Advantages of Management by Objectives (M.B.O)
1. M.B.O. forces the managers not simply to plan activities but plan for results. The managers define the objectives while formulating plans. When once goals are set up clearly, they act as incentives and standards for control purposes.
2. M.B.O. enables the managers to concentrate on really important and profit influencing tasks instead of on tasks which could have little impact on overall results.
3. M.B.O. makes clear organizational goals and structures. It identifies the key result areas and make individuals who are in-charge of them responsible for the attainment of goals.
4. Employees commit themselves to perform the work assigned to them as agreed and expected. They know their objectives clearly and also know how to move towards its achievements. Thus they need not wait for any instructions, directions, guidance from their superiors.
5. It helps to develop effective control. Control involves establishing own standards, evaluating performance and taking necessary remedial action if there are any deviations. The well defined objectives serve as the best standard for effective control.
6. It helps the management to formulate better management training programs on the basis of performance reviews.
7. Since the subordinates participate and are directly involved in setting goals, there is a greater commitment on their part for performance. People become willing and enthusiastic masters of their own fate.
8. M.B.O. helps in more effective planning. Actionable objectives are established with planning, and result-oriented planning makes real sense. It forces managers to think of planning by results, rather than merely planning activities. To achieve given results, the managers are also required to give full consideration to the question of the personnel and the resources needed.
9. M.B.O. aids in developing effective controls: The standards/yardsticks or reach-points are laid down for measurement of performance, through which actual performance can be measured and deviations corrected in time. Through these standards, performance measurement of different cadres of people can be possible.
10. M.B.O. provides more confidence to the management in managing its task, the reason being that the management is more sure of what it wants to do and where it wants to go. It can, therefore, communicate in a better way with different rungs of organizational hierarchy. Better communication is an important benefit of M.B.O.
Disadvantages of Management by Objectives
1. The philosophy of M.B.O. should be well understood by managers. If the persons who are to operate management by objectives do not fully understand the philosophy of M.B.O., it is no wonder that M.B.O. fails.
2. If the goals are to be attainable, they should be realistic. If the goals are vague uncertain and unambiguous managers may not be in a position to carry out their work successfully.
3. Setting up of verifiable goals is not an easy task. It involves lot of time, study, effort and work.
4. M.B.O. lay emphasis on short-term goals and neglect the long range goals. But adequate attention towards both the goals should be given.
5. Effective interactions between the superiors and subordinates may not be possible due to differences in their status.