Effect of Management by Objective on Organization Performance.
CHAPTER ONE
OBJECTIVE OF THE STUDY
The broad objective of the study is to find out the prospects and problems of effective utilization of management by objectives in companies in Nigeria.
The specific objective of the study includes: –
- To determine problems affecting the effective utilization of management by objectives in an organization.
- To determine the level of managers commitment to achieving organizational objectives.
- To find out the level of participation of both managers and employees in the setting of goals to be achieved in the organisation.
- To determine whether employees are given appropriate authority and responsibility for achieving the set objective.
- To recommend strategies for effective utilization of management by objectives.
CHAPTER TWO
LITERATURE REVIEW
CONCEPTUAL FRAMEWORK
Management by objective is traceable to the period prior to the middle of this century but it was not until 1954 that it was well articulated and publicized by one of the world’s leading management thinkers in the person of Peter Drucker. Management by objective goes beyond setting annual objectives for organizational units to setting performance goals for individual employees (Stoner, 2000: 361). Management by objectives has become a great deal of discussion, evaluation and research and inspired many similar programs.
Management by objectives refers to a formal set of procedures that begins with goal setting and continues through performance review. Managers and those they supervise act together to set common goals. Each person’s major areas of responsibility are clearly defined in terms of measurable expected results or objectives, used by staff members in planning their work, and by both staff members and their managers for monitoring progress. Performance appraisals are conducted jointly on a continuing basis, with provisions for regular periodic reviews.
The heart of management by objective is the objectives, which spell out the individual actions needed to fulfil the units functional strategy and annual objectives. Management by objectives provides a way to integrate and focus the efforts of all organisation members on the goals of higher management and overall organizational strategy.
Another key to management by objective is its insistence on the active involvement of managers and staff members at every organizational level. Drucker (1979:256) insisted that managers and staff members sets their own objectives or at the very least, be actively involved in the objective setting process. Otherwise people might refuse to co-operate or make only half-hearted efforts to implement some one else’s objectives.
APPLICATION OF MANAGEMENT BY OBJECTIVE
To understand how management by objectives can be applied, it is necessary to look at the parts of the process. Management by objective can be divided in multiple steps in many combinations, but three main one will be discussed: organisation objective setting, manager objective setting and objective review. (Mullins 2005: 605).
Organisation Objective Setting: Setting objectives is the most difficult step in management by objective. Objective setting looks beyond day-to-day activities to answer the question “what are we trying to accomplish?” This step requires the top managers of an organisation to review the purpose for which the organisation exists. In the military, this may require the view of the mission statement and a discussion of it’s meaning. This is an important requirement, for periodic review re-emphasizes the continuing need for the existence of the organisation. With this mission in mind, the commander or supervisor and his staff must then set organizational objectives in areas where the unit will concentrate its efforts during the approaching objective setting period. These objectives are:
- To provide direction to the entire organisation and
- To provide guidelines for subordinate-level managers to formulate their objective.
As a result of this organizational objective setting step, Air Force managers showed realize that a mission statement is a goal that defines the continuing purpose of an organisation. That mission statement, however, does not define specific methods of accomplishing the goal stated. Management by objectives helps formulate these specific methods that are necessary to accomplish the mission.
Manager Objective Setting: Each individual manager in the organisation must now determine the objectives for his business. This procedure takes place in three general steps: identifying key result areas, writing objectives, and negotiating with the boss. First the manager must identify the key result areas of responsibility that are assigned to this unit. In other words, just as the commander reviewed the whole organisation in order to set organisation objective, the manager reviews his part of the organisation in order to set his objectives. It is important for the individual business manager to identify the areas of his unit where most of the results are obtained. He will usually find that 20 percent of his area of responsibility will produce 80 percent of his results. It is important that he identify and zero in on these key result areas for management by objective to be effective.
Objective Review – After the setting of objectives has been agreed upon by the subordinates, manager and his boss, the stage is set for managing by these objectives. This managing process is responsibility of the subordinate manager, and it is interrupted only by mutually arranged, formal review sessions with the commander. In other words, management by objective requires that each individual have the freedom to perform a well-defined task without interference.
There are two types of objective reviews –intermediate and final. The purpose of the intermediate review is to determine progress and identify problems that stand in the way of accomplishing objectives. Most problems are not for seeable at the time objectives are written; they appear only when action is taken to accomplish the objectives. The result of this intermediate session should be either to agree on a plan that resolves the blockage of objective accomplishment or change the objectives.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter shall discuss the data collection method, the description of the study population sample plan, research instrument, administration of data collection, instrument, limitation of the study and data coding and analytical procedures.
RESEARCH DESIGN
In order to conduct a well planned and executed research work a research design is required. It is used by the researcher as a scheme of a blues print for data collection prior to the actual study. For the purpose of this research, the survey research is use which concerned with identifying real nature of problem and formulating relevant hypothesis to be used.
The success and failure of this research depends on the degree of facts gather during the data collection period. As a result, this data collection was not based only on questionnaire but rather face to face interviewed with employee and top management of the company was highly used. Basically both primary and secondary that will be gathered
POPULATION OF THE STUDY
Population: this refers to the entire groups of people, events or things of interest that the researcher wishes to investigate.
The study of the population is drawn from all employee of the organization. A careful look is taken in all sectors of the organization e.g. the employees and the direct. In order to get the accurate population size of the organization. For the purpose of this research work, the researcher will base on 100.
CHAPTER FOUR
DATA PRESENTATION AND ANYLYSIS
DATA PRESENTATION
This chapter deals with presentation of the data, This is referred to as the heart of the research work. The data is analyzed in tabular form consisting of different responses. A total number of one hundred and two (102) samples were used and simple percentage was used as statistical data.
CHAPTER FIVE
SUMMARY OF FINDINGS CONCLUSION AND RECOMMENDATIONS
In this chapter the findings of this study were presented, conclusions were made and finally necessary recommendation were made in line with the findings.
SUMMARY OF FINDINGS
The following findings were made after the data collected from the field survey had been presented and analyzed.
1. That the major problems militating against effective utilization of management by objectives in an organization are.
- Non Commitment of the top managers
- Non Participation of employees
- Inappropriate Remuneration
2. That motivation determines employee’s performance in terms of achieving a set objectives.
3. That management by objective helps to obtain total commitment of all the employees to work together in order to achieve a common goal
4. The finding revealed that the following factors improve performance of the workers.
- Good and prompt salary
- Promotion as when due
- Good Relationship with management
- Recognition of Achievement
5. That organization that adopt management by objectives usually achieves its set objectives.
6. That the practice of management by objective facilitate the meullation of team spirit and work in an organization. The benefits of team spirit in modern day management cannot be overemphasized.
It helps group over individuals advances collective goals and slums selfish or sectional interests.
7. That the process of management by objectives is an underlying motivational ingredient to lower manages.
The fact that lower managers are involved in annus at the group objectives not only gives them a feeling of belonging but imposes upon them, a commitment to work towards it’s effective realization.
That management by objective encourages systematic planning of organization efforts.
Inbuilt in the process of evolving group and sectional objectives as demanded by management by objectives is the exercise of planning.
The targets thus evolved become the basic for utilization of resources and guiding organizational efforts.
CONCLUSION
This study revealed a lot of positive implications and relevance of management by objective to modern day management of organization especially in Nigeria in practical terms, the operations of management by objectives requires that each manager of a unit draws up his department objectives with his subordinates in line with the centrally stipulated corporate objectives and missions. These unit objectives when approved by the management clearly define responsibilities and expected results and are shared and distributed throughout the organization as a basis for performance and rewards. The objectives set in the process of management by objectives help provide a yardstick for appraisal, compensation and control.
Once the objectives are agreed upon every one knows what is expected of him, thereby making appraisal and reward easy and known what is more, it facilitates control of organizational operations as deviations can be easily identified and connections made.
RECOMMENDATIONS
- Management by objectives in its ideal form operates in such a way that for the corporate goals to be realized manager should consult his subordinates in drawing up unit objectives, which goes up the hierarchy from where it is modified collected approval and distributed throughout the organization.
- There should be regular training and re-training of employees in order to achieve the corporate objectives.
- Managers should endeavour to bill a true team and weld individuals efforts together.
- Their efforts must all pull in the same direction and their contribution must fit together to produce a whole without friction and without duplication of effort.
- Managers and employees should periodically meet in order to review progress towards the realization of objectives.
- There should be autonomy in implementation of plans once the objectives have been agreed upon, the individual enjoys wide discretion in choosing the means for achieving the objectives without being second quessed by higher ranking manager.
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