MBO in Practice
How widely used is MBO? Reviews of studies that have sought to answer this question suggest that it’s a popular technique. Among large organizations-in business and in the public sector-probably half currently have a formal MBO program or had one at some time.
MBO’s popularity should not be construed to mean that it always works. There are a number of documented cases where MBO has been implemented but failed to meet management’s expectations. A close look at these cases, however, indicates that the problems rarely lie with MBO’s basic components. Rather, the culprits tend to be factors such as unrealistic expectations regarding results, lack of top-management commitment, and an inability or unwillingness by management to allocate rewards based on goal accomplishment. Nevertheless, MBO provides managers with the vehicle for implementing goal-setting theory.