To set goals, management must plan for the future and determine the overall objectives of their business. Individual members of the organization have a greater sense of identification with the company's objectives. With MBO, employees feel proud to participate in the organization's objectives. This improves their morale and their commitment to the organization's objectives.
Because objectives are set in consultation with subordinates, they are more difficult to achieve and more challenging than if their superiors had imposed them. In addition, since these objectives are set according to the particular capacities of the subordinates, the maximum contribution is obtained from them and, therefore, leads to the maximum use of human resources. There is no ambiguity or confusion of roles in the organization, because specific and clear goals are established for the organization, for the division, for the departments and for the individual members. Both managers and subordinates know what they need to do and what is expected of them.
It takes a long time, sometimes 3 to 5 years, to implement the MBO program properly and completely, and some research studies have shown that these programs can lose their impact and their potency as a motivating force over a long period of time. The MBO calls for the establishment of goals and targets through the active participation of superiors and subordinates. This mutual goal setting improves the clarity of objectives and results in realistic plans that people commit to. The MBO sets clear and specific objectives and the planning is directed towards these objectives.
Let's discuss together the advantages and disadvantages of the MBO. MBO consultants abound and, over the years, numerous methodologies have been developed and refined to help organizations take advantage of the benefits of management by objectives. The MBO differs significantly from alternative management processes that operate with a predominantly fragmented approach. The MBO style, which is based on management guru Peter Drucker's 1954 book, The Practice of Management, is a large scale organizational operating model that involves all employees in the goal-setting process.
To ensure that you take advantage of the benefits of management by objectives, it is essential to stay away from difficulties. In general, if you can avoid the most common MBO mistakes, you'll get the significant benefits of management by objective. V) Provides defined performance standards for a fair and meaningful evaluation of the contributions of different departments and their managers. However, managers at lower levels have little freedom to react even to organizational goals, let alone the freedom to set their own objectives.
Once employees are informed about the general objectives, the plan, and the strategies to follow, managers can start working with their reports to establish their personal objectives. Organization charts and manuals should be amended appropriately to reflect the changes introduced by the introduction of management by objectives. In practice, managing various operations on the basis of objectives does not provide a unified, comprehensive and total approach to management. One of the biggest advantages of the MBO is that it provides an objective basis for reviewing performance based on achievements and not on personality traits.
An MBO-based management approach provides clear objectives and, in turn, helps motivate the people involved in the process. Managers must learn to manage this situation, because sometimes it is necessary to review short-term goals to achieve long-term goals. Managers tend to be hesitant to change the objectives set in such a detailed effort, even when there is a change in corporate goals and planning premises. The MBO helps the individual manager to develop personal leadership and skills useful for the efficient management of the activities of a business unit.