Benefits or Advantages of MBO Process

Benefits or Advantages of MBO Process

The benefits or advantages of MBO process are depicted in the picture below.

1. Better utilisation of resources

In MBO, there is optimum utilisation of physical, financial and human resources for achieving the objectives.

2. Development of personnel

MBO helps to train and develop the subordinate managers. It improves their skills in planning, decision making, controlling, directing, leadership, etc. So these managers are ready for promotion to higher posts.

3. Makes planning effective

In MBO, the objectives are very clear. So, feasible plans can be made for achieving these objectives. Therefore, MBO makes planning effective.

4. Better team work

The superior and subordinate managers work together for fixing objectives and monitoring the performance. This overall improves their relationship, and they work as a team.

5. Concentration on key result areas

In MBO, objectives are fixed for the Key Result Areas (KRAs). All the plans are made for the KRAs. Therefore, wasteful activities are avoided.

6. Objective evaluation

In MBO, the objectives are tangible and measurable. The actual performance of the subordinate can be accurately compared with the objectives. So, an objective evaluation is possible without any favour to anyone.

7. Result oriented

MBO is a result oriented. It gives more importance to the result i.e. achieving of objectives. It gives less importance to activities and methods. In fact, MBO is also called Management By Results.

8. Sound organisational structure

In MBO system, the organisational structure is very sound. This is because it is periodically reviewed, and necessary changes are made to suit the needs of the company.