The OPTIMAL Management By Objectives System
Sharon Gotteiner from The University of Catalunya may have created a fine business performance wine. You see, like many good wines, they take time to mature and become acceptable to a broad palate.
So, also this leading contribution from Sharon’s work and study should be of immense interest for businesses operating a management by objectives model.
This article is dedicated to explain the core elements from Sharon’s OPTIMAL MBO system within management by objectives.
A key observation from Sharon’s work is the recognition that Management by Objectives (MBO) comprises of 3 core elements. 1) Goal Setting. 2) Decision making participation 3) Objective feedback.
Sharon recognizes within the paper that some business organizations may simply lack the focused culture and discipline required to deliver any variant of a MBO framework. For these companies, I will not address them further in this article. Instead read how to create the start of such a positive culture here….
The business mission statement should be outside focused. This identifies what is the business and what it should be; it also includes what is the value of our customers.
From these clarification points, objectives are aligned to meet them.
So, the mission is the steering compass for the business and the objectives become its deliverable clear path and journey. These objectives are then converted into specific goals, targets and their measurements.
Probably the most significant and instantly attractive element of the OPTIMAL model is the clear requirement for Profitability.
This is a great observation from Sharon’s work. The bare requirement for profitability related to the goals keeps a tighter commercial accountability and output.
A focus on the strategic health and operational health is a key attribute and consideration. I think these pointers will possibly heralded by many other consultancy companies. This address’s the never ending cycle of priorities faced by leaders and managers for short term improvements and longer term benefits.
Specific goals can be split into sub section categories to employee and process level. These areas are then subjected to accountable targets that can be measured and reviewed periodically.
For more on how to set business targets read this article:
Incentives and Influence:
Sharon’s strength of references for incentives and influence deserves noted credit. There is a clear understanding and conclusion that these are critical elements for sustained success of any Management by Objectives system. We agree fully with Sharon’s statement quoted below
A prerequisite here is ability of an individual to influence such a process; setting incentives referring to targets which are beyond an individual’s control, whether solely or as a team member, cannot be effective and may deliver the wrong message
A proposal by Sharon to ensure bonuses and incentives are issued monthly is an integral part of the model.
I like the specific joint approach, rewards should be for both team and personal achievements.
For this point I explore and add some additional points.
· Recognition, influence and incentives can come in many forms. Intrinsic motivation is a clear and significant factor. So, through personal and team development, through mastery of skills, rewards for personal priorities and interests and the integration of gamification are clear methods to support this step. We do not suggest that finances are the solution but rather an appropriate alternative and deep consideration should be given to cultures and ethics.
A clear recognition in this step is the very need for a definition of measurement. This is important for judgmental and statistical measures. The need for critical thinking and objectivity to create positive value and impact is critical, otherwise costs are incurred and productivity is reduced.
Group and individual performance measures are recognized as equally important. A suggestion within the model for cross departmental measures and targets offers a greater incentive to avoid SILO attitudes.
Appreciation, Appraisal, Accountability, Agreement:
Turnaround literature emphasizes the importance of public appreciation of notable achievements, beyond the two-way appraisal communication between a manager and his or her subordinate
These 4 A’s offer the insights and key steps for Management by Objectives success.
A delicate and sincere linkage between the organizations goals and objectives should be also discussed and compared with the individual’s personal goals and objectives.
I see this point as significant, if only briefly mentioned within the formal paper. A deep dive and consideration of individuals and their managers should identify methods how joint achievement can be done, where and when beneficial.
This may deploy alternative solutions in process to allow personal development and goal achievement whilst supporting organizational objectives.
A periodical appraisal system is important, based used when including a 360 degree feedback mechanism.
Special note should be given to the need for accountability. Sharon suggests this can be attained partly through job description and clear consequences at a personal level.
The need to sometime clear out none performing leaders can be seen as a significant step when operating a business turnaround.
The agreement phase is found from a formal acceptance of targets and also the engagement of employees to define and agree targets.
It is important that employees develop a proprietary interest in the business and feel that if it succeeds, they will succeed
Sharon points out that 56% productivity improvement can be found when top management are committed to the support of a Management By Objectives process. The cultural level of support in any change or business is significant. Leadership commitment is quoted in almost every model of performance management and this one is no different. Simply put, without it expect low results.
Special Note for Public Sector organizations:
The OPTIMAL model recognizes that Profit can be interchanged with budget and service levels.
It’s now up to you:
The OPTIMAL management by objectives model is a recent concept and performance model. The model needs to be adopted across a range of cultures and industries to understand how truly effective it is.
There is no question of doubt at JAMSO however that it could become a significant contributor and influential model for the coming 10 years.
We would love to hear your thoughts, comments and reaction to the model.
Read the full paper here