management by Objective (MBO)? Limitations, Disadvantages, Pros and Cons

Advantages And Disadvantages Of MBO: Management by Objectives is a popular management style that has been implemented in many different industries, including marketing, healthcare, and education. This management style is popular because it makes it easier to have a coordinated plan and it can help you achieve your goals faster.

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What Exactly is (MBO) Management by Objectives?

MBO is a management approach that emphasizes the achievement of specific objectives or goals. Under MBO, an organization’s goals are set and then each employee is assigned a specific objective or goal to help him or her achieve the organization’s goals. The benefits of MBO include a clearer understanding of what needs to be done and a more focused effort on accomplishing objectives. However, MBO can also lead to less individual responsibility and greater bureaucracy, and it can be difficult to change when the original objectives no longer seem appropriate. In this article, we shall explore the concept of MBO in detail and understand its advantages and disadvantages of the same.

Advantages of MBO (Management by Objectives)

As stated above, Management by Objectives or MBO is a popular management philosophy that emphasises the achievement of specific goals and objectives. This approach has a lot of benefits, and the most prominent are as follows:

  1. Improved clarity of objectives – Due to the focus on specific goals and objectives, the clarity of what is being sought by the organisation becomes clear. This enhances and also facilitates better decision making within the organisation.
  2. Increased efficiency – With a more focused approach to management, organisations can achieve increased efficiency in their operations. This is due to the fact that objectives are more clearly defined, leading to better coordination between departments and decreased wasted effort.
  3. Improved morale – By ensuring that employees are focused on achieving specific goals and objectives, morale tends to be improved in organisations. This is because employees feel as if they are contributing positively towards an organisation’s success rather than working in an arbitrary manner with no tangible results.
  4. Reduced risk – By specifying clear objectives, organisations minimise the risk associated with taking new initiatives or changes. This reduces the amount of time and energy needed to assess potential risks and makes it easier to make informed decisions regarding the actions to take.
  5. Ensures accountability – With MBO, the management ensures accountability for their employees by setting a goal for them and assigning an individual with specific responsibilities. This is beneficial to any company because it creates a sense of purpose for the employee and helps to keep them accountable.

Disadvantages of MBO (Management by Objectives)

One of the main disadvantages of MBO is that it can be difficult to keep track of objectives and goals. This can lead to a lack of clarity about what the company is trying to achieve. Additionally, MBO can cause conflicts among different departments or groups, as each group may have its own set of objectives. Other disadvantage of MBO are as follows:

  1. Needs support from top management – Management by objectives is a great method for evaluating performance and for creating goals. However, to make this work, the company must have support from the top management. If the company does not have top management support for managing objectives, then it is not effective because the employees will not want to commit to these goals in order to succeed.
  2. May be resented by subordinates – Many organisations use the management by objectives (MBO) approach. The manager sets the deadlines and rules for completing their task, but the subordinates are expected to follow those rules. MBO may be resented by some employees who feel like they have been given too many restrictions so that their work falls short of the manager’s expectations.
  3. Less emphasis on long term goals – A major disadvantage of management by objectives is that they don’t often provide the long-term vision needed in order to create a successful organisation. Long term goals are important because they give employees an idea of what the business will be like at the end of a specific time frame. A common mistake made with management by objectives is setting the year or quarter goals for too short of a time period. This can lead to dead ends and disappointments for both staff and shareholders.
  4. Lack of necessary skills can impair MBO – The effectiveness of MBO is in its simplicity and its ability to make managers aware of their own strengths and weaknesses. However, this can also be its downfall. When managers are not well-versed about their tasks or they lack the necessary skills to perform the task, they might have a hard time meeting their goals.
  5. Difficult to integrate with other systems – Management by objectives can be difficult to integrate with other established systems. This is because the approach is designed to organise work and actions based on long-term and short-term goals. When these approaches are paired with others, it can create conflicts.

Advantages And Disadvantages Of MBO

Comparison Table for Advantages and Disadvantages of MBO

Following are the advantages and disadvantages of MBO:

Provides better clarity of objectivesDifficult to succeed without support from top management
Improves efficiencyMay not be popular with subordinates
Increased moraleLong term goals are given lower priority
Risk is reducedLack of necessary skills can impair MBO
Ensures accountabilityDifficulty integrating with other systems

Conclusion on MBO (Management by Objectives) – Advantages And Disadvantages

Management by objectives has become a popular way to manage organisations in recent years. Advantages of using management by objectives include improved communication and coordination, more accurate planning and budgeting, and better performance measurement. However, there are also some disadvantages associated with this type of management, such as increased managerial workloads, reduced creativity and flexibility, and decreased employee motivation. Ultimately, the decision whether or not to implement management by objectives is up to the individual organisation’s leaders.

FAQs on Advantages And Disadvantages of MBO

Question 1.
What is Management by Objectives?

Management by Objectives is a management technique where objectives are set and followed through to achieve results. The main goal of Management by Objectives is effective planning to meet stated goals, making sure that the plans or work achieved meets or exceeds expectations, as well as its ability to be adjusted quickly when changes are needed.

Question 2.
What are the advantages and disadvantages of MBO?

Management by Objectives is a process that allows companies to set goals and track the progress of individual employees. These goals are often related to profit and sales, but they can also be used for anything from time management to safety initiatives. The key difference between MBO and traditional management is that there is no personal accountability with MBO. This makes it difficult for managers to know what their employees are actually doing since they aren’t checking up on them in person. Additionally, MBO doesn’t provide the same level of motivation that some management processes do. There can be drawbacks to using this form of management, but this method provides businesses with a platform for long-term efficiency and growth.

Question 3.
Why is Management by Objectives important?

Management by Objectives is a model of management in which the employees are motivated to achieve specific goals. It works best when there is a clear and fair set of expectations for each employee. It gives them the feeling that they have control over the work that they are doing, which helps them stay engaged in their work.

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