Ch. 7 Management by Objectives: MBO

Ch.
Ch. 77 Management
Management By
By Objectives:
Objectives: MBO
MBO
MBO is a program that encompasses:
specific goals (goal setting theory)
participatively set (this is emphasized in MBO
systems)
for an explicit time period
with feedback on goal progress
MBO operationalizes the concept of objectives by

devising a process by which objectives cascade
down through the organization.
The result is a hierarchy of objectives that links
objectives at one level to those at the next level.
For the individual employee, MBO provides
specific personal performance objectives.
Cascading
Cascading of
of Objectives
Objectives
What
WhatAre
AreEmployee
Employee Recognition
RecognitionPrograms?
Programs?
Programs that use multiple sources and recognizes both
individual and group accomplishments.
Linking Programs and Reinforcement Theory

Consistent with the reinforcement theory, rewarding a
behavior with recognition immediately following that
behavior is likely to encourage its repetition.
Employee Recognition Programs in Practice

In contrast to most other motivators, recognizing an
employees superior performance often costs little or no
money, making them highly attractive to industry.
What
What are
areEmployee
Employee Involvement
Involvement Programs
Programs
A participative process that uses the entire capacity of
employees and is designed to encourage increased
commitment to the organizations success.
Examples of Employee Involvement
Participative Management
Representative Participation
Work Councils
Board Representatives
Quality Circles
Employee Stock Ownership Plans (ESOPs)
*Note: these strategies use concepts found in Theory X and Y,
the two-factor theory, and needs (i.e. N achievement) and
ERG. These approaches are popular around the world.
Variable
Variable Pay
Pay Programs
Programs
Programs where a portion of an employees pay is based on some
individual and/or organizational measure of performance.
piece-rate pay plans

profit-sharing plans
gainsharing plans
Linking Variable-Pay Plans and Expectancy Theory
Evidence supports the importance of this linkage,

especially for operative employees working under piecerate systems.
Group and organization wide incentives reinforce and
encourage employees to sublimate personal goals for the
best interests of their department or organization.
Many of these plans are used in organizations around the
world. Again, be careful some involve risk (and not all
employees nor employers are risk takers!)
Skill-Based
Skill-Based Pay
Pay Plans
Plans
Pay
Paylevels
levelsbased
basedon
onhow
howmany
manyskills
skillsemployees
employees
have
haveor
orhow
howmany
manyjobs
jobsthey
theycan
cando
do
Benefits
Benefitsof
ofSkill-based
Skill-basedPay
PayPlans:
Plans:
1.1.
2.2.
Provides
Providesstaffing
staffingflexibility.
flexibility.
Facilitates
Facilitatescommunication
communicationacross
acrossthe
theorganization.
organization.
3.3.
4.4.
Lessens
Lessensprotection
protectionof
ofterritory
territorybehaviors.
behaviors.
Meets
Meetsthe
theneeds
needsof
ofemployees
employeesfor
foradvancement
advancement(without
(without
promotion).
promotion).
5.5. Leads
Leadsto
toperformance
performanceimprovements.
improvements.
**Downside:
Downside:you
youcan
cantop
topout,
out,get
getfrustrated,
frustrated,skills
skillsbecome
become
obsolete,
obsolete,paying
payingfor
forskills
skillsnot
notused
used
Flexible
Flexible Benefits
Benefits
Special
Special Issues
Issues in
in Motivation
Motivation
Motivating Professionals
Provide challenging projects.

Allow them the autonomy to be productive.
Reward with educational opportunities.
Reward with recognition.
Express interest in what they are doing.
Create alternative career paths.
Motivating Contingent Workers

Provide opportunity for permanent status.
Provide opportunities for training.
Provide equitable pay.
Special
Special Issues
Issues in
in Motivation
Motivation (contd)
(contd)
Motivating the Diversified Workforce
Provide flexible work, leave, and pay schedules.
Provide child and elder care benefits.
Structure working relationships to account for cultural
differences and similarities.
Motivating Low-Skilled Service Workers
One of the most challenging problems in industry today.
Many plans have been tried, almost all unsuccessfully
Try flexible work schedules, slight increase in pay,
recruit widely
Create broader responsibility for inventory, scheduling,
and hiring
Try creating a family atmosphere among employees
Unless pay and benefits rise significantly, continued high
turnover can be expected.
Special
Special Issues
Issues in
in Motivation
Motivation (contd)
(contd)
Motivating People Doing Highly Repetitive Tasks
Motivating individuals in these jobs can be made
through careful selection
People vary in their tolerance for ambiguity.
Many individuals prefer jobs that have a minimal
amount of discretion and variety.
High pay and careful selection can reduce
recruitment problems and high turnover, however
this doesnt necessarily lead to highly motivated
workers.
Creative personnel programs have exhibited some
success by providing: clean and attractive work
surroundings, ample work breaks and opportunity to
socialize during breaks, and empathetic supervisors.
Summary
Summaryand
andImplications
Implicationsfor
for Managers
Managers
Recognize Individual Differences!
Employees have different needs dont treat
them all alike!
Spend the time necessary to understand whats
important to each employee.
Use Goals and Feedback (This is KEY!)
Allow Employees to Participate in Decisions That
Affect Them
Link Rewards to Performance (seems so simple,
huh?)
Employees must perceive a clear linkage
Check the System for Equity do rewards match
inputs?

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Ch.

MBO operationalizes the concept of objectives by

Linking Programs and Reinforcement Theory

Employee Recognition Programs in Practice

piece-rate pay plans

Evidence supports the importance of this linkage,

Provide challenging projects.

Motivating Contingent Workers

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