MBO has many benefits which may be summarised as follows:
(1) MBO ensures better and more effective management. MBO forces management to think of planning for results, rather than merely planning activities. MBO also force managers to think how the objectives can be achieved and what resources would be required, MBO also provides the standards of control. All these lead to better management.
(2) MBO results clarification in organisational roles and structure and responsibilities of individuals for achieving the goals. Thus various positions are treated as responsibility, authority and resources at their disposal. This process identifies and removes many deficiencies in the organisation.
(3) It reveals organisational deficiencies such as overlapping of authority, ineffective delegation and communication.
(4) It elicits people's commitment for performance.
(5) It furnishes objectivity and reduces the element of pure judgment.
Management by objectives has the following limitations:
1. It presupposes fixing of individual goals and responsibilities. But all work in an organisation is a group effort where activities are so closely interrelated that no single individual can be blamed or rewarded, for any end result.
2. It is difficult to make comparative ratings of individuals because each individual's goals are different from those of others in terms of complexity, etc.
3. It is difficult to appraise and identify potential. MBO only deals with performance on the present job.
4. The method is extraordinarily time-consuming.
5. MBO presumes a certain level of trust throughout the hierarchy. But the organisational life teaches people to be cautious. This inhibits honest dialogue and appropriate goal setting.
6. MBO is less applicable to routine worker-level jobs, such as an assembly line. In these kinds of situations more traditional performance appraisal tends to'be used. The technique is especially suitable for managerial, professional,...