Prerequisites for installing MBO programme

Some of the prerequisites for installing of MBO programme are:

1. Purpose of MBO shoould be clearly defined.
2. Top management support for using objectives to plan and control is essential.
3. Systematic traing is required in the organisation for disseminating the concepts and philosophy underlying MBO.
4. Success with MBO requires a commitment on the past of each individual involved in this type of system.
5. Feedback is an essential ingredient in sustained learning and improvement in situations.
6. It must be carried all way down to the first line of the organization.

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Problems and Limitations of MBO

Some of the common problems of MBO are as follow:

1) Time and Cost:
                     It is a process which requires large amount of the most scarce resource in the organisation and time of the senior managers. Sometimes managers get frustrated and feel overburdened.
2) Failure to teach MBO Philosophy:
                     Management often fail to understand and appreciate this new approach. MBO demand rigorous analysis as an integral element of the management process but the organisation may not be used to rigour.
3) Problems in Objective setting:
                     Setting of verifiable objectives is difficult atleast in some areas. Objectives are more in the form of statement rather than in quantitative form.
4) Emphasis on short-term objectives:
                     Sometimes, in order to be more precise there is a tendency to emphasise on short-term objectives usually for a year or even less. There is a danger in emphasizing short-term objectives at the cost of long terms objectives.
5) Inflexibility:
                     In a dynamic environment, a particular objective may not be valid for even, in the context of revised objectives, changed premises, it is useless to follow the old objectives. Thus inflexibility created by applying MBO may cause harms.
6) Frustration:
                    Sometimes MBO creates frustration among managers, because it tends to arouse high expecation forrapid change, particularly among the young and junior managers.
               

                  Inspite of these obstacles MBO continues to be a way of managing the organisation problems of MBO can be over come by implementing it properly.

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Benifits or merits of MBO

1) Better Managing: 
                                MBO helps in better managing the organisational resources and activities. Resources and activities are put in such a way that they result into better performance in the five ways,
    a) The relationship between clarity of objectives and improvement of performance is the cornerstone of MBO philosophy.
   b) Clarity of roles, including the areas of authority and responsibility, leads to improved performance.
   c)  Periodic review provides opportunities for taking stock of the situation and planning future course of action.
   d) Participation by managers in the management process is expected to ensure achievement of objectives.
   e) MBO provides a base for the philosophy that there is always scope for improved.

All these factors for performance improvement are generated if MBO is followed properly.
2) Clarity in organisational Action:
                             MBO tends to provide the key result areas where organisational efforts are needed. For instance A key factor in objective setting is the external environmental factors is taken care of at the level of objective setting itself. Thus it provides basis for long range planning in the organisation.
3) Personnel Satisfaction:
                             MBO provides greatest opportunity for personnel satisfaction. This is possible because of two closely related phenomena.
4) Basis for Organisational Change:
                             MBO stimulates organizational change and provides a frame work and guidelines for planned change, enabling the top management to initiate, plan, direct and control the direction and speed of change.

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