Tag: Power and Politics

Management by Objectives (MBO) is a strategic management approach where managers and employees collaborate to set specific, measurable goals for a defined period. Each individual’s objectives align with the organization’s broader goals, ensuring that all efforts contribute to overall success. MBO emphasizes results and accountability, with regular progress reviews and adjustments as needed. By focusing on clear targets, employees gain a sense of purpose, while managers can effectively monitor performance. MBO fosters communication, enhances motivation, and improves coordination across departments, ultimately promoting organizational efficiency and goal achievement. It was popularized by Peter Drucker in the 1950s.

Steps for Management by Objectives (MBO):

1. Define Organizational Objectives

The first step in MBO is to establish the overall objectives of the organization. These goals are usually set by top management and provide a clear direction for the company. Organizational objectives should be specific, measurable, achievable, relevant, and time-bound (SMART). These overarching goals serve as the foundation for setting departmental and individual goals.

2. Cascade Objectives to Departments

Once the organizational goals are defined, the next step is to break them down into smaller, more specific objectives for each department or team. This cascading process ensures that every department’s goals are aligned with the broader organizational objectives. Departmental managers take responsibility for translating these goals into actionable targets that their teams can achieve.

3. Set Individual Objectives

After departmental objectives are set, managers work with individual employees to establish personal goals that contribute to the department’s objectives. In this step, employees are actively involved in the goal-setting process, which helps them understand their role in the organization’s success. These objectives are also SMART, ensuring that they are clear and achievable.

4. Develop Action Plans

To achieve the set objectives, action plans are created. These plans outline the specific steps, resources, and timelines needed to accomplish each goal. Action plans provide a roadmap for both employees and managers, detailing how objectives will be reached. This step ensures that there is a clear path from planning to execution.

5. Monitor and Measure Progress

Regular monitoring and measuring of progress are essential in the MBO process. Managers and employees periodically review progress toward achieving the objectives. These reviews help identify any obstacles or deviations from the plan, allowing for corrective actions to be taken. Monitoring also provides an opportunity for managers to provide feedback and guidance.

6. Evaluate Performance

At the end of the performance period, managers evaluate the achievements of employees against the objectives that were set. This step involves a formal review process where performance is assessed based on the results achieved. It helps managers understand how well employees performed and provides a basis for rewarding or recognizing high achievers.

7. Provide Feedback

Providing feedback is a critical part of MBO. After the evaluation, managers discuss the results with employees, offering constructive feedback on their performance. Feedback sessions are not just about assessing past performance but also about identifying areas for improvement and setting new objectives for the next cycle.

8. Reward Achievement

MBO encourages a reward system based on the achievement of objectives. Employees who meet or exceed their goals are often recognized with rewards, promotions, bonuses, or other forms of appreciation. This recognition serves as motivation for employees to continue performing well in future cycles.

9. Set New Objectives

The final step in MBO is to set new objectives for the next performance cycle. Based on the feedback and evaluation from the previous period, new goals are established, taking into account any changes in the organization’s strategy or the individual’s role. This step ensures continuous improvement and alignment with the organization’s evolving needs.

Need of Management by Objectives (MBO):

1. Goal Clarity and Focus

One of the primary needs for MBO is to ensure clarity and focus in goal setting. MBO establishes clear, specific objectives that provide direction to employees. By setting measurable goals, employees and managers understand exactly what is expected, which reduces confusion and aligns individual efforts with the company’s strategic objectives.

2. Improved Communication

MBO fosters better communication between managers and employees. The collaborative nature of setting objectives in MBO encourages dialogue, allowing employees to share their views and gain feedback from managers. This open communication ensures that everyone is on the same page and helps identify any challenges or needs early in the process.

3. Enhanced Employee Motivation

MBO enhances employee motivation by involving them in the goal-setting process. When employees participate in setting their own objectives, they feel a sense of ownership and responsibility. This increased engagement leads to higher motivation and commitment to achieving the defined goals.

4. Performance Measurement

A key need for MBO is its ability to measure performance accurately. By setting specific and measurable objectives, managers can objectively assess the performance of employees. MBO provides a structured framework for performance appraisals, which is essential for identifying areas of improvement, rewarding success, and making informed decisions about promotions or development needs.

5. Alignment with Organizational Goals

MBO ensures that individual goals are aligned with the broader objectives of the organization. This alignment is crucial for organizational success, as it ensures that all employees work towards common goals. MBO creates a sense of unity by linking personal objectives to corporate strategies, ensuring that each employee’s contribution supports the overall direction of the organization.

6. Accountability and Responsibility

MBO promotes accountability by clearly defining the roles and responsibilities of employees. With specific goals in place, individuals are held responsible for their own performance. This encourages accountability and reduces the chances of blame-shifting or ambiguity about job roles.

7. Increased Productivity

By setting clear objectives, MBO leads to improved productivity. Employees are more focused and driven to meet their targets, leading to better time management and resource allocation. The clarity of expectations and structured performance reviews foster a results-oriented work environment.

8. Adaptability to Change

MBO is dynamic and adaptable to changing circumstances. It allows for regular reviews and adjustments of objectives as needed. This flexibility ensures that organizations can respond to market changes or internal shifts without losing focus on their overall goals.

Limitations of Management by objectives:

1. Time-Consuming Process

MBO requires a considerable amount of time and effort in its initial stages. The process of setting objectives, conducting reviews, and holding meetings between managers and employees is time-intensive. This can detract from the day-to-day operations and might be difficult for organizations with tight schedules or limited resources.

2. Emphasis on Quantitative Goals

One of the key criticisms of MBO is its heavy focus on measurable and quantitative goals. This emphasis may lead managers and employees to prioritize tasks that are easily quantifiable, while overlooking qualitative aspects such as employee satisfaction, creativity, or organizational culture, which are harder to measure but equally important.

3. Overemphasis on Short-Term Goals

MBO often focuses on achieving short-term objectives within a specific timeframe, which can lead to the neglect of long-term strategic planning. This short-term focus may cause organizations to make decisions that generate immediate results, but undermine long-term sustainability and growth.

4. Lack of Flexibility

Once objectives are set, the rigidity of the MBO process can make it difficult to adjust goals in response to changing market conditions or internal shifts. The formalized structure of MBO may limit the ability to be agile and responsive, which is critical in today’s fast-paced business environment.

5. Pressure to Meet Targets

The emphasis on achieving pre-determined objectives can create excessive pressure on employees and managers alike. This may lead to stress, burnout, and in some cases, unethical behavior, as individuals may resort to manipulating results or cutting corners to meet their targets.

6. Neglect of Interpersonal Relationships

MBO focuses primarily on the achievement of objectives, sometimes at the cost of interpersonal relationships and collaboration within the organization. Employees may become overly focused on their individual goals, leading to a lack of cooperation and teamwork, which can negatively impact organizational culture and performance.

7. Difficulty in Setting Realistic Goals

Setting realistic and achievable goals is a challenge in the MBO process. Overly ambitious goals may demotivate employees if they perceive them as unattainable, while conservative goals might fail to push employees to their full potential. Striking the right balance is difficult and requires careful consideration.

8. Potential for Misalignment of Goals

Even though MBO aims to align individual goals with organizational objectives, there can be a disconnect between the two. Employees might focus on their specific goals without fully understanding or supporting the broader organizational strategy, which could result in inefficiencies or conflict.

9. Focus on Individual Performance over Teamwork

MBO tends to emphasize individual performance and achievement of personal goals, which can sometimes undermine teamwork. In environments where collaboration and group efforts are essential, MBO’s focus on individual objectives can cause divisions or reduce collective productivity.

Quality Circle is a small group of employees who meet regularly to identify, analyze, and solve work-related problems, aiming to enhance productivity and quality. Typically composed of workers from the same department, these circles encourage participation and collaboration, promoting a culture of continuous improvement. Members share insights and suggestions, which are presented to management for consideration. Quality Circles empower employees, foster teamwork, and enhance communication, leading to improved processes, reduced waste, and greater job satisfaction, ultimately contributing to the organization’s overall performance and competitiveness.

Features of Quality Circle:

1. Employee Involvement

Quality Circles are formed by employees from the same work area or department, encouraging their active involvement in problem-solving. This feature empowers workers by giving them a voice in the decision-making process. Employees feel valued and engaged when they participate in identifying issues and proposing solutions, leading to a more motivated workforce.

2. Voluntary Participation

Participation in Quality Circles is typically voluntary, allowing employees to choose whether to join. This voluntary nature fosters a genuine interest among members, as they are motivated by a desire to improve their work environment and processes. When employees are passionate about their contributions, they are more likely to be engaged and committed to the circle’s objectives.

3. Focus on Continuous Improvement

Quality Circles aim to foster a culture of continuous improvement within the organization. Members regularly identify problems, analyze processes, and propose innovative solutions to enhance quality and efficiency. This ongoing commitment to improvement helps organizations adapt to changing circumstances and maintain a competitive edge in their industry.

4. Structured Meetings

Quality Circles operate through structured meetings, where members discuss issues, share ideas, and develop action plans. These meetings often follow a systematic approach, such as the Plan-Do-Check-Act (PDCA) cycle, to ensure effective problem-solving. The structured format allows for organized discussions, ensuring that all voices are heard and that action items are clearly defined.

5. Emphasis on Teamwork

Quality Circles promote teamwork and collaboration among employees. Members work together to identify challenges, brainstorm solutions, and implement improvements. This collaborative approach fosters a sense of camaraderie and strengthens relationships among team members. By working together, employees leverage diverse perspectives and skills, leading to more innovative solutions and better outcomes.

6. Management Support

For Quality Circles to be effective, they require support from management. This support includes providing resources, facilitating training, and encouraging a culture of open communication. When management actively participates and shows commitment to the process, it enhances the credibility of Quality Circles and encourages more employees to engage.

7. Results-Oriented Approach

Quality Circles are focused on achieving tangible results. The success of these groups is measured by the improvements they implement, such as increased productivity, reduced waste, and enhanced quality. By concentrating on measurable outcomes, Quality Circles demonstrate their value to the organization and motivate members to continue striving for excellence.

Objectives Quality Circle:

1. Enhance Quality of Products and Services

One of the primary objectives of Quality Circles is to improve the quality of products and services offered by the organization. Members work collaboratively to identify quality-related issues, analyze root causes, and propose solutions. By focusing on quality enhancement, organizations can increase customer satisfaction and loyalty.

2. Foster Employee Involvement and Empowerment

Quality Circles aim to empower employees by involving them in the decision-making process. By allowing team members to contribute their ideas and insights, organizations promote a sense of ownership and responsibility among employees. This involvement leads to higher morale and engagement, ultimately creating a more motivated workforce.

3. Encourage Teamwork and Collaboration

Quality Circles are designed to promote teamwork and collaboration among employees. By working together to solve problems, team members develop strong relationships and improve their communication skills. This collaborative environment fosters a culture of cooperation, which can lead to more innovative solutions and improved organizational effectiveness.

4. Identify and Solve Problems Proactively

Quality Circles encourage employees to take a proactive approach to problem-solving. Rather than waiting for issues to arise, team members are trained to identify potential problems before they escalate. This proactive mindset not only helps in addressing current challenges but also mitigates future risks, ensuring smoother operations.

5. Facilitate Continuous Improvement

Continuous improvement is a core objective of Quality Circles. Members are encouraged to constantly assess and refine processes, systems, and workflows. By adopting methodologies such as the Plan-Do-Check-Act (PDCA) cycle, teams can implement incremental changes that lead to significant long-term improvements in efficiency and effectiveness.

6. Improve Communication Across the Organization

Quality Circles facilitate open communication among employees and management. By creating a platform for dialogue, these circles enable members to voice their concerns, share ideas, and provide feedback. Improved communication leads to better understanding and alignment on organizational goals, fostering a collaborative culture.

7. Reduce Costs and Increase Efficiency

By identifying inefficiencies and implementing improvements, Quality Circles aim to reduce operational costs. Members analyze processes to find ways to eliminate waste and streamline operations. The focus on efficiency not only lowers costs but also enhances productivity, allowing organizations to allocate resources more effectively.

Human Resource Planning (HRP) is a systematic process of identifying and addressing an organization’s human resource needs to achieve its objectives. It involves forecasting the future demand for and supply of human resources, assessing current workforce capabilities, and developing strategies to bridge the gap between the two. HRP ensures that the right number of people with the right skills are available at the right time to meet organizational goals.

Features of Human Resource Planning:

• Well Defined Objectives

Enterprise’s objectives and goals in its strategic planning and operating planning may form the objectives of human resource planning. Human resource needs are planned on the basis of company’s goals. Besides, human resource planning has its own objectives like developing human resources, updating technical expertise, career planning of individual executives and people, ensuring better commitment of people and so on.

• Determining Human Resource Reeds

Human resource plan must incorporate the human resource needs of the enterprise. The thinking will have to be done in advance so that the persons are available at a time when they are required. For this purpose, an enterprise will have to undertake recruiting, selecting and training process also.

• Keeping Manpower Inventory

It includes the inventory of present manpower in the organization. The executive should know the persons who will be available to him for undertaking higher responsibilities in the near future.

• Adjusting Demand and Supply

Manpower needs have to be planned well in advance as suitable persons are available in future. If sufficient persons will not be available in future then efforts should be .made to start recruitment process well in advance. The demand and supply of personnel should be planned in advance.

• Creating Proper Work Environment

Besides estimating and employing personnel, human resource planning also ensures that working conditions are created. Employees should like to work in the organization and they should get proper job satisfaction.

HR Planning Process:

• Current HR Supply:

Assessment of the current human resource availability in the organization is the foremost step in HR Planning. It includes a comprehensive study of the human resource strength of the organization in terms of numbers, skills, talents, competencies, qualifications, experience, age, tenures, performance ratings, designations, grades, compensations, benefits, etc. At this stage, the consultants may conduct extensive interviews with the managers to understand the critical HR issues they face and workforce capabilities they consider basic or crucial for various business processes.

• Future HR Demand:

Analysis of the future workforce requirements of the business is the second step in HR Planning. All the known HR variables like attrition, lay-offs, foreseeable vacancies, retirements, promotions, pre-set transfers, etc. are taken into consideration while determining future HR demand. Further, certain unknown workforce variables like competitive factors, resignations, abrupt transfers or dismissals are also included in the scope of analysis.

• Demand Forecast:

Next step is to match the current supply with the future demand of HR, and create a demand forecast. Here, it is also essential to understand the business strategy and objectives in the long run so that the workforce demand forecast is such that it is aligned to the organizational goals.

• HR Sourcing Strategy and Implementation:

After reviewing the gaps in the HR supply and demand, the HR Consulting Firm develops plans to meet these gaps as per the demand forecast created by them. This may include conducting communication programs with employees, relocation, talent acquisition, recruitment and outsourcing, talent management, training and coaching, and revision of policies. The plans are, then, implemented taking into confidence the mangers so as to make the process of execution smooth and efficient. Here, it is important to note that all the regulatory and legal compliances are being followed by the consultants to prevent any untoward situation coming from the employees.

Objectives of Human Resource Planning:

1. Provide Information

The information obtained through HRP is highly important for identifying surplus and unutilized human resources. It also renders a comprehensive skill inventory, which facilitates decision making, like, in promotions. In this way HRP provides information which can be used for other management functions.

2. Effective Utilization of Human Resource:

Planning for human resources is the main responsibility of management to ensure effective utilization of present and future manpower. Manpower planning is complementary to organization planning.

3. Economic Development

At the national level, manpower planning is required for economic development. It is particularly helpful in the creating employment in educational reforms and in geographical mobility of talent.

4. Determine Manpower Gap

Manpower planning examine the gaps in existing manpower so that suitable training programmes may be developed for building specific skills, required in future.

5. To forecast Human Resource Requirements

HRP to determine the future human resource needed in an organization. In the absence of such a plan, it would be difficult to have the services of the right kind of people at the right time.

6. Analyze Current Workforce

HRP volunteers to assist in analyzing the competency of present workforce. It determines the current workforce strengths and abilities.

7. Effective Management of Change

Proper HR planning aims at coping with severed changes in market conditions, technology products and government regulations in an effective way. These changes call for continuous allocation or reallocation of skills evidently in the absence of planning there might be underutilization of human resource.

8. Realizing Organizational Goals

HRP helps the organization in its effectively meeting the needs of expansion, diversification and other growth strategies.

Importance of Human Resource Planning:

• It gives the company the right kind of workforce at the right time frame and in right figures.
• In striking a balance between demand-for and supply-of resources, HRP helps in the optimum usage of resources and also in reducing the labor cost.
• Cautiously forecasting the future helps to supervise manpower in a better way, thus pitfalls can be avoided.
• It helps the organization to develop a succession plan for all its employees. In this way, it creates a way for internal promotions.
• It compels the organization to evaluate the weaknesses and strengths of personnel thereby making the management to take remedial measures.
• The organization as a whole is benefited when it comes to increase in productivity, profit, skills, etc., thus giving an edge over its competitors.

An organized enterprise does not, of course, exist in a vacuum. Rather, it is dependent on its external environment; it is a part of larger systems such as the industry to which it belongs, the economic system, and society. Thus, the enterprise receives inputs, transforms them, and exports the outputs to the environment. However, this simple model needs to be expanded and developed into a model of operational management that indicates how the various inputs are transformed through the managerial functions of planning, organizing, staffing, leading, and controlling. Clearly, any business or other organization must be described by an open system model that includes interactions between the enterprise and its external environment.

1. Inputs and Claimants

The inputs from the external environment may include people, capital, and managerial skills, as well as technical knowledge and skills. In addition, various groups of people will make demands on the enterprise. For example, employees want higher pay, more benefits, and job security. On the other hand, consumers demand safe and reliable products at reasonable prices. Suppliers want assurance that their products will be bought. Stockholders want not only a high return on their investment but also security for their money. Federal, state, and local governments depend on taxes paid by the enterprise, but they also expect the enterprise to comply with their laws. Similarly, the community demands that enterprises become good citizens, and providing the maximum number of jobs with a minimum of pollution. Other claimants to the enterprise may include financial institutions and labor unions; even competitors have legitimate claim for fair play. It is clear that many of these claims are incongruent, and it is manager  job to integrate the legitimate objectives of the claimants.

2. The Managerial transformation Process

It is the task of managers to transform the inputs, in an effective and efficient manner, into outputs. Of course, the transformation process can be viewed from different perspective. Thus, one can focus on such diverse enterprise functions as finance, production, personnel, and marketing. Writers on management look on the transformation process in terms of their particular approaches to management. Specially, writers belonging to the human behavior school focus on interpersonal relationships, social systems theorist analyze the transformation by concentrating on social interactions, and those advocating decision theory see the transformation as sets of decisions. Perhaps, however, the most comprehensive and useful approach for discussing the job of managers is to use the managerial functions of planning, organizing, staffing, leading, and controlling as a framework for organizing managerial knowledge.

3. The Communication System

Communication is essential to all phases of the managerial process for two reasons. First, it integrates the managerial functions. For example, the objectives set in planning are communicated so that the appropriate organization structure can be devised. Communication is essential in the selection, appraisal, and training of managers to fill the roles in this structure. Similarly, effective leadership and the creation of an environment conductive to motivation depend on communication. Moreover, it is through communication that one determines whether events and performance conform to plans. Thus, it is communication which makes managing possible.

The second purpose of the communication system is to link the enterprise with its external environment, where many of the claimants are. For example, one should never forget that the customer, who is the reason for the existence of virtually all businesses, is outside a company. It is through the communication system that the needs of customers are identified; this knowledge enables the firm to provide products and services at a profit. Similarly, it is through an effective communication system that the organization becomes aware of competition and other potential threats and constraining factors.

4. External Variables

Effective managers will regularly scan the external environment. While it is true that managers may have little or no power to change the external environment, they have no alternative but to respond to it.

5. Outputs

It is the task of managers to secure and utilize inputs to the enterprise, to transform them through the managerial functions with due consideration for external variables and to outputs.

Although the kinds of outputs will vary with the enterprise, they usually include many of the following: products, services, profits, satisfaction, and integration of the goals of various claimants to the enterprise. Most of these outputs require no elaboration, only the last two will be discussed.

It must contribute to the satisfaction not only of basic material needs (for example, employees as needs to earn money for food and shelter or to have job security) but also of needs for affiliation, acceptance, esteem, and perhaps even self-actualization so that one can use his or her potential at the work-place.