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Benefits of Management by Objectives (MBO) in Business Organizations

What are the benefits of Management by Objectives (MBO) in Business Organizations?

Benefits of Management by Objectives (MBO) in Business Organizations
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Management by objectives -MBO is a practice in which the employees take part in goal setting process which enables them to be aligned with organization and in the attainment of their goals. MBO is aimed at increasing organizational performance by setting the goals of managers and subordinates together providing motivation and commitment while ensuring better communication between the superiors and the subordinates. There are many benefits of management by objectives. Let's discuss them.

Planning is an essential part of management – it is not taken offhandedly, but after a careful and extensive study as well as based on required experience. Planning enables the organization to design the activities in such a manner that the goals and objectives can be attained effectively while providing the sense of involvement and team spirit among the employees. This way, employees are supposed to contribute their part in a positive manner. Thus, MBO, being extremely result oriented, involves making realistic plans and participative decision making which enables to attain the goals and objectives in a way as intended and planned.

Formulating clearer goals is a great way to lead the employees at all levels of organization to have a common direction. MBO, aiming at effective utilization of human resource seeks to achieve the coordinated structure of activities by integrating the individuals with the organization provides harmony of objectives by making every employee more effective that in turn leads to attain the predefined objectives effectively and efficiently.

The process of MBO leads to greater motivation and commitment. Since it creates the sense that each and every employee is working for a common goal, it instills motivation and commitment in the attainment of objectives in a way as wanted.

MBO facilitates effective control and monitoring the activities of the employees.

In this way, it allows everyone to verify the performance whether or not it is being done in accordance with the set standards which have been established already to be followed.

It’s through the process of MBO that the objectives are appraised accurately. It involves establishing performance appraisal for the whole team in a fair manner on the basis of the objectives that are intended to be attained within certain time frame and in a way that is expected of. At this point, it is to be noted that the process of MBO leads to assess the results based on the performance - not based on favoritism- by eliminating biases and leading employees to greater acceptance of what results should be produced.

It is worth mentioning that the process of MBO enhances the morale of the employees as opposed to the supposition that MBO, being also known as MBR- management by results is just result oriented and that it needs employees to focus their attention on goals without specifying the behavior. As a matter of fact, the process of MBO can boost the employee morale greatly. Since the employees play an important role in setting the goals, this makes sense as to how they can perform better by finding their goals clearer. It also leads them to be more efficient and effective thereby increasing their morale.


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