Meaning of M.B.O.
According to Prof. Reddin - “the establishment of effectiveness standards for managerial positions and the periodic conversion of those into measurable time-bound objectives linked vertically and horizontally and with future planning.”
Management by Objectives (M.B.O.) is a system of management involving effective participation and involvement by each member of the organisation . The discipline of M.B.O. makes each individual output-centered, result-oriented, optimum - committed and achievements. What the business enterprise needs is a principle of management that will give full scope to individual strength and ability and at the same time give common direction of vision and establish team work and harmonies the goals of the individual with common wealth .
Process of M.B.O.
1. Establishing the Goals of the Organisation :
The very first step in M.B.O. process is setting of the goals of the organisation. These goals are set after analysing or viewing both the internal and the external environments of the organisation. Both long-term as well as short-term objectives are set for the organisation.
2. Setting objectives:
Goals are set for the whole organisation but goals does not clarify what the individuals have to do. For this purpose objectives are set for the subordinates. Objectives tell them what they need to do on which way they have to go.
3. Action Planning :
When goals are established at all levels, then only action programmes are developed for their accomplishment. These action plans are revised whenever required. These plans should be clearly defined in the form of charts, manuals, job descriptions, etc. They should be so effective that they ensures the proper utilization of resources.
4. Performance review :
Progress towards the accomplishment of goals should be reviewed at periodic intervals, in consultation with the subordinates. In these reviews subordinates gets help and guidance from their superiors. These reviews are made to identify the shortcomings or the deviations and to take the corrective measures. The results of the review are shown and discussed with the individuals so that they do self-judgement and exercise control.
5. Final Evaluation :
Lastly, final evaluation of performance is made at the end of the year. Achievements are compared with the established targets. If there are any deviations then action plans are modified. Each superior counsels his manager to overcome his weakness, to build on his strengths and to accept responsibility for self-development.
Limitations of Mangement By Objectives (M.B.O.)
Inspite of the benefits, M.B.O. has some weaknesses too, and those are :
1. Time-taking:
M.B.O. is quite time-taking as it requires a lot of time in setting measurable goals through consensus. Everyone has a different point of view and thinking.
2. Increased paperwork:
In M.B.O. charts, manuals, booklets, etc., are made. Above that subordinates have to fill in forms and submit detailed reports on their performance. All this becomes headache for the subordinates.
3. Enflexibility :
Once the goals are set, superiors may not like to modify due to fear of resistance from the subordinates.
4. Leadership:
M.B.O. suggests democratic leadership which is not successful in all situations. M.B.O. assumes that employees always act rationally and objectively but reality is that often there is tug-of-war between superiors and subordinates.
5. Others:
Other limitations include goal-setting problems, pressure-oriented, participation problems, etc.