Advantages And Disadvantages Of MBO

What is MBO?

Management by objectives (MBO) is a management model that aims to improve performance of an organisation by clearly defining objectives that are agreed to by both management and employees. (Investopedia)

The term MBO was first outlined by Peter Drucker in his book “The Practice of Management.” (Drucker, 2006)

Objectives are determined with the employees and are challenging but achievable. Practitioners claim that the major benefits of MBO are that it improves employee evaluation and commitment and ensures better communication between management and employees. An off-cited weakness of MBO is that it unduly emphasises the setting of goals to attain objectives, rather than working on a systematic plan to do so. (Investopedia)

Process

The broad overview should be derived from the company’s mission and vision.

• Translate the organisational objectives to the employees. Drucker as cited in investopedia used the acronym SMART (Specific, Measurable, Acceptable, and Realistic, Time bound) to express the concept.

• Stimulate the participation of employees in setting objectives. This improves employee motivation since they have greater empowerment. Employees also feel included in the company activities and vital processes improving their morale.

• Monitor the progress. This helps establish how well the objectives are met, a key component of the objectives being that they are measurable.

• Evaluate progress and give rewards for progress obtained. This includes honest feedback on what went well and what did not.

MBO is a supervised and managed activity. Every organisation has an overal goal and all the individual goals/objectives should together lead to the achievement of this general goal. (Shawn G, study.com). Employees set personal measurable goals based upon the organizational

• Periodic review of performance is an essential feature; it is done regularly, generally once a year.

• Under MBO, consultation replaces exercise of authority, interaction and communication replaces isolation, and self control by subordinates replaces imposed control by superiors (BMS team, 2013)

Advantages of MBO

• Provides a means to identify and plan for achievement of goals. This makes the organisations work easy since the objectives define the way forward hence preventing and reducing time spent on trial and error activities (shawn G, study.com)

• Planning permits proactive behavior and a disciplined approach to goal achievement and allows one to prepare for contingencies and roadblocks that may hinder the plan hence easing goal achieval.

• Goals are measurable so that they can be assessed and adjusted easily and progress can be easily monitored and evaluated.

• Organisations can also gain more efficiency, save resources, and increase organizational morale.

• Facilitates personal leadership as it helps an individual manager to develop personal leadership skills useful for efficient management of activities of a given