Solution:

Benefits of Management by Objectives:

• Management by objectives helps employees appreciate their on-the-job roles and responsibilities.

• The Key Result Areas (KRAs) planned are specific to each employee, depending on their interest, educational qualification, and specialization.

• The MBO approach usually results in better teamwork and communication.

• It provides the employees with a clear understanding of what is expected of them. The supervisors set goals for every member of the team, and every employee is provided with a list of unique tasks.

• Every employee is assigned unique goals. Hence, each employee feels indispensable to the organization and eventually develops a sense of loyalty to the organization.

• Managers help ensure that subordinates’ goals are related to the objectives of the organization.

Limitations of Management by Objectives:

• Management by objectives often ignores the organization’s existing ethos and working conditions.

• More emphasis is given on goals and targets. The managers put constant pressure on the employees to accomplish their goals and forget about the use of MBO for involvement, willingness to contribute, and growth of management.

• The managers sometimes over-emphasize the target setting, as compared to operational issues, as a generator of success.

• The MBO approach does not emphasize the significance of the context wherein the goals are set.

• The context encompasses everything from resource availability and efficiency to relative buy-in from the leadership and stakeholders.

• Finally, there is a tendency for many managers to see management by objectives as a total system that can handle all management issues once installed.

• The overdependence may impose problems on the MBO system that it is not prepared to tackle, and that frustrates any potentially positive effects on the issues it is supposed to deal with.