MANAGEMENT BY OBJECTIVES

CARHLA FUNG

What is MBO?

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.

Philosophy

People perform better when they know what is expected of them and can relate their personal goals to organizational objectives

Definition of MBO

George Odiorne• “A process whereby superior and

subordinate managers of an Organisation jointly define its common goals, define each individual's major areas of responsibility in terms Of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."

MANAGEMENT BY OBJECTIVES

Core Concepts of MBO

Managers should "avoid the activity trap“

All managers should:•participate in the strategic

planning process, in order to improve the implementation of the plan, and

• implement a range of performance systems, designed to help the organization stay on the right track.

According to Peter Drucker... Managers who continuously focus on the “now” and the

“emergency” result in being ineffective. The perception is that focusing and putting all energy into a “crisis” which happens every week or every month is effective behavior, as a ton of actionables and resources are committed to the cause;

Unfortunately, everyone starts to lose the main direction of what the organization wants from them. The more crises and “fires” occur, the more the management team trails off the path that has been set to be successful. Teams begin to get burned out and confused, managers continue to believe that dealing with “drives” is the right thing to do and executives begin to get frustrated on why their plans are not being executed. A downward spiral for all those involved in any organization.

Managerial Focus

MBO managers focus on the result, not the activity.

Focus on the result, not on the activity

Features of MBO

Supervisor-subordinate participation

Joint goal-setting Joint decision on methodology Makes way to attain maximum

result Support from superior

Steps in MBO Planning

GO

AL

SETTIN

G Define the organizational objectives. – To be determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members.

Developing Objectives:

• Specific• Measurable• Attainable• Relevant• Time-bound

In addition…

Objectives are written down for each level of the organization, and individuals are given specific aims and targets. •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.

Provide is focus•Objectives must be precise and

keep their number small.

Common errors to avoid when developing objectives

Writing too many outcomes or too complex outcomes

Having too high or too low standards

Using too long or too short a time period

Identifying outcomes that are not measurable, or outcomes for which the cost of measurement is too high

Setting Objectives

GUIDELINES Have a specific time frame Be behaviourally stated Be objectively evaluated Identify positive rather

than negative outcomes Maintain and adhere to the

organization's standards of practice and/or policies

CHARACTERISTICS Sets limits on the time for

behavior to change Is a clear and concise form

of communication Controls change Can be used by any level

of staff Varies from the global to

the very specific Documents problems

beyond the manager's control

Aids in analytic thinking Encourages staff

development Improves skill in planning

Example

By March 30, 2011, the nurse manager will:•Set up June-December in-service

topics as prioritized by the staff•Accomplish all staff performance

evaluations by a specified deadline

•Perform documentation reviews in view of institutional standards

•Evaluate staffing patterns and rotate once to each shift

Steps in MBO Planning

GO

AL

SETTIN

GDefine the organizational objectives. – To be determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members.

MA

NA

GER

-S

UB

OR

DIN

ATE

INV

OLV

EM

EN

TAfter the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting.

MATC

HIN

G G

OA

LS

AN

D R

ESO

UR

CESManage

ment must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates.

IMPLE

MEN

TATIO

N O

F PLA

NAfter objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors.

REV

IEW

&

PER

FOR

MA

NC

E

APPR

AIS

AL

This step involves periodic review of progress between manager and the subordinates.

The Five-Step MBO Process

MBO Principles

Cascading of organizational goals and objectives

Specific objectives for each member Participative decision making Explicit time period Performance evaluation and feedback

MBO Strategy : Three Basic 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.

Six 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

Advantages

Continuously emphasize on what should be done in an organization to achieve organizational goals

MBO process secures employee commitment to attaining organizational goals

Creates a vested interest in the employee to accomplish goals because employees are able to set their own goals

Defensive feelings are minimized, and a spirit of teamwork prevails.

Advantages

FOR NURSES Standard of evaluation is

based on the characteristics of a specific person and job

Nurses have input and some control over their future

Nurses know the standard by which they will be judged; nurses have knowledge of the manager’s goals, priorities, and deadlines;

Nurses have a greater understanding of where they stand with the manager in relation to relative progress

There is a better basis for evaluation than personality traits;

MBO emphasizes the future which can be changed, instead of the past and it stimulates higher individual performance and morale.

FOR MANAGERS• Reservoir of personnel data

and performance information for updating personnel files

• An indication of personnel development needs within the agency

• Basis for promotion and compensation

• A relationship with the staff that makes the manager a coach rather than a judge

• Better managerial planning and use of the employee.

• Directs work activities toward organizational goals, facilitates planning, provides standards for control and provides objective appraisal criteria, reduces role conflict and ambiguity and uses and motivates human resources

Limitations• Not easy to implement and requires hard work

for maintenance• Process must be taught and reinforced for

managers to become and remain proficient in applying the principles of the system

• MBO assumes that staff members and managers will define suitable standards that will serve the agency; it presumes that managers understand their limitations

• Some staff nurses may not want to be involved in setting goals;

• Although managers really set goals; staff nurses may set their goals according to what they know their managers expect

• MBO stresses results but does not supply the methods for achieving them;

• Nurses can become frustrated if they believe that increasingly higher goals will be expected of them