Management by objectives (MBO) has certain limitations and weakness. While some of these limitations are inherent in MBO, some limitations arise at the time of introduction and implementation of the process of MBO. Some of these limitations and problems associated with MBO are as follows:–

1. Lack of Support from Top Management: As the authority is vested in the top management in traditional organizations and it flow from top to bottom but in the process of MBO, the subordinates are also given an equal opportunity of participation, which is sometimes not liked by the top management. MBO cannot be successful without full support from management at the top most level.

2. Resistance by Subordinates: The subordinates can also be resentful towards the system of MBO. Sometimes, while setting the goals, they may be under pressure to get along with the management and the objectives which are set may be unrealistically high or far too rigid. The subordinates, generally, feel suspicious of the management and believe that MBO is another play of the management to make them work harder and become more dedicated and involved.

3. Problems in enumerating goals and objectives: The MBO can be successful if the goals can be established in proven terms. But if these are hard to enumerate and evaluate, it may not be achievable to fathom the performance of the employees. Moreover, MBO does not have any subjectivity in performance appraisal. It rewards only productivity without giving any consideration to the creativity of the employees.

4. MBO is time consuming and costly process: MBO could be a time consuming and costly process. A lot of paper work is required and a lot of meetings and reports need to be prepared, which add to the responsibilities and burden of the managers. Because of these reasons managers generally resist of the MBO.

5. Emphasis is on short term goals: Goals under MBO are set only for a short period ranging from six months to one year. The reason could be that goals are quantitative in nature and thus it could be difficult to go in for long range planning in MBO. Since the performance of the subordinate is to be reviewed after every six months or one year, they tend to concentrate on their immediate objectives without caring for the long range objectives of the organization. This emphasis on short term goals goes against the organizational efficiency and effectiveness and is not beneficial for the organization.

6. Lack of training and adequate skills: Most of managers lack adequate skills knowledge and training required in interpersonal interaction which is required in the MBO. Many managers tend to sit down with the subordinate, dictate the goals and targets with no input permitted from the subordinates and then demand that goals be achieved in a specified time. Whether the goals are realistic or not does not enter the picture. In this type of environment, there is a lack of two way communication and objectives are imposed on the subordinates. This could have an adverse impact on the morale, initiative and performance of the employees.

7. Poor Integration: Generally, there is poor integration of MBO with the other system such as forecasting and budgeting. This lack of integration makes the overall functioning of the system very poor.

8. Difficulty in Follow up: Under the system of MBO, the superior must get in touch with the subordinate at the appropriate time and at that time, the subordinate will inform the boss exactly what has been accomplished and how. If the superior delays the meeting, it will create hurdles in the successful implementation of MBO as the subordinate will also start taking the program casually.

9. Difficulty in Achievement of group Goals: When the achievement of the goals of one department depend upon the goals of another department, cohesion is difficult to maintain. In such cases, the achievement of goals will also become very difficult.

10. Inflexibility: MBO could result in a rigid organization structure. As the goals are set after every six months or one year, the manager may not like to review the goals in between, even if the need arises, due to fear of resistance from the subordinates. The managers must learn to handle this situation, because sometimes revision of short term goals is necessary for the achievement of long range objectives.

11. Limited Application: MBO is useful largely for the managerial and professional employees. It is not appropriate for all levels and for everyone because of the heavy demands made by it. It can be made applicable only when both the subordinates and manages feel comfortable with it and are willing to participate in it.

12. Gestation Period: It takes a lot of time, sometimes 3-5 years to implement the MBO program properly and fully and some research studies have shown that these programs can lose their impact and potency as a motivating force over a long period of time.

The concept of management by objectives is a logical extension of Goal Setting theory. The Goal Setting theory studies the processes by which people set goals for themselves and then put in efforts to achieve them. Evidence proves that 90 percent of the time, performance improves with goal setting. Comparatively high achievers set comparatively more difficult goals and they are more satisfied with intrinsic rewards than extrinsic rewards. Management by objectives is an extension of Goal theory as it involves systematic and programmatic goal getting throughout an organization.

The concept of MBO was introduced by Peter Drucker in 1954 as a means of using goals to improve people rather than to control them. Thus this concept of MBO is also known as Goal management. It is based upon the assumption that involvement leads to commitment and when an employee participates in goal setting as well as setting standards for measurement of performance towards that goal then the employees will be motivated to perform better and in a manner that directly contributes to the achievement of organizational objectives. Simply stated, “MBO is a process whereby both managers and subordinates work together in identifying goals and setting up objectives and makes plans together in order to achieve these objectives. Their objectives and goals should be consistent with the organizational goals”.

What are the steps involved in the process of MBO?
The basic steps that are common in all the processes of management by objective (MBO) are:-

1. Central goal setting: defining and verifying organizational objectives is the first step in MBO process. Generally these objectives are set by central management of the organization but it does so after consulting other managers. Before setting of these objectives, an extensive assessment of the available resources is made by the central management. It also conducts market service and research along with making a forecast. Through this elaborate analysis, the desired long run and short run objectives of the organization are highlighted. The central management tries to make these objectives realistic and specific. After setting these goals it is the responsibility of the management that these are known to all members and are also under stood by them.

2. Development and individual goal setting : After organization objectives are established by the central management, the next step is to establish the department goals. The top management needs to discuss these objectives with the heads of the departments so that mutually agreed upon objectives are established. Long range and short range goals are set by each department in consultation with the top management. After the department goals are established, the employees work with their managers to establish their own individual goals which relate with the organization goals. These participative goals are very important because It has been seen that employees become highly motivated to achieve the objectives established by them. These objectives for individuals should be specific and short range. These should indicate the capability of the unit of the individual. Through this process all the members of the organization become involved in the process of goal setting.

3. Revision of job description : In the process of MBO resetting individual goals involves a revision of job description of different positions in the organization which in turn requires the revision of the entire structure of the organization. The organization manuals and charts may also have to be modified to portray the changes that have been introduced by the process of MBO. The job description has to define the objectives, authority and responsibility of different jobs. The connection of one job with all other jobs of the organization also needs to be established clearly.

4. Matching goals : The establishment of objectives can not be fruitful unless the resources and means required to achieve these objectives are provided. Therefore the subordinates should be provided required tools and materials which enables them to achieve the objectives efficiently and effectively. Resource requirements can be measured precisely if the goals are set precisely. This makes the process of resource allocation relatively easy. Resource allocation should be made after consulting the subordinates.

5. Freedom implementation: The task team of manager and his subordinates should be given freedom in deciding the way to utilize their resources and the way to achieve their objectives. There should be very little or no interference by the seniors as long as the team is working with in the framework of organization policies.

6. Establishing check points: The process of MBO requires regularly meetings between the managers and their subordinates to discuss the progress achieve in the accomplishment of the objective established for the subordinates. For this purpose the mangers need to establish the standards of performance or check points to evaluate the progress of their subordinates. These standards need to be specified as for as possible quantitatively and it should also be ensured that these are completely understood by the subordinates. This practices needs to be followed by all managers and these should lead to an analysis of key results has the targets are represented in terms of the results. The analysis of key results should be recorded in writing and it generally contains information regarding :
(i) The overall objectives related with the job of subordinates.
(ii) The key results which must be achieved by the subordinate to fulfill his objectives.
(iii) The long term and short term priorities, a subordinate needs to adhere to.
(iv.) The extent and scope of assistance expected by a subordinate from his superior and other departmental managers and also the assistance, the subordinates is required to extend to other departments of his organizations.
(v.) Nature of information and the reports receive by the subordinate to carry out self evaluation.
(vi.) The standards use to evaluate the performance of the subordinate.

7. Performance appraisal : An informal performance appraisal is generally conducted in routine by the manager, a periodic review of performance of the subordinates should also be conducted. Periodic reviews are required as the priorities and conditions change constantly and need to be monitored constantly. These reviews help the mangers as well as the subordinates to modify the objectives or the methods whenever require. This significantly increases the chances of achieving the goals and also ensures that no surprises are found at the time of final appraisal. Periodic performance appraisal needs to be based on measurable and fair standards so that these are completely understood by the subordinates and there are also aware of the degree of performance required at each step.

8. Counseling : Periodic performance review helps the subordinates in improving his future performance.

Abraham Maslow was a clinical psychologist of USA and his theory of individual need is probably the most popular one. Maslow has suggested that have a complex set of needs which are exceptionally strong and the behaviour of individuals at a given time is generally determined by the strongest needs of the individual. Psychologist believe that human needs have a priority and first of all basic needs are satisfied and then the individual tries to satisfy his higher needs. In case the basic needs remain unfulfilled all efforts for satisfying higher needs also have to be postponed. Maslow has given five basic levels of the needs of individuals which they try to satisfy in a Hierarchical order. Maslow has proposed that these needs can be arranged starting from the lowest level and moving towards the needs of the highest level. This hierarchy of individual needs is explained by Maslow as mentioned below:

(i) Physiological needs: The physiological needs of individual are the starting step for the need based theory of motivation. Physiological needs are the strongest needs of the individuals. These include the basic bodily needs including food, water, air, shelter, clothing and other necessity of life. Individuals try to satisfies these basic needs first of all and then only they move towards the satisfaction of the second level needs

(ii) Safety needs: The second level of needs comprises the safety and securities needs. Once the physiological needs are satisfied upto a reasonable level individuals make efforts to satisfied their second level needs. Here it should be noted that the reasonable satisfaction of physiological needs is a subjective matter and the level of reasonable satisfaction varies from person to person. In the modern civilized society individual are generally protected from threats of violence or physical danger and the safety and security needs include economic and job security, security regarding the source of income, insurance against risk, provisions for old age and other protected measures which can safeguards the satisfaction of physiological needs in future also.

(iii) Social needs: After the fulfillment of second level needs human beings make effort to satisfy social needs. Human being are social animals and they always strive to belong to a social group to fulfill their emotional needs of love, affection, friendship and warmth. These social needs can be satisfied by individuals when they are in the company of their friends, relatives or any other group like a voluntary group or a work group.

(iv) Esteem needs: Ego or self esteem needs are the fourth needs in this hierarchy. These needs are related with recognition, self respect, self confidence, prestige, applause, appreciation, power and control. Through the fulfillment of these needs and individuals achieves a sense of ego satisfaction and self worth.

(v) Self Actualization needs: These needs are at the top of this hierarchy. These include the need to fulfill what is considered by a person as the mission of his life. The desire for personal achievement arises after all other needs of the individual are satisfied. At this stage the person is looking for something challenging as it gives him initiative and enough push to work and is beneficial for the individual as well as the society. This sense of achievement provides and individual psychological sense of satisfaction.
In this way Maslow has suggested five levels of needs which he has arranged in a hierarchy. When one need is satisfied it no longer remain a motivating factor and after the satisfaction of one level of needs the next level needs emerge which seek to be satisfied. The physiological and security needs of individuals are limited but other needs of the higher order are unlimited. These needs are more likely to be dominant among the persons functioning at a higher level in the organizations. Maslow suggests that the various levels of needs are interdependent and overlapping. The next level of needs emerge after the complete satisfaction of lower level needs.

Motivation causes goal directed behavior for example when a person strongly feels the need of something he will behave in such a way that he will try to satisfy himself so that he does not feel the lack of that particular thing. A human need creates tension in the mind of the individual and this need transforms itself into want depending upon the environment. Again, there will be tension in the mind which will be satisfied only by a particular behavior of the individual which will release the tension. That particular behavior may be caused by the incentives, which exist to satisfy the need. Satisfaction of one need will lead to the feeling of another different need or the same need at an interval of Thus, this process is a continuous one.

However, if the need is not satisfied because of some reasons, the person may feel frustration. Frustration can be defined as the accumulation of stress because of non-fulfillment of needs. At this stage, the person will try to amend his behavior to eliminate factors responsible for non-fulfillment of his needs in one particular situation only. There will be numerous such factors, which will be beyond his control. Thus, the situation can be that he is in a position to remove his frustration by satisfaction of needs.

Frustration is not an ideal situation for an individual, so he will change this situation by choosing some alternative behavior. As human beings are different from each other, this type of behavior will not be uniform. Some common forms of behavior are :

1. Aggression – A person who is denied the need satisfaction may aggressive. Different forms of aggression may be displacement (attacking source of frustration or towards some other object), Negativism resistance operating consciously or unconsciously) and fixation

2. Withdrawal – Another way of overcoming frustration is withdrawal from the scene physically or psychologically. The different forms of withdrawal may be fantasy, regression or flight.

3. Compromise – The individual try to compromise the situation. Various forms of compromise may be identification, projection, rationalization or formation.

Motivation techniques are selected by the organization for improving the performance of the employees. While some techniques may be most suitable in some organizations, some other techniques work better in other. Every management tries to select certain motivational techniques which can be employed for improving performance of its employees. The techniques may be suitably employed in one concern, others may be useful in another concern and so on. Motivational techniques may be classified into two categories i.e., financial and non-financial. Both the categories of motivation are discussed as under.

A. Financial Motivators :
Financial motivators may be in the form of more wages and salaries, bonuses, profit-sharing, leave with pay, medical reimbursements, company paid insurance or any of the other things that may be given to employees for performance. The economists and most managers consider money and financial incentives as important motivators. Behavioral scientists, on the other hand, tend to place them low. Neither view is probably right.

Money is the most important to people who are young and are raising their families then to those who have aligned at a stage when money needs are less. Money needs go on changing from time to time. He may like to have a comfortable house later on. For some persons money remains to be a motivator and for others it may never be. Accordingly to Gellerman money is actually used to retain people in the organization and not primarily to motivate them. To attract good persons an organization will have to offer better wages.

Generally, persons engaged in some type of work are offered equal wages. It is seen as a practice that persons are comparable levels get the same or usually the same compensation. Under such circumstances money tends to be dulled as a motivator. Besides all this money can motivate people if their wages are related to their performance.

B. Non-financial Motivators :
These motivators are in the nature of better status, recognition, participation, job security etc. Some of these motivators are discussed here :

1. Recognition: Every person wants his work to be recognized by his
superiors. When he knows that his performance is known to his boss then he will try to improve it more and more. The recognition may be in the form of a word of praise, a pat on the back, a word of praise, a latter of appreciation, entry in annual confidential report etc. There may also be awards, certificates plaque etc. The recognition may be for better output, saving the time, improving quality of products, suggestions for better ways of doing things etc.

These types of recognitions will act as motivator. If the performance of persons is not recognized and everybody treated on the same footing then good persons will not like to put their best efforts.

2. Participation: Participation has been considered a good technique for motivation. It implies physical and mental involvement of people in decision- making process. It satisfies ego and self-esteem of persons. They feel important when asked to made suggestions in their field of activity. There is no doubt that most of the people know the problems they will face and their possible solutions. Participation results in motivation and knowledge valuable for the enterprise success. Participation gives a sense of affiliation and accomplishment. It certainly acts as motivator.
Participation should not mean that managers should abdicate their positions. They should encourage subordinates to participate in matters where they can help. Managers should listen to various View-points and then take decisions themselves.

3. Status: It refers to a social status of a person and it satisfies egoistic needs. A management may create some status symbols in the organization. This can be done by way of giving various facilities to the persons. These may be superior furniture, carpets on the flood, attachment of peons, personal assistant etc. To get these facilities a person will have to show a certain amount of performance. When a person achieves certain facilities then he tries to get better status by working more. In this way status needs act as motivator.

4. Competition:In some organizations competition is used as a motivator. Various persons are given certain objectives and everybody tries to achieve them ahead of others. There may be praises, appreciation letters or financial incentives for those who achieve the goals first. The competition encourages persons to improve their performance.

5. Job Enrichment: Job enrichment has been recognized as an important motivator by various researches. The job is made more important and challenging for the workers, may be given wide latitude in deciding about their work methods. The employees will also perform the management functions of planning and control so far as the work is concerned. Job enrichment provides an opportunity for the psychological growth of the employees. Within a framework, the employee is given a free-hand to decide and perform the work. It brings more job satisfaction and high morale. It is a recognized device of motivating the employees.