Management by Objectives (MBO) is a method designed to coordinate and motivate all staff in an organization by dividing the organization’s overall business aim into specific targets for each division, department, manager and employee.
Advantages of Management by Objectives (MBO)
Advantages of Management by Objectives (MBO) include:
1. Everyone in a business knows what to do. Each manager and his or her subordinates will know exactly what they have to do. This will help everybody to prioritize their daily tasks and better manage their time. In the short-term, it will also enable all employees to see the importance of what they do to the whole organization. In the long-term, it should lead to increased overall productivity.
2. Everyone works toward the same goal. By using the corporate aim and objectives as the key focus to set all departmental and individual objectives, everyone in the organization should be working toward the same overall target. This will avoid potential conflicts and should ensure a consistent and well-coordinated approach across the whole business.
3. Better performance monitoring. Clearly specified objectives act as a control mechanism. By setting individual targets agreed with the people who have the authority to reach them, managers are able to transparently monitor everyone’s performance and measure success or failure.
4. A new source of motivation. This form of staff involvement is a key feature of job enrichment and should help provide a motivating force. By adding extra tasks for the workers to accomplish, this new dimension to existing jobs will make them more motivated.
Disadvantages of Management by Objectives (MBO)
Disadvantages of Management by Objectives (MBO) include:
1. Very time consuming. The process of dividing the big corporate aim and corporate objectives into smaller divisional, departmental and individual targets can be very time-consuming for the managers. Each worker affected will need to be fully consulted individually for Management by Objectives (MBO) to be best implemented and fully performed.
2. Not useful in fast-paced environments. Business objectives can become outdated very quickly due to changing nature of external business environment. Fixing targets and constantly monitoring progress against them can be less than useful, if the economic or competitive environment has changed completely.
3. Completion of objectives cannot be guaranteed. Setting targets does not guarantee success despite what some managers might believe. It is the same with business plans – having a beautiful business plan may not ensure commercial success. Issues such as adequate resources and staff training must also be addressed, if the original targets are to have any real meaning or are to act as true motivating goals.
4. Disagreements between management and staff. Workers who already have busy schedules may not appreciate additional targets arranged by the managers. Also, stricter control of the workers can often turn into micromanaging that may result in demotivated staff and reluctance to complete work on time.
Most importantly, for Management by Objectives (MBO) to be effective in any organization, individual targets need to be discussed between managers and workers in advanced, and agreed by both sides in the end. It applies to both departmental and individual targets. Only when commonly agreed, the MBO method of managing can provide job enrichment and motivation.
