Management By Objective

Goal-Setting Theory (Edwin Locke) Basic Premise: That specific and difficult goals, with self-generated feedback, lead to higher performance But, the relationship between goals and performance will depend on goal commitment “I want to do it & I can do it” task characteristics (simple, well-learned) national culture

Management By Objective A system in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of that progress. MBO makes objectives operational by a process in which they cascade down through the organisation.

MBO A program that encompasses specific goals, participatively set, for an explicit time period, with feedback on goal progress. Key Elements Goal specificity Participative decision making An explicit time period Performance feedback

Cascading of Objectives

MBO is a motivational program based on goal setting MBO is a motivational program based on goal setting. The goal(s) should: be mutually agreed upon. be difficult, but achievable (realistic). have a defined time frame be measurable (objective and budgeted). provide means for feedback.

SMART goals Specific Measurable Attainable Results-oriented Time-related

Steps in a Typical MBO Program The organization’s overall objectives and strategies are formulated. Major objectives are allocated among divisional and departmental units. Unit managers collaboratively set specific objectives for their units with their managers. Specific objectives are collaboratively set with all department members. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. The action plans are implemented. Progress toward objectives is periodically reviewed, and feedback is provided. Successful achievement of objectives is reinforced by performance-based rewards.

Setting Employee Objectives Identify an employee’s key job tasks. Establish specific and challenging goals for each task. Allow the employee to actively participate. Prioritize goals. Build in feedback mechanisms to assess goal progress. Link rewards to goal attainment.

How to Set Objectives

How to Set Objectives

Checklist for Manager Objectives

Checklist for Manager Objectives

Why MBOs Fail Unrealistic expectations about MBO results Lack of commitment by top management Failure to allocate reward properly Cultural incompatibilities

Other Approaches Management By Exception (MBE) Management by exception is the practice of focusing on important variances so that managers can direct their attention to areas that need improvement. Performance reports show differences between budgeted and actual amounts

Management By Walking Around MBWA is a hyperactive, out-of-the office, interventionist top management practice. open-door management policy. made leadership more effective in many well-run organizations. MBWA has been found to be particularly helpful when an organization is under exceptional stress;

What Leaders and Managers Should Do As leaders and managers wander around, at least three things should be going on: They should be listening to what people are saying. They should be using the opportunity to transmit the company's values face to face. They should be prepared and able to give people on-the-spot help.