MBO AND QUALITY ACTION PLAN

Corporations can lose the benefit of a more abstract management by objectives in order to gain quantification. It is the combination of the objectives and its quality action plan. A serious management should focus on these twins and not just the objective

Management by objectives (MBO) is the process of management by results (MBR), setting specific objectives within an organization that management can convey to its members, then deciding how to achieve each objective in sequence. This process allows managers to take work that needs to be done one step at a time to allow for a calm, yet productive work environment. This process also helps organization members to see their accomplishments as they achieve each objective, which reinforces a positive work environment and a sense of achievement.

 An important part of MBO is the measurement and comparison of an employee's actual performance with the standards set. Ideally, when employees themselves have been involved with the goal-setting and participate in the course of action to be followed by them, they are more likely to fulfill their responsibilities. The system of MBO can be described as an approach whereby the superior and subordinate jointly identify common goals, define each individual's major areas of responsibility in terms of the results expected of him or her, and use these measures as guides for operating the unit and assessing the contribution of each of its members.

 Management by objectives at its core is when employers attempting to manage their subordinates by introducing a set of specific goals that both the employee and the company strive to achieve in the near future, and working to meet those goals accordingly. It is consisting of 5 basic steps:

•  ·        Review organizational goals
• ·        Set worker objective
• ·        Monitor progress
• ·        Evaluation
• ·        Rewards system

 The principle of MBO is for employees to have a clear understanding of their roles and the responsibilities expected of them, so they can understand how their activities relate to the achievement of the organization's goals. MBO also places importance on fulfilling the personal goals of each employee.

 Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment, commitment and satisfaction.

Better communication and coordination – Frequent reviews and interactions between superiors and subordinates help to maintain relationships within the organization and also to resolve problems.

 Organizational Goals

Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. Managers can ensure that objectives of the subordinates are linked to the organization's objectives. Common goal for whole organization means it is a unifying, directive principle of management.

 Application in practice measured with Quality ratios

 There are endless ways to exercise management by objectives. A must is to find specific goals to aim for in an organization or business. Companies that use MBO often report greater sales rates and productiveness within the organization. Objectives can be set in all domains of activities, such as production, marketing, services, sales, R&D, human resources, finance, and information systems. Some objectives are collective, and some can be goals for each individual worker. Both make the task at hand seem attainable and enable the workers to visualize what needs to be done and how.

 In the MBO paradigm, managers determine the mission and the strategic goals of the enterprise. The goals set by the top-level are based on an analysis of what can and should be accomplished by the organization within a specific period of time. The functions of these managers can be centralized by appointing a project director who can monitor and control activities of the various departments. If this cannot be done or is not desirable, each manager's contributions to the organizational goal should be clearly spelled out.

 MBO was used as the basis of "the performance-based merit system” which used clear numerical targets to measure performance in contrast to the previous system of non-specific contracts in Japanese companies.

 SMART criteria are commonly associated with management by objectives concept. The acronym, is giving criteria to guide in the setting of objectives, for example in project management, employee-performance management and personal development. The letters S and M generally mean specific and measurable. Possibly the most common version has the remaining letters referring to achievable (or attainable), relevant, and time-bound.

SMART goals and objectives similarities with MBO will erupt as a matter of discussion and agreement. Although the acronym SMART generally stays the same, objectives and goals can differ. Goals are the distinct purpose that is to be anticipated from the assignment or project. Objectives on the other hand are the steps that will direct full completion of the project goals.

These criteria don't say that all objectives must be quantified on all levels of management. In certain situations it is not realistic to attempt quantification, particularly in staff middle-management positions.

 Corporations can lose the benefit of a more abstract objective in order to gain quantification. It is the combination of the objective and its quality action plan. A serious management should focus on these twins and not just the objective.

 Each letter in SMART refers to a different criterion for judging objectives. Different sources use the letters to refer to different things. In order to be graphical and follow the old school of management, the acronym is basically composed of this accepted criterion:

•  S         Specific (Strategic and specific)
• M        Measurable (Motivating)
• A         Achievable or attainable (aligned with corporate, agreed)
• R         Relevant (realistic and resourced, results-based)
• T         Time-bound (time-based, time-oriented)

 Objectives need to be quantified and measured. Reliable management information systems are needed to establish relevant objectives and monitor their "ratio" in an objective way. Pay incentives are often linked to results in reaching the objectives. In terms of goals, SMART system under MBO changes the terminology to the following definitions; pay attention about the differences mentioned above in terms of Quality objectives.

•  ·        Specific - Target a specific area for improvement.
• ·        Measurable - Quantify or suggest an indicator of progress.
• ·        Assignable - Specify who will do it.
• ·        Realistic - What results can realistically be achieved, given available resources.
• ·        Time-bound - Specify when the result can be achieved.

 What gets measured gets done is the alignment of the Quality objectives with the MBO philosophy. There are few things to address here: A lack of understanding of systems commonly results in misapplications. Additionally, Deming stated that setting production targets will encourage workers to meet those targets through whatever means necessary, which usually results in poor quality.

 It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. It under-emphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders.

 MBO is practiced with a focus on planning and development aiding various organizations. The most recent research focuses on specific industries, specifying the actual practices. In addition, following criticism of the original MBO approach, a new formula was introduced, aiming at revitalizing it, that is the OPTIMAL MBO, which stands for its components:

namely: (O) Objectives, Outside-in; (P) Profitability (budget) related goals; (T) Target Setting; (I) Incentives & Influence; (M) Measurement; (A) Agreement, Accountability, Appraisal, Appreciation; and (L) Leadership Support.

 Objectives and key results (OKR)

 This is a framework for defining and tracking objectives and their outcomes. The key result has to be measurable. But at the end you can look, and without any arguments: Did I do that or did I not do it? Yes? No? No other judgments in it.

 The goal of OKR is to define how to achieve objectives through concrete, specific and measurable actions. Key results can be measured on a 0-100% scale or any numerical unit (e.g. dollar amount, %, items, etc.). Objectives should also be supported by initiatives, which are the plans and activities that help to achieve the objective and move forward the key results.

 The idea took hold and OKRs quickly became central to the culture as a "management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization. They’ve kept the Management and the rest of the company on time and on track when it matters.

 OKRs may be shared across the organization with the intention of providing teams with visibility of goals with the intention to align and focus effort. OKRs are typically set at the company, team, and personal levels although there is criticism on this causing too much of a waterfall approach, which, OKRs, in many ways, tries to be the opposite.

 OKRs overlap with other performance management frameworks - in terms of complexity sitting somewhere between KPI’s and the balanced scorecard.

 Conclusion

 In this case, the suggested tools across each and every theory are Corporate Social responsibility is an essential element of governance reinforced through sustainable ethics and work force integrity in the business processes. Cooperation should be embedded in the Organization’s Management and they are encouraged to embrace the values and behaviors to achieve them. Respect of cultural diversity that adds value to the mission, competitiveness and sustainable long term growth.

 The employees are the most important resource and the Management need to value their talent and experience, a training plan for the optimization of personal abilities give the company the guarantee of accumulation, transmission of the technical and professional knowledge that endure the performance. Transparency is the guidance for MBO and OKR’s that generates confidence in conducting business in a systematic and accessible way.

 These also boost the trust of the stakeholders. Emphasis on processes and predictability sharing knowledge and predictability with traceability methods of business risks to prevents variables and final results. These principles can be achieved only with the following attributes from the Top Management cascading down to the staff:

•  ·        Problem solving
• ·        Critical Thinking
• ·        Creativity
• ·        Empathy
• ·        Respect of People
• ·        Communications Hierarchically and Functional
• ·        Use of Knowledge and data banks
• ·        Decision making with Safety and Quality standards
• ·        Flexibility balance
• ·        Service dedication to customers
• ·        Negotiation process with superiors