There are some limitations of Management by Objectives, here are some of the pitfalls and issues:
Time-consuming: Management by Objectives is incredibly effective, but it can take up an inordinate amount of time. The process of setting objectives is not something that tends to happen quickly. Regular meetings are required in order to assess just how well the system is working, all of which chew up even more time.
Reward-punishment approach: Management by Objectives can create a situation where a great deal of pressure is put on employees. Since the process means constantly reaching goals, employees that fall behind the timeline are subject to penalty, while those who do well are rewarded. This reward-punishment method can create a high level of stress on certain members of the team.
Increases paper-work: It’s easy for an organization to become weighed down under the avalanche of paperwork that comes with employing the Management by Objectives method. It’s not just the training manuals, newsletter, and instruction booklets that pile on the paper, it’s also the inordinate amount of progress paperwork and reports that employees are expected to submit that adds to the weight.
Creates organizational problems: Too many organizations fall into the trap of believing that Management by Objectives is the cure for all that ails. They fail to see that there are a definite set of problems that can come with it. One of the most common is that employees will try to keep targets as simple as possible, whereas upper management will shoot for the stars. This wide gap in expectations can make it difficult to find a common ground in the middle. The program can also instill fear in employees as it is so closely tied to performance.
Management by Objectives develops conflicting objectives: The goals and objectives of each individual within the organization may not mesh with that of other employees, which is particularly true when there are multiple departments. Each department will have their own ideas of success, which they may feel is different from the rest, all of which creates conflict.
Problem of co-ordination: A number of problems can pop up when it comes time to coordinate the company objectives across multiple departments. Since each department has their own goal ideas, they may set unrealistic goals in order to undermine others.
Management by Objectives lacks durability: When MBO is first introduced, it tends to generate a lot of excitement. That can fizzle out over time as the method starts to become tired. It’s such a simple process, but also one that doesn’t really leave space for new opportunities.
Problems related to goal setting: MBO works best when everyone is on the same page and find the goals set to be mutually agreeable. That can all fall apart when the goals are considered to be too rigid or when they are particularly difficult to set. There can also be major problems if employees start to believe that the goals in place are more important than they are, or of they feel that short-term goals have taken the place of the long-term health of the company.
Lack of appreciation: While the purpose of Management by Objectives is to involve everyone in the goal setting of the organization, it can still fail if the goals are not properly passed down the chain. It may be that executives fail to fill in all the details of the company objectives to management. It can also hit a snag if management do not delegate properly or motivate accordingly.