Management by objective....
Definition
Management
by objectives is a dynamic system which seeks to integrate the
company's need to clarify and achieve its profit and growth goals
with the manager's need to contribute and develop himself. It is a
demanding and rewarding style of managing a business.
Explanation
Since
the best managers have always practised management by objectives, the
cynic's view that it is merely old wine in new bottles is perhaps
valid. However, it is timely and useful to restate basic principles
and to demonstrate that there is a practical approach which will help
all managers to improve their performance. Companies are meeting
increased pressures of competition and rising costs and management’s
task is becoming more complex with accelerating changes in markets,
technology, and social environment. Yet, many companies are content
to follow tradition based on past success. The explosive growth in
knowledge had led to more specialization, with the result that fewer
general managers and entrepreneurial types are being produced.
Moreover, the time span and range of objectives set by companies is
often dangerously restricted. Management by objectives must create a
climate of opinion in which these and other problems are recognized
as well as providing the framework of techniques for solving them.
Illustration
When a
worthwhile system of management by objectives (MBO) is operating in a
company there is a continuous process of:
- Reviewing critically, and restating, the company’s strategic and tactical plans.
- Clarifying with each manager the key results and performance standards he must achieve, in line with unit and company objectives, and gaining his contribution and commitment to these.
- Agreeing with each manager a job improvement plan, which makes a measurable and realistic contribution to the unit and company’s plans for better performance.
- Providing conditions in which it is possible to achieve the key results and improvement plans, notably:
- An organization structure which gives a manager maximum freedom and flexibility in operation.
- Management control information in a form, and at a frequency, which makes for more effective self-control and better and quicker decisions.
- Using systematic performance review to measure and discuss progress towards results, and potential review to identify men with potential for advancement.
- Developing management training plans to help each manager to overcome his weaknesses, to build on his strengths, and to accept a responsibility for self-development.
- Strengthening a manager's motivation by effective selection, salary, and succession plans.
These
techniques are interdependent and the dynamic nature of the system
can be shown as in the diagram above. It follows that the development
of managers, which is a matter of vital importance to every company,
only makes sense if it is integrated with the purpose of the
business. Looked at in this way, management development is a valuable
by-product of running a business efficiently.
Chris
Wilkinson.
Certified
Business Behaviour & Attitudes Analyst.
Business Coach.
Tel:
(905)
275-2907
(Mississauga).
E-mail:
buspilot@bell.net
