Advantages and Disadvantages of MBO


Advantages of MBO

1) MBO Helps and Increases improve motivation: It is so because MBO relates overall goals to individual goals, and helps to increase employees’ understanding of where the organisation is and where it is heading.

2) Managers are more Likely to Compete with Themselves than with Other Managers: This kind o evaluation can reduce internal conflicts that often arise when managers compete with each other to obtain scarce resources.

3) MBO Results in a “Means Ends” Chain: Management at succeedingly lower levels in the institution establishes targets which are integrated with those at the next higher level. Thus, it can help ensure that everyone’s activity is ultimately aimed toward the organisation’s performance.

4) MBO Provides more Objective Appraisal Criteria: The targets that emerge from the MBO process provide a sound set of criteria for evaluating the performance of managers.

5) MBO Forces and Aids in Planning: By forcing top management to establish a strategy and goals for the entire organisation; and by requiring other managers to set their targets and plan how to reach them.

6) MBO Identifies Problems Better and Early: Frequent performance review sessions make this possible to identify the problems as soon as possible.

7) MBO Identifies Performance Deficiencies: It Identifies Performance Deficiencies and enables the management and the employees to set individualised self-improvement goals and thus proves effective in training and developing people.

8) Helps the Manager to Develop Personal Leadership: MBO helps the individual manager to develop personal leadership, especially the skills of listening, planning, counselling, motivating and evaluating.


Disadvantages of MBO 

1) Pressure-oriented: MBO may prove to be self-defeating in the long run since it is tied to reward punishment psychology. It is a clear violation of the integrity of a subordinate’s personality. MBO programs sometimes discriminate against superior performers.

2) Time Consuming: MBO demands a great deal of time to set objectives carefully at all levels of the organisation. Initially to instil confidence in associates in the ‘new system’ superiors may have to hold many meetings. The formal, periodic progress and final review sessions also take time.

3) Increased Paperwork: MBO programs introduce a tidal wave of newsletters, instruction booklets, training manuals, questionnaires, performance data, and reports into the organisation. To stay abreast of what is going on in the organisation managers may demand regular reports and data in writing resulting in a ‘gruelling exercise in filling out forms.

4) Goal-setting Problems: MBO works when important measurable objectives are jointly agreed upon. It works less when; Verifiable goals are difficult to set; Goals tend to take precedence over the people who use them; Goals are inflexible and rigid; There is over-emphasis on quantifiable and easily measurable results instead of important results; Overemphasis on short-term goals at the expenses of long-term goals.

5) Organisational Problems: MBO is not soothing for all organisational ills. It is not for everybody. MBO creates more problems than it solves them, when:

i) There is a failure to teach philosophy to all participants. Too often MBO is introduced across the organisation with little explanation, help or training; 

ii) There is a failure to limit objectives. Too many purposes obscure priorities and create a sense of fear and panic among subordinates;

iii) The program is used as a ‘whip’ to control employee performance; 

iv) It leads to a tug-of-war in which the subordinate tries to set the lowest possible targets and superior the highest;

v) Managers turn MBO into fraud and start ‘playing games’.

Advantages of MBO


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