Introduction
The increase in the amount of intellectual work leads to the need to introduce new management technologies. Since management seeks to orient the management of the organization towards achieving its economic goals and objectives, goal setting in management activity comes to the fore. The management by objectives system has received wide recognition among managers and practitioners, as it provides good results in achieving planned indicators and contributes to the effective joint activity of the organization’s management apparatus. However, each concept has its advantages and disadvantages, which should be considered when implementing it.
Planning and Goals
Management by objectives (MBO) is based on the assumption that people perform better if they know what is expected of them and can align their personal goals with those of the company. The organization’s goals are achieved not by issuing instructions but by ensuring cooperation and involving all employees in management processes. MBO is a democratic management style that implies a high level of employee involvement (Planning ch. 5, 2015). Kinicki & Williams (2020) defines MBO as a process where management and subordinates jointly define common goals and delineate areas of personal responsibility regarding expected results. Further, these goals are used when managing departments and evaluating each employee’s contribution.
Advantages of the System
The integrated implementation of MBO provides the company with many strategic advantages, both in terms of more effective goal-setting and achievement of set goals, increasing the competence of employees, and creating incentives for their development. MBO increases work efficiency because each manager has a clear idea of their own goals and the goals of the organization (Islami et al., 2018). It creates conditions in which everyone feels a personal interest in achieving goals, which ultimately increases the motivation for the work of each involved employee. As a result, it improves the relationship between managers and subordinates due to transparency and alignment of goals. A clear definition of goals and distribution of responsibilities provides visibility into the achievement of the final result as the time frame for its achievement is formulated. Thanks to this, the systems for monitoring and evaluating the work of each member of the organization are being improved, considering the results achieved.
Disadvantages of Management by Objectives
The above benefits of MBO give many managers the illusion that this approach guarantees an increase in the company’s efficiency. However, the implementation of management by objectives comes with several limitations. In addition, the approach has its flaws, the role of which will only increase when implemented in companies that are imperfect in terms of the quality of management. For example, MBO does not apply to the management of an organization, where goals are determined only by top management, without involving managers at all levels in this process (David, 2018). That is a laborious, complex and lengthy process; the result is achieved only when and where the manager himself chooses the model of actions (behavior). A weak information management system (its availability) gives an unsatisfactory organization of control. Managers’ attention is focused on achieving current and short-term goals (results), sometimes to the detriment of long-term strategic goals. In addition, the MBO system is challenging to implement and gets decent results without personal motivation.
Conclusion
Management by objectives is a concept, the effective implementation of which is possible only in companies with a high level of organizational maturity, on the one hand, and sufficient motivation of top management to implement this approach, on the other. The fragmented implementation of the approach does not bring the desired result due to the high interdependence of all management processes, from goal setting to reviews. Even though management by objectives has gained recognition in the scientific world and has been implemented in practice for many years, a superficial attitude to the study of this approach can still lead to inconclusive results.
References
David, A. (2018). Understanding the invention phase of Management Innovation: A Design Theory Perspective. European Management Review, 16(2), 383–398. Web.
Islami, X., Mulolli, E., & Mustafa, N. (2018). Using management by objectives as a performance appraisal tool for employee satisfaction. Future Business Journal, 4(1), 94–108. Web.
Kinicki, A., & Williams, B. K. (2020). Management: A practical introduction. McGraw-Hill Education.
Planning ch. 5 management a practical introduction – PPT video online download. SlidePlayer. (2015). Web.