Module - II: Motivation

MOTIVATION In an organisation, management tries to coordinate various factors of production to achieve organisational goals. The efficiency of non human factors like materials, machines etc, depends on the type of technology being used and also the performance level of human factors used. Thus to make total factors efficient and effective, one has to improve the performance level of human beings in the organisation. This is determined by two important factors.-- Ability and Motivation. The challenge faced by a modern manager now a days, is how to motivate employees to display behaviour consistent with organisational goals; such as reducing cost, increasing revenues and satisfying customers. Motivation is a challenge for managers, because it requires to understand 'how an employee thinks?'. Motivation arises from within employees, and motivational factors differ for each individual within an organisation. When managers analyse their workers, they always discover that some people invariably out perform others of equal skill , efficiency, and ability. A close scrutiny often reveals that in some situations a person with outstanding talents is consistently out performed by some one having lesser talents. The reason seems to be that the latter employees voluntarily put more effort, try harder, in order to accomplish their goals. These hard workers are often described as motivated workers. Since people are the most important resource of an organisation, their behaviour has to be studied, analysed, and interpreted properly. Among behaviour processes, motivation is generally treated as one of strategic importance. It is because lack of motivation results in ineffective performance and high levels of absenteeism and labour turnover. Definition. The tem 'Motivation' has come from motives, which are the expression of human needs by a human being. The activities of human beings are caused; and behind every action there is a particular motive or need. The need can be defined as feeling of lackness for some thing, and human being tries to get satisfy their needs.

Motivation is the process of inducing persons to experience needs for certain desired behaviour so that the organisational efficiency is achieved. Scott has defined motivation as " a process of stimulating people to action to accomplish desired goals". McFarland says " the concept of motivation is mainly psychological. It relates to those forces operating within the individual employees or subordinates which compel them to act ot not to act in certain ways." These definitions show that motivation has following characteristics. Motivation is an inner feeling and psychological aspect. However its reaction is physical. Motivation is a process. It is continuous and contains system orientation. It stimulates the human being to release his energy and the behaviour is directed to realise goals. Motivation can be positive or negative. It is complex. It is influenced by many variables at a time. Motivation is a process, which inspires the human efforts of an organisation to perform their duties in the best possible manner so that the pre- determined objectives may be achieved. THEORIES OF MOTIVATION. From the very beginning, when human organisations were established, people hard tried to find out the answer to what motivated people maximum. Since various people have been engaged in finding out the motivational factors, their approaches have differed resulting in to a number of theories concerning motivation. MASLOW's NEED HIERARCHY THEORY. Psychologist, Abraham Maslow has developed the theory of the hierarchy of needs in 1943. According to him, there seems to be a hierarchy in to which human needs are arranged. The needs are ranked in a hierarchy in which one need is important than others until it is satisfied. Once the most important need is satisfied, the next high need becomes important, and a satisfied need can no longer motivate human behaviour. According to Maslow, the needs are satisfied in the following sequence.
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1. Physiological Needs. These are shown at the top of the hierarchy because they tend to have the highest strength until they are reasonably satisfied. The primary needs consist of water, air, food, avoidance of pain etc and human beings first try to acquire necessities for survival. The manager attempts to satisfy these needs in the workplace primarily through salary and by eliminating threats to physical safety. 2. Safety and Security Needs. When physiological needs are satisfied, safety needs get most important priority as motivator. Such needs get expression through employee unions, permanent job, and desires for insurance and retirement programmes. Arbitrary management actions such as favouritism, or discrimination and unpredictable application of policies often become powerful threats to satisfy needs of any employee at any level. 3. Social Needs. At this stage people desire friendship, and a place in a group. When social needs become dormant, person will strive for meaningful relations with others. If the opportunity of association with the other people is reduced, men often take vigorous action against the obstacles to social intercourse. In the organisation, workers form informal group environment. 4. Esteem needs. These are concerned with self respect, self confidence, a feeling of personal worth, feeling of being unique and recognition. satisfaction of these needs produces feeling of self confidence, prestige, power and control. However, unlike lower needs, these are rarely fully satisfied. Most of the organisations offer few opportunities for the satisfaction of these needs at lower levels. 5. Self Actualisation Needs.

Self actualisation is the need to maximise ones abilities and potential, whatever it may be. This is necessary for continued self development. As Maslow has put it- "this need might be phrased as the desire to become more and more what one is, to become everything that one is capable of becoming". Maslows Need hierarchy theory has been highly appreciated by the managers because it offers some useful ideas for helping managers think about motivating their employees. As a result of their familiarity with the model, the managers are more likely to identify employee needs, recognise that they may be different across employees, offer satisfaction for the particular needs, and realise that giving more of the same reward may have diminishing impact on motivation. HERZBERG's TWO FACTOR THEORY ( Motivation Hygiene Theory). This theory is developed by Frederick Herzberg and his associates, after conducting a series of interviews with 200 engineers and accountants, focusing on factors considered to be important as sources of motivation. During the interview they were asked to describe a few job experiences in which they felt 'exceptionally good' and 'exceptionally' bad. From the replies received, Herzberg concluded that there were two categories of needs, essentially independent of each other affecting the behaviour in different ways. There are some job conditions which operates primarily to dissatisfy employees when the conditions are absent, but their presence doesnt motivate them in a strong way. Another set of conditions operates primarily to build strong motivation and high job satisfaction, but their absence rarely proves strongly dissatisfying. The first job conditions are called as 'maintenance' or 'hygiene' factors and the second set as ' motivational factors'.

Hygiene or Maintenance factors. These factors are the primary cause of unhappiness on the job. When the employer is unable to provide enough of these factors to its employees, there will be job dissatisfaction. However, if they are provided in sufficient quantity, they will not necessarily act as motivators. They are not parts of jobs, but they are related to conditions under which a job is performed. These factors are necessary to maintain a reasonable level of satisfaction in employees. Some of these factors are company policies and administration, Quality of supervision, interpersonal relationships, job security, working conditions, employee benefits etc. Motivational Factors. These factors are capable of having a positive effect on job satisfaction, often resulting in an increase in ones total output. These are achievements, recognition, advancement, work itself, possibility of growth, and responsibility. An increase in these factors will satisfy the employees, however, any decrease will not affect their level of satisfaction. Herzberg's model is based on the fact that most of the people are able to satisfy their lower needs considerably. As such they are not motivated by any further addition of satisfaction of these needs. Herzberg's model has been applied in the industry and has given several new insights. One of them is job enrichment. Maslows Theory Vs Herzbergs theory. 1. Meaning Maslow's theory is based on the concept of human needs and their satisfaction. Hertzberg's theory is based on the use of motivators which include achievement, recognition and opportunity for growth. 2. Basis of Theory Maslow's theory is based on the hierarchy of human needs. He identified five sets of human needs (on priority basis) and their satisfaction in motivating employees. Hertzberg refers to hygiene factors and motivating factors in his theory. Hygiene factors are dissatisfiers

while motivating factors motivate subordinates. Hierarchical arrangement of needs is not given. 3. Nature of Theory Maslow's theory is rather simple and descriptive. The theory is based long experience about human needs. Hertzberg's theory is more prescriptive. It suggests the motivating factors which can be used effectively. This theory is based on actual information collected by Hertzberg by interviewing 200 engineers and accountants. 4. Applicability of Theory Maslow's theory is most popular and widely cited theory of motivation and has wide applicability. It is mostly applicable to poor and developing countries where money is still a big motivating factor. Herzberg's theory is an extension of Maslow's theory of motivation. Its applicability is narrow. It is applicable to rich and developed countries where money is less important motivating factor. 5. Descriptive or Prescriptive Maslow's theory or model is descriptive in nature. Herzberg's theory or model is prescriptive in nature. 6. Motivators According to Maslow's model, any need can act as motivator provided it is not satisfied or relatively less satisfied. In the dual factor model of Hertzberg, hygiene factors (lower level needs) do not act as motivators. Only the higher order needs (achievement, recognition, challenging work) act as motivators. McCLELLANDS NEEDS ACHIEVEMENT THEORY. Shortly after the second world war, David McClelland of Harvard University developed achievement theory which places great emphasis on needs and individual difference. He has identified three types of basic motivating needs. They are need for power, need for affiliation and need for achievement. McClelland believes that each person has a need for all the 3 needs, but people differ in the degree to which various needs motivate their behaviour.

Power motive. The ability to induce or influence behaviour is power. McClelland found that people with a higher power need have a great concern for exercising influencing and control. They derive satisfaction from being in positions to influence and control. Such individuals are generally seeking positions of leadership, they involve in conversation, and they are forceful. Eg. Supervisors, Military officers etc. Affiliation Motive. Since people are social animals, most individuals like to interact and be with others in situations where they feel they belong and are accepted. McClelland has suggested that people with high need for affiliation usually derive pleasure from being loved and tend to avoid the pain of being rejected. They are concerned with maintaining pleasant social relationships, enjoying a sense of intimacy and understanding. Eg. Customer relations executives.

assumptions in two extreme points. Theory X and Theory Y. Theory X. This is the traditional theory of human behaviour. In this theory McGregor, has certain assumptions about human behaviour.

Achievement Motive. Some people have an intense desire to achieve. The need for achievement is a distinct human motive that can be distinguished from other needs. McClelland has identified four basic characteristics of high achievers. They take moderate risk, desire immediate feed back, find accomplishing a task satisfying and they tend to be totally pre-occupied with the task, until it is successfully completed. E.g. Sales managers with Challenging quotas. McClelland believes that the need for achievement can be learned, and economically backward cultures can be changed by it. Although the people with a high need for achievement are often wealthy, their wealth comes from their ability to achieve goals. According to the research conducted by McClelland, managers show high on achievement and power and low on affiliation. Achievement motivated people can be the backbone of most organizations because they progress much faster. THEORY 'X' & THEORY 'Y' The management actions of directing human beings in the organisation, according to McGregor, involves certain assumptions and generalizations relating to human behaviour and nature. The basic assumptions about human behaviour may differ considerably, because of the complexity of factors influencing this behaviour. McGregor has characterized these

1. Management is responsible for organising the elements of productive enterprise. - Money, materials, people,- in the interest of economic needs. 2. With respect to people, this is a process of directing their efforts, motivating them, controlling actions, and modifying their behaviour. 3. Without active intervention by the management, people would be passive to organisational needs. They must be persuaded, rewarded, punished, controlled, and directed. 4. The average man works as little as possible. 5. He lacks ambition, dislikes responsibility, prefers to be led. These assumptions about human nature are negative in their approach; however much organizational process has developed on these. Mangers having these views attempt to control and closely supervise their employees. These managers feel that external control is clearly appropriate for dealing with unreliable and irresponsible persons. After describing these views, McGregor questioned these views and concluded that Theory X assumptions when universally applied, are often inaccurate and that management approaches that develop from these assumptions may fail to motivate many individuals. Management by direction and control may not succeed, because it doesnt motivate people whose physiological and safety needs are reasonably satisfied. Theory Y McGregor feels that management needed practice based on more accurate understanding of human nature and motivation. Because of these feelings he developed an alternative theory called Theory Y. The assumptions of theory Y are:1. The physical and mental effort in work is natural as play or rest. The average human being does not dislike work. 2. Man will exercise self direction and self control in the service of objectives to which he is committed. 3. The average human being learns to accept and to
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seek responsibility. 4. The capacity to exercise high degree of imagination and creativity is widely distributed in population. 5. The intellectual potentialities of the average human being are only partially utilised. The assumptions of theory Y suggest a new approach in management. Theory Y organisations have united work force whose goals parallel organisational goals. In such organisations, there is high productivity and people come to work gladly. Both theories have certain assumptions about human nature. In fact they are the reverse side of a coin.

affecting employees in any way should be taken jointly and if there is any decision which the management wants to take individually, the employees should be informed about this so that they do not feel ignored. 4.No formal structure. Theory Z provides no formal structure for the organisation. Instead it must be a perfect teamwork with co operation along with sharing information, resources and plans. It places emphasis on rotational aspect of employee placement which provides opportunities to him to understand how his work affects others or is affected by others. This enables him to develop group spirit. 5.Coordination of human beings. The leaders role is to coordinate people and not developing peoples skills and also the creation of new structures, incentives and new philosophy of management. To develop trust, there should be a complete openness in the relationships.

THEORY Z Theory Z describes the Japanese management practices and how these can be adopted to the environment of the United States and other countries. Ouchi; who has given Theory Z, has made a comparative study of American and Japanese management practices and has recommended that many management practices can be adopted in American context. Features of Theory Z 1.Trust. Trust is the most important feature of this theory and by trust Ouchi means trust between employees, supervisors, work groups, unions, management and government. According to him trust, integrity and openness are closely related and these are essential ingredients of effective organisations. When an organisation relies o these principles, employees tend to cooperate to the maximum extent. 2.Strong bond between organisation and employees. Theory Z suggests strong bond between organisation and employees. Ouchi has suggested certain methods for this, including the life time employment and if there is a situation of lay off, it should not be resorted to and owners can share the resultant loss by accepting less profit or even moderate loss for a short period of time. A career planning for employees should be prepared so that every employee is suitably placed. 3.Employee involvement. Employee involvement is an important factor and this comes through meaningful participation. Any decision

ERG Theory of Motivation. In 1969, Clayton Alderfer's revision of Abraham Maslow's Hierarchy of Needs, called the ERG Theory appeared in Psychological Review in an article titled "An Empirical Test of a New Theory of Human Need." Alderfer's contribution to organizational behavior was the ERG theory (Existence, Relatedness, and Growth), and was created to align Maslow's motivation theory more closely with empirical research. The letters ERG represent these three levels of needs: Existence refers to our concern with basic material existence motivators. Relatedness refers to the motivation we have for maintaining interpersonal relationships. Growth refers to an intrinsic desire for personal development. Alderfers ERG theory demonstrates that more than one need may motivate at the same time. A lower motivator need not be substantially satisfied before one can move onto higher motivators. The ERG theory acknowledges that if a higher-order need is frustrated, an individual may regress to increase the satisfaction of a lower-order need which appears easier to satisfy. This is known as the frustrationregression principle.
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Adams Equity Theory - Motivation of Employees. Vroom's Expectancy Theory. Expectancy Theory is based on an employees beliefs:
Equity theory, most popularly known as equity theory of motivation, was first developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963. John Stacey Adams proposed that an employees motivation is affected by whether the employee believes that their employment benefits/rewards are at least equal to the amount of the effort that they put into their work.

Valence - refers to emotional orientations which people hold with respect to outcomes (rewards) the value the person attaches to first and second order outcomes Expectancy refers to employees different expectations and levels of confidence about what they are capable of doing the belief that effort will lead to first order outcomes Instrumentality refers to the perception of employees whether they will actually receive what they desire, even if it has been promised by a manager the perceived link between first order and second order outcomes These 3 factors interact together to create a motivational force for an employee to work towards pleasure and avoid pain.

Definition of equity. An individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Thus, all else being equal, it would be acceptable for a more senior colleague to receive higher compensation, since the value of his experience (and input) is higher. The way people base their experience with satisfaction for their job is to make comparisons with themselves to people they work with. If an employee notices that another person is getting more recognition and rewards for their contributions, even when both have done the same amount and quality of work, it would persuade the employee to be dissatisfied. This dissatisfaction would result in the employee feeling under-appreciated and perhaps worthless. This is in direct contrast with the idea of equity theory, the idea is to have the rewards (outcomes) be directly related with the quality and quantity of the employees contributions (inputs). If both employees were perhaps rewarded the same, it would help the workforce realize that the organization is fair, observant, and appreciative. This can equation: be illustrated by the following

The formula for this force is:

Motivation = valence x expectancy x instrumentality.

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Adams categorised employment benefits and rewards as outputs and an employees work effort as inputs. Input Examples The number of hours worked by the employee An employees work responsibilities An employees work duties The work commitment demonstrated by the employee An employees loyalty An employees flexibility such as undertaking tasks at short notice The support that the employee has provided to the organisation, colleagues and line managers

these studies reveals that there is wide scope of variability in the factors of motivation. Various factors of motivation can be grouped in to two broad categories. Financial and Non Financial. FINANCIAL FACTORS. Financial motivators relate to money or any other benefits that can be converted or expressed into monetary unit. In the present day context, money has become a means to satisfy the physical needs. It is an instrument of obtaining social position and power. Thus, money became a basic incentive for individuals. Wages, salaries, allowances, bonus, financial incentives, commission etc. are financial motivators. These financial motivators motivate individuals to join the organisations. The financial package should motivate the present and prospective employees. However, it should be borne in mind that money is not an end but a means of an end. It can satisfy both physical and safety needs. Interestingly some people place a little emphasis on money irrespective of their possession. However, certain people are continuously driven by the desire to acquire more money even if they have possessed wealth to satisfy their basic needs. This may be to satisfy their desire for status, esteem and self-actualization. This reveals that money is an instrument by which a person can satisfy various types of needs. Even research supports use of money in satisfying esteem and recognition needs too, as well as basic physiological needs.

Output Examples

Salary Bonus Prizes Recognition of the employees contribution Positive work appraisals Work promotions Pension Employer flexibility Annual leave

Adams stated that if an employee believes that their work outputs are not equal or greater than their inputs then the employee will become de-motivated. Adams theory includes the assertion that when an employee is assessing whether the outputs they receive are fair the employee will often compare their colleagues work inputs and outputs with their own. The comparison will often be made with an employee at a similar level in the organisation to the employee.

Financial and Motivation.

Non

Financial

It will be a powerful motivator for a person who is anxious about lack of money. Financial factors of motivation can be grouped in to two categories. Individual and collective. 1. Individual Financial Motivators .
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When we take human beings in organizations for analysing motivational pattern, we identify two groups of individuals. Managers and workers. Some of the studies have focussed on the motivation of managers and some other, on workers. An analysis of

This group includes all such plans which induce an individual to achieve higher output to earn higher financial rewards. Piece rate wages, Taylors differential Piece rate system, Halseys efficiency plan etc are examples of such incentives. The basic assumption behind this is that an individual will be motivated for higher output to earn more money, which satisfies his need. 2. Collective Financial Motivators . This group of motivators tries to motivate individuals collectively. The basic idea of these incentives is that the same as in the case of individual financial motivators, however the employees are given these collectively. E.g. Bonus, Profit sharing, pension plan etc. NON FINANCIAL MOTIVATORS. People at higher level of managerial hierarchy give more importance to socio, psychological needs, which cant be satisfied by money alone. Thus management; in addition to financial incentives, provides non-financial incentives to motivate people in the organisation. These provide psychological and emotional satisfaction rather than financial satisfaction. The non-financial incentives can be grouped in to three parts. A. INDIVIDUAL NON FINANCIAL FACTORS . These factors motivate people on individual basis. They are:1 . Status . In general terms, it is the ranking of the people in the society. In an organisation, status means ranking of positions, rights and duties in the formal organisation structure. It is an instrument of motivation, because status is extremely important for most of the people. 2. Promotion. It is the movement to a position in which responsibilities and prestige are increased. Promotion is a good motivator for all employees. Since it depends upon capabilities and good performance, people will try for that, if chances of promotion exist. 3. Responsibility. Most of the people prefer challenging and responsible jobs. If the job is a responsible one, it satisfies

peoples natural characteristics and esteem needs, and they put more efforts for completing the work. 4. Making the job interesting. The work can be made enjoyable and pleasant, if it is so designed that it allows the employees to satisfy their natural instincts. This creates interest in the work and employees take it as natural as play. 5.Recognition of work . Most people feel that what they do should be recognised by others. Recognition means acknowledgement with a show of appreciation. When such appreciation is given to employees, they feel motivated to perform work at higher level. 6. Job security. Most of the employees prefer a secure job. They want certain stability about future income and work, so that they do not feel worried on these aspects. In India this aspect is more important considering the inadequate job opportunities. B. COLLECTIVE NON FINANCIAL FACTORS. People may be motivated in groups also. They perform their duties in groups and are affected by the group. If the group in general is effective, an individual tends to become efficient. Some of the collective non financial factors are :1. Social Importance of work. People generally prefer a work, which is socially acceptable. If society gives importance and praise to the work, people like to perform. Some times people prefer a job of high social importance, event though the financial compensation would be less. 2 . Team spirit. The management should encourage team spirit, i.e., to work in co-operation and co-ordination. If there is team spirit among the employees, they will try to put in maximum effort to achieve the objective. 3 . Compensation . Some times competitions are organised between different individuals or different groups in an organisation. There may be a case of self competition, where an individual tries to improve his earlier performance. When a person performs well because of such competition, he should be given some advantage, not necessarily in terms of money, but it may be in terms of recognition, prestige, praise etc. 4 . Informal Groups .
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When people work together, they develop some sort of affiliation among themselves. These relationships are not officially prescribed, but created on the basis of some factors like personality and other social factors. Creation of these groups provide social satisfaction to employees. Management should provide the way for creation of such informal groups; so long as they are not against organisational efficiency. C. INSTITUTIONAL INCENTIVES. These are related with the environmental factors in the organisation. 1. Human relations in an industry . This is related with the policy to be adopted in the organisation to develop a sense of belongingness in the employees, improve their efficiency, and treat them as human beings. The emphasis is on providing greater psychological and physiological satisfaction to the employees. 2. Participation. Participation of subordinates in the decision making process will motivate an employee to take proper and prompt action on decision implementation. This will also increase his responsibility. 3. Communication . Communication is the process of passing ideas fro one person or groups to another person or groups. A free and adequate flow of communication is necessary for successful organisational functioning. This provides satisfaction to workers, as they want to be informed properly about the matters concerning their interest. 4. Discipline . The quality of an organisations climate is reflected in the discipline of its employees. Discipline is the employees self control to meet organisation standards and objectives. Managements maintain discipline by applying standards in a consistent, fair and flexible manner. Discipline has a positive role in satisfying employees by providing them proper atmosphere. In an organisation all these factors should be used for motivating the employees. Previously there was an assumption that higher money would bring higher productivity. But now a days social and psychological satisfaction is getting more importance. 5. Management by objectives. 6.Job Satisfaction 7.Job enlargement

8. Job enrichment. MANAGEMENT BY OBJECTIVES. The concept of management by objectives is a logical extension of Goal Setting theory. The Goal Setting theory proposed by Edwin Locke studies the processes by which people set goals for themselves and then put in efforts to achieve them. Evidence proves that 90% 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 reward. Management by objectives is an extension of Goal theory as it involves systematic and programmatic goal getting throughout an organization. According to George S. Ordiorne, "The system of management by objectives can be described as a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individual's major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members. Dale D. McConkey has preferred the term management by results to management by objectives ELEMENTS IN THE MBO PROCESS. There are some elements which are common to all the MBO processes. The basic steps of MBO process are described as follows: 1. Central Goal Setting: The first step in the process of MBO is to define and verify organizational objectives. These objectives are generally set by the central management and usually in consultation with the other managers. Before setting the objectives a detailed assessment will be made of the resources available. Once the goals are established these should be made known to all the members of the organization and will be clearly understood by them. 2. Departmental and Individual Goal Setting: After setting the organizational objectives, the next step is to set the departmental objectives. The top management should discuss the objectives with the departmental heads so that objectives can be mutually agreed upon. Each department sets its long range and
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short range objectives with the approval of the top management. After setting the departmental goals, the subordinates work with their respective managers to set their own goals relative to the organizational goals. The goals of the subordinates will be specific and short range and indicate what the subordinates unit is capable of achieving in a specified period of time. 3. Revision of Job Descriptions:Under MBO, resetting of the individual goals will call for a revision of the job descriptions of various positions which in turn, will call for the revision of the whole organizational structure. The organizational charts and manuals will be amended to depict the changes brought in by the MBO. The job description of various jobs will now define their' objectives, responsibilities and authority. The relationship of one job with other jobs in the organization should also be clearly established. 4. Matching Goals and Resource Allocation: Setting of objectives does not mean anything in itself unless resources and means to achieve there objectives are also provided. Thus, the subordinates must be provided necessary tools and materials by the managements, so that they can achieve their goals effectively and efficiently. The resource allocation should also be made in consultation with the subordinate. If goals are precisely set, resource requirements can be precisely measured which will make the resource allocation very easy. 5. Freedom of Implementation: The manager subordinate task team should be given complete freedom in deciding how to utilise the resources and how to achieve the objectives. There will be minimum or no interference by the superiors so long as the manager-subordinate team works within the overall framework of organisational policies. 6. Establishing Check Points: MBO ensures periodic meetings between the manager and his subordinate to discuss the progress towards the accomplishment of the targets of the subordinates. For this the manager must establish check points or standards of performance for evaluating the progress of the subordinate. The standards should be specified quantitatively as far as possible and the subordinate must understand them fully. ADVANTAGES OF MBO.

The concept of MBO is very important in terms of its managerial implications. Besides being a philosophy of management, it is a system which helps in sychronising the objectives of the individuals with the objectives of the organization. When implemented properly, systematically and consciously, the MBO has following advantages. Maximum Utilization of Human Resources: Since the goals are set in consultation with the subordinates, these are more difficult to achieve and more challenging than if the superiors had imposed them. In addition, since these goals are fixed according to the particular abilities of the subordinates, it obtains maximum contribution from them and thus it leads to maximum utilisation of human resources. No Role Ambiguity: There is no role ambiguity or confusion in the organisation, because specific and clear goals are set for the organization, for the division for the departments and for the individual members. Both the managers and the subordinates know what they have to do and what is expected of them. Improved Communication:In MBO, there is improved communication between the management and the subordinates. This continuous two way communication helps in clarifying any ambiguities, refining and modifying any processes or any aspects of objectives. Improved Organisational Structure: In MBO, the whole of organisational structure is redesigned because of the revision of job descriptions of various positions as a result of resetting of the individual goals. All this helps in improving the organizational structure as a result of location of the problem and weak areas of the organization. Device of Organisational Control: MBO serves as a. device for organizational control and integration. If there are any deviations discovered between the actual performance and the goals, these can be regularly and systematically identified, evaluated and corrected. Career Development of the Employees: MBO provides a realistic means of analyzing training needs and opportunities for growth for the employees. The management takes keen interest in the
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development of skills and abilities of subordinates and provides an opportunity for strengthening those areas which need further referents, thus, leading to career development of employees. Result Based Performance Evaluation: The system of periodic performance evaluation lets the subordinates know how well they are doing. In MBO, strong emphasis is put on measurable and quantifiable objectives. As a result, the appraisal tends to be more objectives specific and equitable. As these appraisal Methods are based on result and not on some intangible characteristics; these are considered to be superior to the trait evaluation methods of appraisal. Stimulating the Motivation of the Employees: The system of MBO stimulates the employees motivation. First of all, they feel motivated because of their participation in goal setting. They take keen interest in the implementation of the goals which they themselves have set. Secondly the appraisal system, being very objective and specific can be highly morale boosting Performance appraisal. It rewards only productivity without giving any consideration to the creativity of the employees. 4. Costly and Time Consuming Process: MBO is quite costly and a time-consuming process. There is a lot of paper work involved. Moreover, there are a lot of meetings and too many reports to be prepared, which add to the responsibilities and burden of the managers. Because of these reasons managers generally resist the MBO. 5. Emphasis on short Term Goals: Under MBO, goals are set only for a short period; say for six months or one year. This is because of the reason that goals being quantitative in nature, it is difficult to do long range planning. 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 enterprise. This emphasis on short term goals goes against the organizational efficiency and effectiveness and is not a healthy sign. 6. Lack of Adequate Skills and Training: 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 the goals be achieved in a specified time. Whether the goals are realistic or not does not enter the picture. In this type of environment, two way communications is not there and objectives are imposed on the subordinates. This destroys their morale, initiative and performance. 7. Poor Integration: Generally, the integration of the MBO with the other systems such as forecasting and budgeting is very poor. This lack of integration makes the overall functioning of the system very poor. 8. Lack of 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 programme casually.

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