According to Peter Ragan, “Management by objective works if you first think about your objectives. 90 percent of the time you are not aware of your objectives or you don’t your objectives.
Peter Ragan again said, “The productivity of the work is not the responsibility of the worker but of the manager. So manager must where he has to go, what is the goals, what are the objectives of the organization and on the bases of that he can take up the activities so as to perform in order to grow in a positive way. Knowledge is the basic investment in terms to design the goals and objectives because you have to be an expert to understand what are the organization stands for and what the organization needs in order to grow in a better way.
According to Peter Ragan, “Today knowledge has power. It controls access to opportunity in advancement. So organization can only grow if the concept of management by objectives is implemented in a proper way. What is MBO that is Management by objectives is a systematic and organized approach that allows managements to focus on the achievable goals and then try to attain the best possible results from the available resources?
Limitations in the organization and you have the availability of resources related to certain extent into the needs of the basic issues related to the growth of the organization. Here we need to focus on the issues which are related to the availability of the resources and then try to arrange a sequence where we decide on the focus of the objectives which are essential for the organization. Ideally employees get strong if they what they have to do it and how they have to perform? The core concept of MBO relates to the basic impact which is taken to the top management and this relates to these strategic planning process goals.
According to Ragan, manager should avoid the activity trap, Getting so involved in the day-to-day activities that they forget their main purpose or the objective. Instead just a few top managers all the managers should participate in the strategic planning process in order to improve and implement the plan. See management by objectives says that the top the management has core activities related to the organizational growth and development. The strategic development in order to diversify, in order to grow up with the better options and to decide on the new concepts coming into the market and to change the organization to the modern aspects requires a lot of thinking and requires a lot of skills in terms to draw of the plans and to take up the strategic issues in order to sustain and grow but if the top management is involved with the daily activities. Daily activities in terms that is, they are involved with the HR issues, they are involved with the marketing issues or with day-to-day businesses they will loose the goal of focusing on the growth. So you should decentralize these trivial activities or these peripheral activities to the lower management and then try to focus on the core and the strategic issues in order to get the best results done.
Organizations can only grow
If the top management is aware what has to be done and they have to focus on the results rather than on the activities which are being done. Management by objectives is about setting yourself objectives and then breaking down these objectives into more specific goals which give you the key results. So the main principle of MBO relates to the empowered employees who have kind of a top level instructions given to them which are well worst in terms that is each participant knows what he has to do and how do we use MBO this is the concept which is used in the knowledge processing outsourcing organization and enterprises where the self leadership can develop.
Creativity and knowledge and the impact of the basic implicit development of the concepts take the organization to greater level. The multinational corporations are also using this concept to work in the countries which are abroad. Setting objectives is a complex job with the principle of focusing on the issues becomes very important. The one thing in MBO system should provide it focus says
Andy Grow, “Practice MBO at Intel so however your objectives are precise keeps the number small. Most people disobey this rule, try to focus on everything and end up with the no focus at all. So we have to try to motivate people that they have to focus on the issues related to their core areas of the growth and if they are able to do this they are able to perform in a better way. You have to have a balance between the management and the employee empowerment.
Basic important aspect is the management should take up with the setting of the objectives and organizing the group activities and then the implementation and the performance has to be done by motivating and communicating the people who become empowered. After this you try to measure the results. The individual responsibility is important because you have to distribute this responsibility to each individual where the strategic thinking has been broken down in order to give a concept of self management where everybody knows what he has to do? How he has to do? And where he has to go? So we have to make every person responsible and accountable for the work performance into the organization. The five step MBO process is shown in this model- management by objectives.
Five step MBO process this model is developed by Peter Ragan. This shows that the organizational objectives have to be reviewed.
- try to review and see what are the resources available
- How they can be used in the best possible way to give the maximum results.
- The employee objectives are set by this kind of review process then the progress is monitored that is you try to control each and every aspect of the employees so that they give the performance in terms of the daily reports,
- Weekly reports and the monthly reports and then the performance have to be evaluated at each level.
- Performance evaluation is done by the setting of the standards where you try to compare your actuals and if there is a difference you try to give a feedback to the employees that this kind of basic impact has to be corrected
Then the achiever should be rewarded and then the MBO for the next operating period is calculated and this begins in terms to again come to the first step. So the MBO principle focuses on the organizational goals and objectives. This is to have specific objectives for each member of the organization.
Participation and decision making is important and this is the kind where you try to provide a fix period of time so that the employees can perform in an empowered way. We need to have a performance evaluation so as to give the feedback and get the work done. Most of the objectives in the organization have the categories related to the routine type of objectives. You have innovation objectives, you have improvement objectives, you have the objectives related to the results these objectives must have the quality to be consistent, specific, measurable, attainable and they have to be related to time period in a particular way to be achieved. So the MBO strategy has the three basic parts. First is that the individuals with the organizations are assigned specific objectives.
Second is the performance review is done and third is the rewards are given. So we stick to these core principles, the management by objectives will work into the organization, the basic stages of the MBO passes through the setting up of the corporate objectives at the top level. This is the analysis of the management task where we try to build up the specification for each activity, the detail job descriptions and the job specification for each title and then try to perform in terms where the basic performance standards are also set up. We try to agree on the specific objectives and try to align the individual targets with the corporate targets so as to achieve the results. The establishment of the management information system is important to support the basic development of the objectives in order to govern the ethics of administration by management.
Key areas impacting the objectives where managers have to perform and sign relate to
- human organization
- financial resources
- physical resources
- productivity social responsibility
- Profit requirements.
So any organization in modern era can not grow if it is not able to build a brand and a status in the market by marketing the products and services.
Innovations are important that is the combination of resources to give innovative designs, products and services is required so because the market is changing and we need updated services. The human organization needs empowered employees who have the skills and competencies to perform.
Financial resources require a funding from major sources of banks and other financial institutions. The physical resources are the raw material and the other infra structure required for the development of the organization.
Productivity is the ratio of input upon output. What we are investing and how much we are earning that is the return on investment is important. The social responsibility relates to your social concerns for the environment and for the society that is we have to provide eco friendly products and we have to provide socially acceptable products to the society. The profit requirements are important because no business can sustain losses for many years.
Advantage of MBO relates to the process that it continuously updates and tries to put a control on the employees so as to give performance in a better way. The MBO process is a communication process which builds up a contact between the management and the other levels of the hierarchies,
Disadvantages that the development of the objectives can be time consuming and most of the time is used up in building up the strategic process. The elaborated written goals are tedious and a costly procedure but in any case MBO in certain organization relates to a philosophy and a way of working.
Successful organizations always have a mission statement and this mission statement gives you the basic path to set your objectives. The mission statement is a basic description about the unique purpose for which you are standing. This is the basic issue which captures the quality of the organization and tries to develop and accomplish your contribution in relation to the organization.
The mission statement should be narrow so as to focus with the goals and objectives related to your philosophy and then it must allow the organization to grow in a sustainable and a diversified way. The mission statement has to be realistic, achievable and descriptive. It should be able to capture the essence of the organization so as to govern the best practices prevalent in the business market. Sound business practices relate that we have been able to launch up of the new products. We have been able to develop new products. We have been able to design and create and innovate the better options for the consumer satisfaction. We need to implement these statements in the organization with the help of a focus team.
Team which is dedicated, committed and loyal is important. The team management becomes the core concern for the management because all the employees related to the team has to connect on the bases of the inter-personal relationships. These members of the team have to assimilate the mission statement in terms so as to improve a business focus and get the positive results. We need that all the employees must have a corporate understanding and they should enhance their professional perceptions in order to have a team oriented environment. We need to enhance the employee moral and try to help people to grow in a better way.
MBO starts up at the core level when the organization starts. Managing organization without objectives is like taking a trip without knowing for the destination is all about. Objectives are necessary because they measure the performance. According to Peter Ragan, “Objectives are necessary if performance results influence the company’s survival and growth. So we need to focus on the people, money and the equipment we are using. We need to justify the reasons for which we stand. We need to have a planning base by which we can be launched up in the market. We need to give direction to the employees so as to build an empowered team. We need to provide data so as to build up the facts in terms to convert them into information for the total processing of the work done. We need to indicate the problems so as to give the solutions to the people.
Features of a good MBO system that is the good objective system must system which could be described. We have shown you the features of good objectives in this model. The objectives can be done types. They should be written, they should be understood by the employees. They must be specific, current flexible and must have the quality to impact people. So these are the basic impacts and the issues we try to design the impacts of the objectives. We need to set up the management by the objective system in such a way that the company planning process has to be enhanced in order to get the essential work done. Management by objectives is shown over here, you have the company plans. This company’s plans are divided into the departmental plans and the individual manager plans and here the control of the information is required at each level because we have to give them the orders, the instructions and the policies on which they can built up their own plans and we need to review and control the process and then this can be done by the review of the meetings and this review of the meetings would enhance the improvement process where you built up the improvement plans. These improvement plans will impact the company plans again in a cycle.
Setting the objectives is essential because this is shown over here in the model that what is the impact that organization gets the basic shape out of the objective, The objective is, what is to be accomplished, who is responsible for carrying out those objectives, when it has to be accomplished that is it has to be relate to the time period and how it will be accomplished relates to the method and the procedure we take up in order to perform.
We have to be realistic in order to concentrate what is happening in the organization and how it has to be done. It has to be relevant in terms so that the people become responsible for the performance. Setting up the objectives requires monitoring and it has to be a controlled procedure. Strategic issues are important for the organizational growth because we need to deal with the cost constraint and design the impacts where is the budgets? And the basic resource becomes important. The profitability of the organization should not be compromised and the market decisions have to be accurate and ethical in order to impact the larger masses of the people where the consumers and stake holders all become important. The top executives must what the business is all about and how business stands for a planning impact where we have to deal with the routine objectives. Objectives could be qualitative or quantitative. The qualitative relates to the standards and it is hard to measure and it relates to the emotional cosset of the employees whereas the quantitative objectives relate to the productions standards and they are easier to measure in terms of quantitative aspects. The decision oriented objectives and routine oriented objectives have an impact on the organization to give creative and personal gain and a balance with the organization.
Goals of organization should meet the expectations of the people or the consumers. They should have a support from the staff so as to sustain. The specific goals need to have a basic explicit time and a system of feedback build up.
Cascading of objectives is shown over here in this model; see you take the example of a company XY. Xyz is a company which has two divisions, the consumer product division and the industrial product division. The consumer product division is divided into production, sales and customer services and these relate to the workers and to the lower level people who are performing the task. The industrial product division relates to marketing, research and development. So depending on the type of the market you are serving the departments become different and objectives become different. When the overall company is considered at the top level that is the corporate objectives of the xyz company relates to the overall organizational objectives whether it is the consumer division or the industrial division. The divisional objective separates the objectives of the consumer division and the industrial division. The departmental objectives focuses on each activity related to production research and development and the individual objective relates to the activities which he has to perform in order to sustain the top level organization. So you have to link these programs in order to build up reinforcement where we can have a review and a feedback which the top management gets by the work done through the people.
The employee recognition programs and employee welfare programs the awards and the incentives will help the team to grow in a better way and give better performance to the team. We need to have an involvement program where participative management becomes important. The participative management is the representative management system where each group can have a representative and they can achieve the meeting and try to make decisions which are very necessary for the organizational growth. We need to have
- work councils
- board of representatives
- quality circles
- employees talk
Ownerships plans where people meet and try to build up the programs. Programs could be variable in order where you have the basic programs supported by the wage system of the piece wage system, you have profit sharing system and then you have the gain sharing plus your salary. So depending on the financial incentives you give to the employees you can design the reward systems and force the employees to work in a better way.
The skill based plan system relates to provide flexibility in earning. It facilitates the communication process between the management and the employees and this lessen the production of the territory behaviors. Most of the employees need money in order to grow and this gives the performance implement in term so as to generate greater wealth. The flexible benefits relate to employee’s teller they benefit programs in order to achieve their personal needs by giving work a new dimensional challenges. We need to motivate people.
The special issues in motivate relate to the motivation techniques taken up for the professionals and for the contingent workers. Professional people who are working in an organization on permanent bases and they have a greater impact on the decision and the quality of work. Contingent workers are those people who come to the organization for temporary bases and give their consultative services in order for the development of the organization. These employees are paid on the bases of their work and the activity they take up. Motivating professionals is a job which requires a tedious kind of an issue because here the employees get a fixed amount of salary and to make them work we need to provide them challenging projects. We need to provide them with the basic difficulties in terms to give an impact in terms of building tougher challenges. It is to allow them greater autonomy and make them accountable for their performance. We need to reward the educational opportunities and express interest in what we are performing. We need to create the alternative career path also. Motivating contingent workers requires opportunity where these people grow up to the permanent status.
Opportunities for training and development and try to give good salaries and equitable salaries so as to make people and the employees happy in the organization. Sometimes you have a diversified workforce team working in the organization for a shorter period. This diversified team works their work hours are flexible. They come; they leave and do according to their own benefits and their own fancies. We need to provide this kind of impact in the organization that even the diversified workforce which is associated should have a child care system and a structured working relationship where the cultural differences and the other differences have to be respected.
Motivating low skilled people or service workers is a challenging job where we need to built up the plans in order to have a increase in pay you have to recruit in a better way and we need a broader responsibility to make them happy because their family environment is important. We need to promote their families and built a good environment in the organization. The special issues in motivating people to follow the MBO objectives relate that jobs can be done in the best possible way. People have some tolerances and they will face the issues in such a way that difficulties will be assimilated. We have to recognize the individual differences. Each employee has a different need. We need to spent time necessary to so as to build the participation and then we have to do the decisions which are based on quality. The basic impact of objectives relates to the delegation of authority to the people to boom you’re giving the objectives. We have to describe these cope of authority in order to implement the management by objectives because this describes the importance of plans in a way which is sequenced and which is arranged on a priority bases. Authority is a right or obligation to act on behalf of a department agency or jurisdiction. Who is responsible, it is the commander, the manager and the CEOs and the board of directors are responsible for implying, applying and using those losses in the organization.
We need to work on these aspects because this relates to the delegation where the impact has to be built up in such a way that people understand that delegation is a tough job. The delegation of authority may not be required in emergencies or in incident conditions but in routine or existing conditions we can give this kind of responsibilities so that people can perform in a better way. When we try to implement these kinds of MBO objectives that is management by objectives we need to implement on the bases of the strategies, the resources and the communication infrastructure available into the organization. The information communication systems are important so as to send the details of plans to all the organization within minutes. Here the internet supports the kinds of the basic systems so as to generate results. The incident objectives will have a measurable impact of the organization and the organizations have to understand the problems related to people.
The steps for implementing the objectives are shown over here,
- The step one is to understand the policy and the direction; we need to access the incident situation.
- We need to establish the incident objectives
- And we need to select a strategy which helps you to achieve the objectives.
- We need to perform on tactextual options and provide necessary follow up.
- The necessary follow up is important because if you follow people the work is performed on time bases and we try to verify the impacts in terms of measuring the standard with the actual performance.
Effective incident objectives must be realistic, must be time saving and must be achievable. We must have an initial response built up which relates to the impact where we have the stabilization of objectives which could be converted into strategies. Strategies could be built up to tactics. The performance in such a way we establish and try to grow to the organization relates to the agreements which are built on the information bases. We need to fight with emergencies. We need to fight with the contingency problems arising in the organization and this has to relate to the impact where the goals of the organization become important.
Writing effective organization relates to the right choices of the word and the right impact the words have on the organization.
Criteria, other the objectives should meet are shown over here in this model, what criteria must be met and what criteria you want to be crystallize in the organization are shown over here, you must have a single result. You must be
- measurable result
- Must be target based but the want criteria is the difficult but achievable.
- participation setup
- Acceptance and the commitment.
So you want all this but the realistic is the objectives must need to focus on some areas which you can see,
Perceive and get work done.
The corporate level strategy relate to issues where we have growth important. The corporate objectives are like
- forward integration
- Diversification which impacts into the market.
Every organization has basic forth generic core strategies. These core strategies are derive on the bases of the objectives of the organization and what could be the future of the organization depends on the current and the factual situational analysis of the organization which will generate the strategies.
The grand strategies relate to the growth, stability, turnaround and the combination of all these. The growth strategy focuses on the concentration of building of materials and resources. This helps in the integration and the growth of the organization. This helps in the innovations and the design of the organization. The diversification is to manufacture products which are related or not related to the organization’s existing profile. Stability is an establishment in the organization where the markets are stable and there are no options for growing up more.
So we need to limit our investment and try to search out the better options for markets where the growth potential is available and here the money can utilize for a best option. The turnaround are retrenchment is taken up when the organization is little bit facing a decreased rate of growth that is the organization may be in profits but still here the profits are not lucrative. This is the time when you have to be alarmed. You need to think about the other strategies or you need to reinvest you money to other business ventures so as to turn your way and try to crystallize on impactful markets. The combination is we can imply both the strategies on the same bases or at same time. Wherever it is possible we need to perform in such a way that the performance has to be measured. This performance is the result of the intensive training programs taken up into the organization. The preliminary review of training program builds the people in order to connect with the organization. We have software and we have computer systems who are training people in order to grow in a better way. We have the merit pay systems where we try to select the employee on the bases of their merit and we have pay for the performance that is extra you perform, extra you get. The equity arrangements are done by the external environment where we have the participation through the development of the equity fund. the bonuses and the other things are given to the people so as to grow in a better way. The highest performance generally relates to the excellent impact given to the organization in terms of the consistence expectations people have. We need to meet these expectations so as to have an impact where the proposed means are achieved.
Again according to Peter Ragan, “Management means in the last analysis the substitution of thought for brain and muscle of knowledge for folklore and superstition and cooperation of force. So we need to apply our brain. We need to apply or basic emotional cosset and our basic feelings in order to relate to the employees, to dedicate to the employee and to need to integrate with a system of sustainable positive approach to the organization. Growth is essential for any organization because that generates a standard for an organization to do better. This standard has to be maintained by the proper control and feedback system built up. If the employees are empowered and happy we have results which would be worked on with better growth and positive future. I hope the students must have understood the concept of MBO, the impact of MBO on the organization and how managers can build a fruitful future. Thank you students