Explain the advantages of MBO to superiors and to subordinates. Elaborate on its limitations also.
Answers
Answer:
Advantages of MBO:
1. Improved Performance:
MBO is basically a result oriented process. Its main focus is on setting and controlling goals. Managers are encouraged to do detailed planning. They concentrate on the important task of improving performance by reducing the costs and harnessing the opportunities.
2. Greater Sense of Identification:
The individual members of the organization have a greater sense of identification with the company goals.
3. Maximum Utilization of Human Resources:
Since the goals are set in consultation with the subordinates, these are more difficult to achieve and more challenging than if the superiors
4. No Role Ambiguity:
There is no role ambiguity or confusion in the organization, because specific and clear goals are set for the organization, for the division for the departments and for the individual members.
5. Improved Communication:
In MBO, there is improved communication between the management and the subordinates.
6. Improved Organizational Structure:
In MBO, the whole of organizational structure is redesigned because of the revision of job descriptions of various positions as a result of resetting of the individual goals.
7. Device for Organizational Control:
MBO serves as a device for organizational control and integration.
8. Career Development of the Employees:
MBO provides a realistic means of analyzing training needs and opportunities for growth for the employees.
9. Result Based Performance Evaluation:
The system of periodic performance evaluation lets the subordinates know how well they are doing. In MBO, strong emphasis is put on measurable and quantifiable objectives.
10. Stimulating the Motivation of the Employees:
The system of MBO stimulates the employees motivation. First of all, they feel motivated because of their participation in goal setting.
Limitations of MBO:
1. Lack of Support of Top Management:
In traditional organizations, the authority is vested in the top management and it flow from top to bottom. In MBO, subordinates are given an equal opportunity of participation, which is resented by the top management. This system cannot succeed without the full support of top management.
2. Resentful Attitude of Subordinates:
The subordinates can also be resentful towards the system of MBO. Sometimes, while setting the goals, they may be under pressure to get along with the management and the objectives which are set may be unrealistically high or far too rigid. The subordinates, generally, feel suspicious of the management and believe that MBO is another play of the management to make them work harder and become more dedicated and involved.
3. Difficulties in Quantifying the Goals and Objectives:
The MBO will be successful only if the goals can be set in quantifiable terms. But if the areas are difficult to quantify and difficult to evaluate, it will not be possible to judge the performance of the employees. Moreover MBO does not have any subjectivity in performance appraisal. It rewards only productivity without giving any consideration to the creativity of the employees.
4. Costly and Time Consuming Process:
MBO is quite costly and a time consuming process. There is a lot of paper work involved. Moreover, there are a lot of meetings and too many reports to be prepared, which add to the responsibilities and burden of the managers. Because of these reasons managers generally resist the MBO.
5. Emphasis on Short Term Goals:
Under MBO, goals are set only for a short period, say for six months or one year. This is because of the reason that goals being quantitative in nature, it is difficult to do long range planning. Since the performance of the subordinate is to be reviewed after every six months or one year, they tend to concentrate on their immediate objectives without caring for the long range objectives of the enterprise. This emphasis on short term goals goes against the organizational efficiency and effectiveness and is not a healthy sign.
6. Lack of Adequate Skills and Training:
Most of managers lack adequate skills, knowledge and training required in interpersonal interaction which is required in the MBO. Many managers tend to sit down with the subordinate, dictate the goals and targets with no input permitted from the subordinates and then demand that the goals be achieved in a specified time. Whether the goals are realistic or not does not enter the picture. In this type of environment, two way communication is not there and objectives are imposed on the subordinates. This destroys their morale, initiative and performance.
7. Poor Integration:
Generally, the integration of the MBO with the other systems such as forecasting and budgeting is very poor. This lack of integration makes the overall functioning of the system very poor.
8. Lack of Follow Up
9. Difficulty in Achievement of Group Goals
10. Inflexibility
11. limited acceptation
12. Long Gestation Period
Explanation:
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