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Ch. 7 Management By Objectives: MBO PowerPoint PPT Presentation


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Ch. 7 Management By Objectives: 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

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Ch. 7 Management By Objectives: MBO

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Ch. 7 Management By Objectives: 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 of Objectives


    What Are Employee Recognition 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 employee’s superior performance often costs little or no money, making them highly attractive to industry.


    What are Employee Involvement Programs

    • A participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organization’s 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 Pay Programs

    • Programs where a portion of an employee’s 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 piece-rate 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 Pay Plans

    • Pay levels based on how many skills employees have or how many jobs they can do…

    • Benefits of Skill-based Pay Plans:

    • Provides staffing flexibility.

    • Facilitates communication across the organization.

    • Lessens “protection of territory” behaviors.

    • Meets the needs of employees for advancement (without promotion).

    • Leads to performance improvements.

    • * Downside: you can “top out”, get frustrated, skills become obsolete, paying for skills not used


    Flexible Benefits


    Special Issues in 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 Issues in Motivation (cont’d)

    • 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 Issues in Motivation (cont’d)

    • 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 doesn’t 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 and Implications for Managers

    • Recognize Individual Differences!

    • Employees have different needs – don’t treat them all alike!

    • Spend the time necessary to understand what’s 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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