Define management by objectives (MBO) and list four elements of this type of goal setting. What are some problems associated with this approach?
Management by objectives (MBO) is a management system in which specific performance goals are jointly determined by employees and their managers, progress toward accomplishing these goals is periodically reviewed, and rewards are allocated on the basis of this progress. Rather than using goals only as controls, MBO uses them to motivate employees as well. Management by objectives consists of four elements: goal specificity, participative decision making, an explicit time period, and performance feedback. Its appeal lies in its focus on employees working to accomplish goals they have had a hand in determining. One problem is that MBO may not be as effective in times of dynamic environmental change. Under an MBO program, employees need some stability to work toward accomplishing the set goals. If new goals must be set every few weeks, there’s no time for employees to work on accomplishing the goals and measuring that accomplishment. Another problem of MBO programs is that an overemphasis by an employee on accomplishing his or her goals without regard to others in the work unit can be counterproductive. A manager must work closely with all members of the work unit to assure that employees aren’t working at cross-purposes. Finally, if MBO is viewed simply as an annual exercise in filling out paperwork, employees won’t be motivated to accomplish the goals.
Source: Management, 11e (Robbins/Coulter)