AboutLeo Lingham Expertise human resource management, human resource planning, strategic planning in resource, management development, training, business coaching, management training, coaching, counseling, recruitment,
selection, performance management.
Experience 18 years of managerial working exercise which covers business planning , strategic planning, marketing, sales management,
management service, organization development
PLUS
24 years of management consulting which includes business planning, corporate planning, strategic planning, business development, product management, human resource management/ development,training,
business coaching, etc
Question hello sir
i am a management student from mumbai and i hav to comment on these following statements
1 "Management is concerned with ideas, things and people" comment
2 how does mbo(management by objective)differ from traditional management?
it wud be gr8 if u wud help me
ur sincerely
Geoffrey
Answer GEOFFREY,
I WILL SEND YOU THE ANSWER IN THE
NEXT 24 HOURS.
THE DELAY IS DUE TO MY HEALTH PROBLEM.
REGARDS
LEO LINGHAM
GEOFFREY,
HERE IS SOME USEFEL MATERIAL.
MY APOLOGY THE DELAY.
REGARDS
LEO LINGHAM
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1 "Management is concerned with ideas, things and people" comment
what is management
MANAGEMENT is the process of getting activities completed efficiently and effectively with and through other people.
MANAGEMENT uses the ideas, materials, human resources to produce an outcome / results ,
as a product or service.
using the Management functions of :
-PLANNING
-ORGANIZING
-STAFFING
-DIRECTING
-COORDINATING
-CONTROLLING
-REPORTING
-BUDGETING
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CHECKLIST OF ROUTINE MANAGERIAL DUTIES
*Analyze, on a periodic basis, workload and personnel needs of an organizational unit.
*Recommend changes in the staff level of the work unit.
*Review documentation for new positions and positions that have been revised.
*Obtain approval to modify positions.
*Interview candidates for employment and make hiring decision or recommendations.
*Orient new subordinates concerning policy and procedures, work rules, and performance expectation
levels. Review position responsibilities.
*Plan, delegate, communicate and control work assignments and special projects concerning
subordinates.
*Establish and maintain specific work goals and objectives or quantitative and qualitative work standards
to be achieved by subordinates.
*Train, develop, and motivate subordinates to improve current performance and to prepare for higher‑ level
jobs.
*Determine significant changes in responsibilities and major duties of subordinates by reviewing their job
responsibilities on a regular basis.
*Evaluate the performance of subordinates. Document and discuss present and past
*performance with each direct report. Keep supervisor informed of results.
*Review salaries of subordinates and recommend changes according to policy and procedures.
*Recommend personnel actions such as promotions, performance awards, demotions, etc., according
to budget guidance and policy.
*Advise superiors and subordinates of developments that impact job duties. Ensure proper
communications.
*Maintain discipline, recommend and administer corrective action according to policy and procedures.
*Communicate and administer personnel programs in accordance with design and objectives.
*Maintain proper documentation on all subordinates.
*Direct the business activities of the company for the achievement of short and long term business/policy objectives, increased profit, production activity, or market share.
*Establish the business's objectives, policies and programmes within the context of the overall Corporate plan and, where appropriate, recommend standards and set targets (may include manufacturing, sales, marketing, distribution and administration).
*Prepare, or arrange for the preparation of the business's budgets, reports and forecasts, and ensure they are presented in a timely manner to the MANAGEMENT.
*Appraise the activities of the BUSINESS according to overall strategies and objectives, and monitor and evaluate branch and division performance, the efficiency of staff, procedures and production costs.
*Co‑ordinate subordinate staff to optimise the use of human and material resources to achieve goals. Consult with subordinate staff and review recommendations and reports.
*Oversee the development and implementation of all BUSINESS activities including production, distribution and sales, to protect the funds invested.
*Plan and review the BUSINESS operating costs particularly with regard to production, output, quality and quantity, cost, time available, labour requirements, planned production programmes and control activities, inventory levels, freight and advertising.
*Direct the preparation of marketing plans, key customer strategies and sales forecasts recommended by subordinate managers and ensure adequate support is provided in all branches/areas.
*Control use of production plant facilities by planning maintenance, designating operating hours and supply of parts and tools.
*Direct research into new and improved production methods and products, changes in selling policies, and other areas necessary to ensure the continued growth of the business.
*Select, or approve the selection and training of senior staff. Establish lines of control and delegate responsibilities to staff.
*Provide overall direction and management of the business, including personnel, technological resources and assets. Maintain necessary contact with major suppliers, customers, industry associations and government representatives to achieve the objectives of the business.
*Ensure all the business's activities comply with relevant Acts, legal demands and ethical standards.
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The three parts are of MANAGEMENT:
achieving the task
managing the team or group
managing individuals
***Your responsibilities as a manager for achieving the TASK are:
identify aims and vision for the group, purpose, and direction - define the activity (the task)
identify resources, people, processes, systems and tools (inc. financials, communications, IT)
create the plan to achieve the task - deliverables, measures, timescales, strategy and tactics
establish responsibilities, objectives, accountabilities and measures, by agreement and delegation
set standards, quality, time and reporting parameters
control and maintain activities against parameters
monitor and maintain overall performance against plan
report on progress towards the group's aim
review, re-assess, adjust plan, methods and targets as necessary
***Your responsibilities as a manager for theGroup / team are:
establish, agree and communicate standards of performance and behaviour
establish style, culture, approach of the group - soft skill elements
monitor and maintain discipline, ethics, integrity and focus on objectives
anticipate and resolve group conflict, struggles or disagreements
assess and change as necessary the balance and composition of the group
develop team-working, cooperation, morale and team-spirit
develop the collective maturity and capability of the group - progressively increase group freedom and authority
encourage the team towards objectives and aims - motivate the group and provide a collective sense of purpose
identify, develop and agree team- and project-leadership roles within group
enable, facilitate and ensure effective internal and external group communications
identify and meet group training needs
give feedback to the group on overall progress; consult with, and seek feedback and input from the group
***Your responsibilities as a manager for each INDIVIDUAL are:
understand the team members as individuals - personality, skills, strengths, needs, aims and fears
assist and support individuals - plans, problems, challenges, highs and lows
identify and agree appropriate individual responsibilities and objectives
give recognition and praise to individuals - acknowledge effort and good work
where appropriate reward individuals with extra responsibility, advancement and status :
To meet the many demands of performing their functions, managers assume multiple roles. A role is an organized set of behaviors. There are ten roles common to the work of all managers. The ten roles are divided into three groups:
interpersonal, informational, and decisional.
1.The informational roles link all managerial work together.
2.The interpersonal roles ensure that information is provided.
3.The decisional roles make significant use of the information.
The performance of managerial roles and the requirements of these roles can be played at different times by the same manager and to different degrees depending on the level and function of management. The ten roles are described individually, but they form an integrated whole.
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WORK COMMON TO ALL MANAGERS
Manager’s Basic Purposes
Ensures that organization serves its basic purpose - efficient production of specific goods or services.
Designs and maintains the stability of operations.
Takes charge of organization’s strategy-making system.
Ensures that organization serves the ends of those persons who control it.
Serves as key informational link between organization and environment.
Is responsible for the operating of organization’s status system.
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THE TEN ROLES
INTERPERSONAL ROLES
1.Manager as Figurehead
2.Manager as Leader
3.Manager as Liaison
INFORMATIONAL ROLES
4.Manager as Monitor
5.Manager as Disseminator
6.Manager as Spokesperson
DECISIONAL ROLES
7.Manager as Entrepreneur
8.Manager as Disturbance Handler
9.Manager as Negotiator
10.Manager’s Basic Purposes
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WHAT ARE The MAIN Functions OF A MANAGER.
Planning
Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal.
Planning is the first tool of the four functions in the management process. The difference between a successful and unsuccessful manager lies within the planning procedure. Planning is the logical thinking through goals and making the decision as to what needs to be accomplished in order to reach the organizations’ objectives. Managers use this process to plan for the future, like a blueprint to foresee problems, decide on the actions to evade difficult issues and to beat the competition. Planning is the first step in management and is essential as it facilitates control, valuable in decision making and in the avoidance of business ruin.
Quality in the results that are achieved and how the results are reached doing what is right, respect for others, value those that lead and take pride in all they do, and the value of teamwork to reach common goals.
STEPS FOR EFFECTIVENESS/ EFFICIENCY
- review of the previous period.
-review of the current/ future environmental factors.
-conducting the internal SWOT analysis.
-setting up mission for guidelines.
-setting corporate objectives/ strategies
-cascading down to business units/ departments/ individuals.
ALL THESE HELP TO SET EVERYONE TO AN OBJECTIVE
WHOSE ACHIEVEMENT HELPS TO BUILD THE CORPORATE OBJECTIVES.
THE PLANS HELP TO
-achieve a purpose for all the employees.
-sets a direction.
-provides a set of business drivers.
-sets up issues to tackle to solve problems.
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Planning
1. Effective managers understand clearly their job responsibilities and authority.
2. They utilize their resources productively.
3. They establish priorities for work to be done by themselves and their people.
4. They minimize the need for overtime.
5. They see to it that everyone understands his responsibilities and authority.
6. They show their people how each job fits into the total picture.
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This measure of management effectiveness provides you with an idea of how well the company is being run relative to others in its sector and the market as a whole. Consistently low numbers are a red flag.
Unlike many comparisons, you can use these tools to compare companies in different industries. The tools are:
Return on assets
Return on investment
Return on equity
Return on Assets
Return on assets tells you how well a company’s management uses its assets to make a profit.
You calculate the ROA by taking the net income and dividing it by the total assets.
The ROA comparison works better over time so you can see a trend in how well management uses assets to the advantage of the company.
The higher the ratio, the better and the continued high level over time is even better because it indicates management makes a habit of managing with efficiency.
Poorly managed companies, will consistently fall before industry averages in this area, while better run companies stay out in front of the averages.
Return on Investment
Return on investment measures not only the company’s contribution, but also the purposeful use of leverage or debt to extend company’s reach.
You calculate ROI by dividing net profits by (long-term debt plus other long-term liabilities plus equity).
Managers choose to combine the company’s equity with outside debt to extend programs quickly and efficiently.
Skillful use of debt can change a $50 million project into a $75 million project. If everyone has done their homework correctly, the company can see additional profit from a larger project than they could have afforded without the debt.
Return on Equity
Return on equity is music to stockholders ears if the numbers are good, because it measures how well management did in earning money for them.
Unlike return on assets and return on investment, this measure goes directly to the stockholders and their stake in the company.
Unfortunately, ROE is somewhat flawed. You calculate ROE by taking net income and dividing by shareholders equity. Missing from this equation is debt and that distorts the picture somewhat.
Although ROE is somewhat helpful in looking at companies, it doesn’t provide the guidance the ROA does.
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2.Organizing
Organizing is establishing the internal organizational structure of the organization. The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid and unpaid positions held by family members including the owner/operators.
In order to reach the objective outlined in the planning process, structuring the work of the organization is a vital concern. Organization is a matter of appointing individuals to assignments or responsibilities that blend together to develop one purpose, to accomplish the goals. These goals will be reached in accordance with the company’s values and procedures. A manager must know their subordinates and what they are capable of in order to organize the most valuable resources a company has, its employees . This is achieved through management staffing the work division, setting up the training for the employees, acquiring resources, and organizing the work group into a productive team. The manager must then go over the plans with the team, break the assignments into units that one person can complete, link related jobs together in an understandable well-organized style and appoint the jobs to individuals.
STEPS FOR EFFECTIVENESS/ EFFICIENCY
-develop the effective organization process to achieve the objectives.
-develop the effective organization structure
-develop the appropriate business process.
-develop the most effective/ appropriate HR PLANNING
-FILL IN WITH THE best fit in THE RIGHT PLACE.
-develop / set up the most effective procurement system / process.
-develop / set up the most effective production system / process
-develop / set up the most effective warehousing system / process
-develop / set up the most effective marketing/sales system / process
-develop / set up the most effective distribution system / process
-develop / set up the most effective customer service system / process
etc etc etc
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Initiating
1. They recognize and correct situations that need improvement.
2. They originate new approaches to problems.
3. They make the most of a promising new idea.
4. They encourage their people to try new ideas.
5. They face up to situations.
Delegating
1. They effectively delegate responsibility and authority.
2. They avoid trespassing on authority, once delegated.
3. They periodically check performance of delegated duties.
4. They encourage their people to make decisions.
5. They inspire their people to work toward goals.
6. They make full use of the skills and abilities of their people.
7. They generate a sense of belonging.
8. They go to bat for their people when necessary.
Decision Making
1. Their decisions are consistent with policies, procedures, and goals.
2. They keep within the bounds of their authority in making decisions.
3. They consider and interpret correctly the important facts in solving a problem.
4. They accept responsibility for their decisions, even when they've consulted others.
5. They make decisions promptly, but not hastily.
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3.Leading
Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives.
Organizational success is determined by the quality of leadership that is exhibited. "A leader can be a manager, but a manager is not necessarily a leader," . Leadership is the power of persuasion of one person over others to inspire actions towards achieving the goals of the company. Those in the leadership role must be able to influence/motivate workers to an elevated goal and direct themselves to the duties or responsibilities assigned during the planning process.. Leadership involves the interpersonal characteristic of a manager's position that includes communication and close contact with team members.
STEPS FOR EFFECTIVENESS/ EFFICIENCY
-set up a system to give direction to the staff.
-set up a system to provide feedback from the staff.
-should have a regular weekly review meetings [ 15 minutes]
-should have a regular monthly planning meetings.
-should have an annual strategic planning meetings.
-set up a motivational program for recognition/ rewards for staff.
-set up performance appraisal / performance improvement plan.
-annually review the staff potential assessment.
-provide regular training for staff.
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Communicating
1. They encourage their people to express their ideas and opinions.
2. They listen with understanding and purpose.
3. They respond intelligently to criticisms of their own actions.
4. They keep their people informed of changes in policies and procedures and all other matters affecting their work.
5. They recognize good work and express appreciation.
6. They express themselves clearly and effectively - in writing, speech, and manner.
Relationships
1. They are fair and firm in dealing with people.
2. They show that they enjoy their work and their associates.
3. They can take it when the going gets rough.
4. They make it easy for people to talk to them.
5. They understand both on-the-job and off-the-job problems of their people.
Put Your Praise On Paper
Most managers would agree that a verbal pat on the back for a job well done is not only simple justice; it's good management.
Yet, such gestures are less frequent than they might be, probably because of the general pressure of work. But if the employee is to gain any real recognition, the words should be written, not verbal.
There is nothing wrong with calling somebody on the phone or thanking him or her during a chance meeting in the cafeteria. But why not go the extra distance and put it in writing?
It's most effective to send those words of praise not to the individual, but to his or her manager with a personal copy for the employee, if you are not the immediate manager. (If you are, a memo in his personnel file might be in order.) This eliminates the dilemma of the employee keeping the compliment to himself or personally bringing it to the attention of his manager. A modest person might well do the former and where is the recognition in that?
Teach Accountability
One of the toughest jobs managers face is getting across to their people that results - not only good intentions - are what really count. Many people never seem to absorb the fact that they should take responsibility not only for what they do, but for what happens as a result of what they do - or don't do.
Example: a manager tells one of his people to make sure that a particular job sent to another department for special coating is returned by the seventeenth of the month at the very latest.
The seventeenth comes and goes - but no sign of the job. The manager checks with his employee, who shrugs, "I told them we had to have it back no later than today."
The manager's first impulse may be to read the riot act to the offending department. But then he realizes that by doing so he is letting his employee off the hook. Instead, he says, "I'm sure you did tell them. But I told you to be sure the job came back on time. You didn't do that."
That's a different message from the one the employee obviously expected, which was, "Okay, you've done all you could." But next time he'll be more likely to remember that his boss wants both action and results.
Make it clear to your people, therefore, that when they are asked to do something, or have something done, they will be held accountable for the successful completion of the job, no matter who else is involved.
It could be one of the most important lessons of their lives.
Listening: Still Important
You've heard it before, certainly, but it can't be overemphasized: listening is an important management skill for at least three reasons.
First, no one knows the problems of a job as well as the person who is doing it.
Second, only by listening can a manager spot trouble before it develops.
Third, people want to feel that their bosses take an interest in them as in their ideas.
Listening enables a manager to respond to the needs of his people. Such responses are essential to good leadership because everyone is, at times, troubled. Everyone wants recognition, sympathy, praise, interest without intrusion. The good leader is liked because he really is interested. This can't be faked because people quickly see through a phony.
Keep Your Boss Informed
In the world of business, information is gold. No boss ever has enough. Most often, though, he hears from his people about problems or trouble. Most bosses would enjoy being on the receiving end of something positive, or at least neutral, for a change.
What kind of information can a boss use? Some examples:
* Copies of memos. Managers usually give some thought to whether the boss should view copies of memos sent to people outside the department. But they tend to overlook the possibility that he may be equally interested in memos to people within the department - if they are complimentary or discuss an unusual task or project. A copy of such a memo accomplishes two things: it gives the employee additional recognition and it links your name to successful, out-of-the-ordinary action.
* Employee comments, suggestions. Some managers relay complaints or suggestions from employees when they talk with the boss. Others, however, get better mileage by suggesting that the employee write a memo on the subject to be forwarded up the line. That way, they are able to offer solutions to problems raised or comment on the suggestion and sense of involvement in their departments.
* Articles. Usually it's the other way around: the boss sends articles from magazines and newspapers to subordinates. But there is no reason why a manager can't send to his boss something he has found helpful or informative. And the reading matter doesn't have to be work related - unless, of course, the boss plainly has no interests in outside issues. By the same token, mentioning an especially rewarding book can be a good idea.
A word of caution: with all the paper passing across his desk, no boss wants to be deluged with material that doesn't interest him. This, therefore, is a place to exercise discrimination - while incidentally enhancing your image as someone who is alert to his or her interests. However, unless your boss has unusually broad and varied tastes, material that is not work related should be kept to a minimum.
* Meetings. The boss should not become too familiar a fixture at department meetings. In fact, if you invite him too often, he may wonder what you do as a manager or how you perceive his schedule. Occasionally, though, when you anticipate an impressive show, tell your boss you think he'd find the time well spent and let him get direct exposure to what's going onControlling
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4.Controlling
Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary.
The process that guarantees plans are being implemented properly is the controlling process. ‘Controlling is the final link in the functional chain of management activities and brings the functions of management cycle full circle.’ This allows for the performance standard within the group to be set and communicated. Control allows for ease of delegating tasks to team members and as managers may be held accountable for the performance of subordinates, they may be wise to extend timely feedback of employee accomplishments.
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IN INDIA, TODAY, THE CLASSICAL EXAMPLE OF A PRODUCT OF
''IDEAS, THINGS, PEOPLE'' IS
''NANO'' CAR FROM ''TATA MOTORS''.
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2 how does mbo(management by objective)differ from traditional management?
Management by Objectives (MBO) is a process of agreeing upon OBJECTIVES within an organization so that MANAGEMENT and EMPLOYEES agree to the objectives and understand what they are.
It is all too easy for managers to fail to outline, and agree with their employees, what it is that everyone is trying to achieve. MBO substitutes for good intentions a process that requires rather precise written description of objectives (for the period ahead) and TIMELINES for their monitoring and achievement. The process requires that the manager and the employee agree to what the employee will attempt to achieve in the period ahead, and (very important) that the employee accept and agree to the objectives (otherwise commitment will be lacking).
For example, whatever else a manager and employee may discuss and agree in their regular discussions, let us suppose that they feel that it will be sensible to introduce a KPI [ key performance indicators ] to show the development of sales revenue in a part of the firm. Then the manager and the employee need to discuss what is being planned, what the time-schedule is and what the indicator might or might not be. Thereafter the two of them should liaise to ensure that the objective is being attended to and will be delivered on time.
Organizations have scarce resources and so it is incumbent on the managers to consider the level of resourcing but also to consider whether the objectives that are jointly agreed within the firm are the right ones and represent the best allocation of effort. Also, reliable MIS [ management information system ] are needed to establish relevant objectives and monitor their "reach ratio" in an objective way.
MBO is often achieved using set targets. MBO introduced the SMART criteria: Objectives for MBO must be SMART (Specific, Measurable, Agreed, Realistic, and Time-Specific]
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Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and FEEDBACK in the process to reach objectives.
This enables managers to "avoid the activity trap", getting so involved in their day to day activities that they forget their main purpose or objective. Instead of just a few top managers , all managers :
participate in the strategic planning process, in order to improve the implementability of the plan, and
implement a range of performance systems, designed to help the organization stay on the right track.
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Managerial Focus
MBO managers focus on the results , not the activity. They delegate tasks by "negotiating a contract of goals" with their subordinates without dictating a detailed roadmap for implementation. MBO is about setting yourself objectives and then breaking these down into more specific goals or key results.
Main Principle
The principle behind MBO is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization
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Where to Use MBO
The MBO style is appropriate for organizations when your staff is competent. It is appropriate in situations where you wish to build employees' management and self management skills and tap their creativity , tactit knowledge and initiative. MBO is also used by chief executives of multinational corporations (MNCs) for their country managers abroad.
Setting Objectives
In MBO systems, objectives are written down for each level of the organization, and individuals are given specific aims and targets. "The principle behind this is to ensure that people know what the organization is trying to achieve, what their part of the organization must do to meet those aims, and how, as individuals, they are expected to help. This presupposes that organization's programs and methods have been fully considered. If they have not, start by constructing team objectives and ask team members to share in the process."6
"The one thing an MBO system provide is focus". So, have your objectives precise and keep their number small. Most people disobey this rule, try to focus on everything, and end up with no focus at all.
For MBO to be effective, individual managers must understand the specific objectives of their job and how those objectives fit in with the overall company objectives set by the board of directors. "A manager's job should be based on a task to be performed in order to attain the company's objectives... the manager should be directed and controlled by the objectives of performance rather than by his boss."1
The managers of the various units or sub-units, or sections of an organization should know not only the objectives of their unit but should also actively participate in setting these objectives and make responsibility for them.
The review mechanism enables leaders to measure the performance of their managers, especially in the key result areas: marketing; innovation; human organization; financial resources; physical resources; productivity; social responsibility; and profit requirements.
However, in recent years opinion has moved away from the idea of placing managers into a formal, rigid system of objectives. Today, when maximum flexibility is essential, achieving the objective rightly equally is more important.
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Balance between Management and Employee Empowerment
The balance between management and employee empowerment has to be struck, not by thinkers, but by practicing managers. Turning their aims into successful actions, forces managers to master five basic operations:
settings objectives,
organizing the group,
motivating and communicating,
measuring performance , and
developing people , including yourself.
These MBO operations are all compatible with empowerment, if you follow the main principle of decentralization: telling people what is to be done, but letting them achieve it their own way. To make the principle work well, people need to be able to develop personally. Further, different people have different hierarchy of needs and, thus, need to be managed differently if they are to perform well and achieve their potential.
Empowerment recognizes "the demise" of the command-and-control system, but remains a term of power and rank. A manager should view members of his or her team much as a conductor regards the players in the orchestra, as individuals whose particular skills contribute to the success of the enterprise. While people are still subordinates, the superior is increasingly dependent on the subordinates for ../products/bec_mc_business_bliss.htmlgetting results in their area of responsibility, where they have the requisite knowledge. In turn, these subordinates depend on their superior for direction and "above all, to define what the 'score' if for the entire organization, that is, what are standards and values, performance and results."
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Managing for Results
The only place where meaningful management results can be won is the outside world. Managing for results is expansion of MBO into the marketplace. It is the theory and practice of how to produce results on the outside, in the market and economy.
To achieve these results, you should develop a solid, sound, customer-focused, and entreprenurial strategy, aimed at market leadership, based on innovation, and tightly focused on decisive opportunities.
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Individual Responsibility
MBO creates a link between top management's strategic thinking and the strategy's implementation lower down. Responsibility for objectives is passed from the organization to its individual members. It is especially important for organizations where all members have to be able to control their own work by feeding back from their results to their objectives.
Management by objectives is achieved through self-control, the tool of effectiveness. Today the employee is a self manager , whose decisions are of decisive importance for results.
In such an organization, management has to ask each employee three questions:
What should we hold you accountable for?
What information do you need?
What information do you owe the rest of us?
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CORPORATE STRATEGIC PLANNING / MBO
In most companies, senior management.
makes contribution to the development of
-corporate mission statement
-corporate objectives
-corporate strategy.
Normally the senior management team or TOP management would
consists of
-ceo or managing director
-corporate planning manager
-finance manager
-marketing manager
-manufacturing manager
-sales manager
-supply chain manager
-HR manager
etc.
STEP 1[a]
TOP management would
-evaluate the current [ last 12 months] performance against the
objectives / target set previously, which includes return on investment,
profitability , etc and also the performance of various departments
like marketing, sales, HR, manufacturing, etc etc.
STEP 1 [b]
TOP management will also evaluate the current mission,objectives,
strategies and policies.
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STEP 2[a ]
CEO or MD will take the summary of the evaluation of the current
performance to the board for review.
STEP 2 [ b ]
Based on the review plus the external environmental factors,
the board will make decisions on
-new mission statement
-new corporate objectives
-new corporate governance
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STEP 3 [ a ]
TOP management will scan and assess the company's
external environment --political/ economic/social/ technology.
to determine the strategic factors that pose as
OPPORTUNITIES / THREATS.
STEP 3 [ b ]
TOP management will scan and assess the company's
internal environment --structure/ culture/resources etc
to determine the strategic factors that pose as
OPPORTUNITIES / THREATS.
STEP 3[ c ]
TOP MANAGEMENT will analyze the the strengths / weaknesses
of the organization and pinpoint the problems areas that needs
attention and the strengths that could be exploited.
STEP 4
Based on the above analyses, TOP management will generate,
evaluate, and select the best strategic factors.
STEP 5
TOP management will review and revise [ if necessary ] the
mission statement and corporate objectives.
STEP 6
TOP management will generate and evaluate strategy alternatives
and objectives.
STEP 7
This final corporate mission statement, objectives and strategies
becomes the foundation information for the various departments
to work out their departmental objectives/strategies/plans.
STEP 8
After working out their respective objectives/strategies/plans
and the budgets , the departmental managers send their
respective information to the TOP management for
approval.
STEP 9
On receiving the approved package from the TOP management,
the departmental managers develop the implementation plan.
STEP 10.
NOW you have mission/objectives/strategies/plans/budget/schedules.
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MBO SETTING IS CASCADED DOWNWARDS
SAY FOR EXAMPLE,
1. TOP MANAGEMENT SET SALES OBJECTIVES.
2. THE SALES DIRECTOR SETS HIS REGIONAL SALES OBJECTIVES.
3. THE REGIONAL SALES MANAGERS SET THEIR AREA SALES OBJECTIVES.
4. THE AREA SALES MANAGERS SETS THE TERRITORY SALES OBJECTIVES.
5. THE TERRITORY SALES MANAGERS SETS THE CUSTOMER SALES OBJECTIVES.
IN THE SAME MANNER, MANUFACTURING DIRECTOR, SUPPLY CHAIN DIRECTOR
ETC ETC SET THEIR DEPARTMENTS CASCADING MBO OBJECTIVES.
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WITH THE INTRODUCTION OF THE '' BALANCED SCORECARD''
SOFTWARE, YOU CAN HAVE
-SHORT TERM MBOs
-LONG TERM MBOs
-STRATEGIC MBOs
all combined into one system in the balanced scorecard.
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MBO PRINCIPLES
Cascading of ORGANIZATION GOALS/OBJECTIVES.
Specific objectives for each member
Participative decision making
Explicit time period
PERFORMANCE EVALUATION AND FEEDBACK
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QUESTIONS YOU NEED TO ANSWER TO GET THE
WHOLE PROCESS ROLLING
Where do I want to go ? (What is the objective?)
How will I pace myself to see if I am getting there? (What are my milestones, or key results?)
TYPES OF OBJECTIVES
Routine objectives
INNOVATION objectives tainable
IMPROVEMENT objectives
The objectives must beinable
THE OBJECTIVES MUST BE
-FOCUSED ON RESULTS
-CONSISTENT
-SPECIFIC
-MEASURABLE
-RELATED TO TIME
-ATTAINABLE
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MBO STRATEGY 3 PARTS
All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers.
Performance reviews are conducted periodically to determine how close individuals are to attaining their objectives.
Rewards are given to individuals on the basis of how close they come to reaching their goals.
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6 MBO STAGES
Define CORPORATE OBJECTIVES at board level
Analyze management tasks and devise formal job specifications, which allocate responsibilities and decisions to individual managers
Set performance standards
Agree and set specific objectives
Align individual targets with corporate objectives
Establish a management information system to monitor achievements against objectives
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KEY RESULT AREAS WHERE MANAGEMENT MUST PURSUE CLEAR OBJECTIVES
MARKETING
INNOVATION
HUMAN RESOURCES
Financial resources
Physical resources
PRODUCTIVITY
Social responsibility
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PERSONNEL EMPOWERMENT
The Four Powers you need to do an excellent job:
Freedom to challenge everything and anything
Continuous training and development on the job
Knowledge of, and faith in, the organization's MISSION
The ability to achieve and see results
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MBO ADVANTAGES AND DISADVANTAGES
ADVANTAGES
MBO programs continually emphasize what should be done in an organization to achieve organizational goals.
MBO process secures employee commitment to attaining organizational goals.
Disadvantages
The development of objectives can be time consuming, leaving both managers and employees less time in which to do their actual work.
The elaborate written goals, careful communication of goals, and detailed performance evaluation required in an MBO program increase the volume of paperwork in an organization.
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MANAGING THE RESULTS - YOU SHOULD NOTE THAT
Resources and results exist outside, not inside, the business
Results come from exploiting opportunities, not solving problems
For results, resources must go to opportunities, not to problems
"Economic results" do not go to minor players in a given market, but to leaders
Leadership, however, is not likely to last
What exists is getting old
What exists is likely to be misallocated
To achieve economic results, concentrate
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TRADITIONAL MANAGEMENT
1.Management desire to be in TOTAL control
2.Managemetn prevents people being creative
3.Middle managers prevent innovations getting top level visibility
4.Poor leadership style
5.Maintaining traditional ways of thinking
6.Intolerance of wanting to change anything
7.Excessive rules, constraints and bureaucracy
8.Unwillingness to change a winning formula
9.Resistance to change
10.Excessive demands to produce lengthy written reports
