Chapter 6

MBO
 

You can find web sites which are devoted to complete courses that just focus on MBO, such as
 http://web.stargate.net/asme/courses/mbo.html

MBO is a collaborative process whereby the Leader and team members can jointly determine objectives for each team members. MBO begins when the Team Leader explains the goals for his group. The team members take the goals and propose objective for his / her particular job. In case of any modification of individual’s objectives, it is accomplished through negotiation since the Team Leader has resources to help the team member commit to the achievement of the objective. Thus, a set of verifiable objectives for each team member are jointly determined, prioritized and formalised.
from ABVP Karnataka
 

Chapter 6

MBO

1. Development of role & mission statement. 
2. Establishing strategic goals/strategic plan. 
3. Defining key results areas. 
4. Establishing indicators or effectiveness, goals, or organizational objectives. 
5. Establishing, or negotiating individual employee objectives. 
6. Establishing performance standards for each objective.
7. Action planning for each employee.
8. Periodic measurement and assessment of status of each objective
9. Coaching/training to helpwith problems
lO. Some form of evaluation or assessment done formally and included in an employee's record.

from Robert Bacal  http://members.nbci.com/_XMCM/cooperate/pmch1.htm

another example of a list of MBO principles can be found at
 http://choo.fis.utoronto.ca/FIS/Courses/LIS1230/LIS1230sharma/plan4.htm

Chapter 6

MBO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Robert Bacal says "The literature regarding MBO and performance management suggests a plethora of benefits and purposes that are designed to make organizations more effective. We can summarize them as follows:
(this is not from the text, this is from a web site)

1. Increases management control over work and results.
2. Increases management ability to identify or "red-flag" problems early.
3. Links employee objectives and functions to overall organization obj ectives, thereby creating a sense of contribution for the employee.
4. Motivates employees by allowing them input into and ownership of their obj ectives and standards of performance.
5. Enhances communication by ensuring there is clear understanding of management expectations about results.
6. Supports remedial action or disciplinary action because a breach of standards can be defined  objectively and in a measurable way.
7. Provides a system where feedback can be given to employees on a more objective basis, and not on management's subjective criterion.
8. Provides objective criterion that management can use to make decisions regarding pay scale, and promotion.
9. Provides a centralized record of performance for each employee"

Some people, like Robert Bacal says that "while performance management can be described as absolutely logical, the assumptions underlying it that relate to organization effectiveness are somewhat flawed... traditional performance management contains many excellent notions, but that  the positive things about it are lost in a morass of conflicting purposes that usually guarantee that it will not work."

Downside to Performance Management?

Robert Bacal says " Is it possible that traditional performance management programs cause problems for an organization? The answer is a resounding yes. The performance management system conveys to people in an organization how work is to be performed, and communicates, often unintentionally, values and organizational culture. More specifically traditional performance management systems can foster a lack of collective responsibility for the achievement of organizational goals, encourage competition  rather than cooperation, and can impede the development of effective teamwork."

MBO
and
"Objectives"
 

"Most supervisors set objectives, but not with equal skill. Few, who do not correctly write objectives, will reap MBO's full benefits. An objective is simply a statement of what is to done and should be stated in terms of [measurable] results."
 http://ollie.dcccd.edu/mgmt1374/book_contents/2planning/perf_objectives/perf_obj.htm

Professor Gemmy Allen'smnemonic aid to write objectives is SMART

• Specific
• Measurable
• Attainable
• Result-oriented
• Time-limited

An objective must be specific with a single key result. If more than one result is to be accomplished, more than one objective should be written. 

An objective must be measurable. Only an objective that affects behavior in a measurable way can be optimally effective. If possible, state the objective as a quantity - example, the number one company, by passenger car sales, in Toronto.

An objective must be attainable with the resources that are available. It must be realistic. Many objectives are realistic. Yet, the time it takes to achieve them may be  unrealistic. It would not be realistic for a truck dealership to switch to cars, and then say its objective is to be the number one seller of cars because competition would be too tough in the short run.

The objective should be central to the goal of the organization. The successful completion of the objective should make a difference - If it is not, then the statement is not important enough to be an objective.

The objective should be something that can be achieved in a resonable period of time, so that the goal can be met, without problems. Specific objectives enable time priorities to be set and time to be used on objectives that really matter. Are the time lines you have established realistic? Will other competing demands cause delay?

These points on S.M.A.R.T. comes from the web site of Professor Gemmy Allen who teaches at Mountain View College of the Dallas County Community College  http://ollie.dcccd.edu/mgmt1374/Default.htm
 

.	MBO is not just a concept for business students in North American schools, it is widely understood around the world and applied at all levels. You can even find examples of where MBO is applied to the running of an entire country.

 

A story at  http://mafhoum.com/syr/articles/salama/abstract.htm describes how Management by Objectives was announced in 1999 by a decision from the Prime Minister of Syria