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As discussed in many studies in this performance appraisal method employee are

evaluated against their objectives. So I as a manager in a health institution I would
choose Management by Objectives (MBO) methods of performance appraisal.
Employees are evaluated on how well they have achieved a measured set of objectives
that have been determined to be successful in the completion of their job (Spaulding et
al., 2010). This method also supports from one study which it could be observed that
the main area of MBO application is in the medical sector. Indeed, the four main
medical sub-groupings of healthcare, nursing, hospital management, and hospital
pharmacy account. Moreover, the above references presentation reveals the
advantages and disadvantages of applying the MBO approach (Kyriakopoulos,

The basic purpose of MBO for an employee to understand the roles and responsibilities
in order to, understand how their works relate to the achievement of the organization’s
objectives. MBO also places importance on fulfilling the personal goals of each
employee. The MBO method is in itself a method of motivating employees by
managerial practices that are perceived positively (commonly negotiated goals, an
autonomy in searching and using means to achieve goals, self-controlling and periodical
common controlling work done by team members). Management by objectives improves
employees’ motivation to work and to achieve organizational goals (Hoffmann-
Burdzińska and Flak,2016).

Some of the important advantages of MBO are MBO method as an effective tool in the
teamwork process. Hoffmann-Burdzińska and Flak, (2016) found the MBO process
can improve the effectiveness of teamwork. The authors added that an autonomous
teams and their role in increasing effectiveness of an organisation and simultaneously
improving competitiveness of an organisation among health care teams, most important
conclusions is team members’ engagement in achieving the goals is positively
correlated with results achieved by the team and there is a positive correlation between
group processes and team results.
Another advantage is MBO motivates persons. Individuals tend to work harder towards
goals which they accept them as their own (Schermerhorn, 1989). MBO goal setting
strategy of including subordinates attempts to insure this acceptance. When individuals
accept goals as their own increased levels of motivation are likely. Those who create,
tend to support.

Another advantage is MBO assists administrators with the planning function.

Schermerhorn, (1989), stated, “It involves managers working with their subordinates to
clarify performance objectives that are consistent with the objectives of the work unit
and organization as a whole. When this process is followed throughout the organization,
MBO helps clarify the hierarchy of objectives as a series of well defined and integrated
means-end chains”. This suggests the related advantage of facilitating communication
between organizational members.

MBO may reduce managerial stress. Managerial stress is inevitable in most

organizations. According to Huse (1975) “MBO is an attempt to establish a better ‘fit’
between personal and organizational goals by increasing communications and shared
perceptions between the manager and his subordinates, either individually or as a

Several disadvantages have been identified regarding the MBO process that is at any
level of management may be that objectives usually focus on the short-term and not the
long term (Bateman & Zeithaml, 1990). Yanagizawa and Furukawa (2016) found
supervisors’ behavior regarding goal setting in a hospital setting impacted line positions
positively regarding goal commitment and goal-attainment but not staff positions. They
indicated that "supervisor behavior increased goal-attainment behavior in staff
positions". This may be due to the dual hierarchies inherent in hospitals, namely,
administrative and medical.


Spaulding, A. C., Gamm, L. D., & Griffith, J. M. (2010). Studer unplugged: identifying underlying
managerial concepts. Hospital topics, 88(1), 1-9.
Kyriakopoulos, G. (2012). Half a century of management by objectives (MBO): A review. African Journal
of Business Management, 6(5), 1772-1786.

Hoffmann-Burdzińska, K., & Flak, O. (2015). MANAGEMENT BY OBJECTIVES AS A METHOD OF

MEASURING TEAMS'EFFECTIVENESS. Journal of Positive Management, 6(3), 67-82.

Schermerhorn, J. R. (1989). Management for productivity (3rd ed.). John Wiley & Sons.

Huse, E. F. (1975). Organization Development and Change (St. Paul. N: West Publishing Company.

Bateman, T. S., & Zeithmal, C. P. C. (1990). Management: function and strategy (No. 658.4 B317m Ej. 1).

Yanagizawa, S., & Furukawa, H. (2016). Fitness of Job Type and Management by Objectives: Mediating
Effects of Perception of Effectiveness and Goal Commitment and Moderating Effects of Supervisor's
Behavior. Japanese Psychological Research, 58(4), 297-309.