What is MBO?
v A tool of management to increases the effectiveness of organization, company by concentrating efforts, targets of all individuals, Sect/Dept in company.
v A systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources.
Raised Issues
v The objectives of Company, divisions are not clarified à difficulties in setting objectives of section, individuals.
v Unfairness in Objectives setting: some set objectives are easy to be achieved, some objectives are challenged.
v The process of objectives approval is not clarified: hierarchy or flat.
v Top --> Top objectives setting?
v Should all managers apply MBO?
v Are qualitative objectives acceptable?
BOD response to the raised issues
v A standardization of Process of objectives setting, clear roles and responsibilities of department/section/individual should be made as a main solution to raised issues.
v The process standardization should be based on “shorter process, fewer steps”.
Agreement on Objectives setting
v Top --> Down objectives setting to ensure the focusing on company achievable goals. Company --> Division --> Department /Section -->Individual.
Manager’s Objectives and Sect/Dept Objectives
v Objectives of section/department = objectives of manager because he/she is responsible for this section/department operation.
v The differences in the roles and responsibilities between managers and staffs should be mentioned in Action plan or in details of Objectives. Manager’s responsibilities are described mainly as follows:
§ Manages, develops people to ensure people is of the right quality to meet Biz requirement.
§ Maintains, upgrades working process, controls systems to meet VOC.
§ Proposes, implements measure to solve problems, which are out of normal processes.
§ Conveys messages from the top management to the staffs properly.
§ Implements “Plan, do, check” process to enhance productivity and quality of the jobs.
§ Implements cross-functional communication effectively.
§ Creates, maintains effective working environment and good staff relationship.
Qualitative or Quantative Objectives?
v In terms of fair evaluation, measurable objectives are highly recommended and a qualitative objective is not recommended.
v In terms of quality management, qualitative objectives should be acceptable. However the evaluation method should be considered when setting objectives. Qualitative objectives should be:
o Declared as qualitative objectives when setting
o Their features should be clarified and appreciated by recipients
o Attached with detailed action plan
o Evaluated by “Process evaluation”: process completeness/thoroughness/ and recipient feedback.
Target Setting General Guidelines
v Target should be based on:
o Cascades from Company/Division target
o Historical data
o Company/HQ/Regional target
o VOC, Competitor’s activities
v Should not set objectives which the holder does not control/implement the process directly.
v Number of Objectives (guideline only):
o Manager: should be 3.
o Staffs: 3 maximum
Min – Max Target
v On target:
o Should be attainable and in compliance with the total company objectives.
o In terms of fairness, a structure of 360-degree evaluation should be applied (will be proposed by HR later).
v Max Target:
o Set by Division heads case by case.
o Max target reflects the challenge, stressful level of objectives.
v Min Target:
o Set by Division heads case by case.
o Min target reflects the lowest level of performance/ achievement, which can be accepted.
Who should do MBO?
v All above-acting managers should manage their jobs by Objectives and their performance should be evaluated by Objectives achievements because they are responsible for section/department objectives, which are parts of Division objectives.
v Staff: who is qualified the followings should manage their jobs by objectives and their performance should be evaluated by achievement of objectives.
o Takes management role: group leader, project leader.
o Takes important role in achievement of section/department objectives.
o Is responsible for improvement projects, KPI.
o Assigned by direct managers.
o HR will propose the bonus scheme that support for staffs applying MBO.
Who should not do MBO?
v Staff are doing routine work.
Why should staff do MBO?
v Challenge potential staffs.
v Motivate key/potential staffs.
v Concentrate staff’s efforts to Division/department objectives.
v Make the difference in rewarding key/potential staff.
Can I refuse to do MBO?
Yes, you can. MBO must be based on volunteer: staff can agree or refuse to take MBO when he/she is assigned.
What is the difference between doing and not doing MBO?
Bonus pay-out: more challenged (bigger bonus, but risky) for MBO cases.
Bonus pay out can be based on PA result for non MBO cases.
How many objectives should I set?
v It is recommended to set 3 objectives.
v It should not be less than 3 or more than 5.
v In special cases, 2 objectives are acceptable.
Managers must have clear expectation/ direction on their objectives.
Problems faced by managers
Some managers faced problem on getting the approval of Division Managers/ BOD for setting objectives. Division Managers were not satisfied with set objectives meanwhile there were no clear and specific directions given out. Those objectives were approved too late even not approved yet.
v The causes
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The role/ responsibility of those managers has not been defined/confirmed.
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Objectives of division were not clear enough to cascade to the next level (department/ section).
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Low motivation/effort of Dept/Section Managers to set challenging objectives.
v Suggested solutions
§ Division managers/ BOD should define role, responsibility of dept/section.
§ Divisional Objectives must be set clearly and specifically enough for its cascading to next level.
§ Managers have to put effort to set objectives to meet VOC and superior expectation.
§ The qualitative objectives will be considered where quantitative objectives are not adapted.
§ If the objectives can not be approved within one month, it will be reported to MD for final solutions.
Objectives are not set on Voice Of Customer (VOC)
Some managers set objectives that look nice, but those objectives really did not contribute to the achievement of the company objectives or satisfy VOC at all.
v Suggested solutions
Div/ Department can raise the voice to the respective Div/Department. HR department will report to MD those VOC. MD will make final decision if those VOC should be considered/confirmed for setting objectives.
Evaluation
- It is agreed that objective achievement which is 150% higher must have report on taken actions and be certified by objective evidences or recipients (customers).
- It is dificult to evaluate objectives --> Certifying achievements of some objectives by recepients will be on request. E.g: survey of employee satisfaction on services provided by administration department (lunch, safety and hypogiency, trip,..).
- The discussion between superiors and subordinates on subordinate’s performance needs to be done. Some divisions have done it, some not yet --> HR department should report the status of implementation of this step to BOD.
- There is no considerable problem, inconvenience in using current forms and MBO guideline.
