Limitations of MBO:

a. It presupposes fixing of individuals goals and responsibilities. But all work in an organization is a group effort where activities and so clearly interrelated that no single individuals can be blamed or rewarded for any result.

b. It is difficult to make comparatively ratings of individuals because each individual's goal is different from those of other in terms of complexity.

c. It is difficult to appraise and identity potential. MBO only deals with the performance on the present job.

d. The method is extra ordinary time consuming.

e. MBO presumes a certain level of trust throughout the hierarchy. But the organization life teaches people to the cautions. This inhibits honest dialogue and appropriate goal setting.

f. MBO is less applicable to routine workers level jobs, such as an assembly line. In these skills kinds of situations more traditional performance appraisal tends to be used. The technique is especially suitable for managerial, professional and sales people and those who work individually.