Improving the performance of your organisation

Improving the performance of your organisation

The performance of every organisation should be measured regularly and if there is substandard performance, corrective action needs to be taken early before the organisation drifts from its mission. One of the management processes that has been adopted by a number of organisation is the management by objectives or MBO. The performance of every organisation should be measured regularly and if there is substandard performance, corrective action needs to be taken early before the organisation drifts from its mission. One of the management processes that has been adopted by a number of organisation is the management by objectives or MBO.

Management by Objectives is defined as a management technique where managers and employees work together to set, record and monitor goals for a specific period of time. In this process organizational goals and planning would flow from top-down through the organization and these goals are then translated into personal goals for every employee. This management technique was popularised by management guru Peter Drucker in 1954 in his book The Practise of Management.

The core concept of MBO is planning, which means that an organization and its management and its employees are not merely reacting to events and problems but are instead behaving proactively by planning. The MBO process requires that employees set measurable personal goals based upon the organization’s goals ensuring coordination of activities throughout the organisation. So the essence of Peters Drucker’s basic principle of Management by Objectives is to determine joint objectives and then to provide feedback on the results achieved.There are five steps that were developed by Peter Drucker that should be followed when putting management by objectives into practice:The starting point would be to set up strategic corporate objectives which cover the whole organisation. These are developed at the strategic planning stage.

The objectives are determined from the mission and vision of an organization: that is from the main purpose and goal of the organisation. You cannot set individual goals/objectives without having determined the mission of the organisation. The mission explains why the organisation was set up – why it exists: its purpose.

The main corporate objectives would look at profit, growth, survival and service provision.The corporate objectives should then be cascaded throughout the organization by translating these objectives right to employee level. The individual objectives should meet what Peter Drucker called SMART objectives an acronym which means (Specific, Measurable, Acceptable, Realistic and Time-bound). The concept of ‘acceptability’ is crucial in management by objectives since this whole technique is based on the principle of agreeing on the objectives between the employee and the organization.

Every employee should be involved in the setting of his/her objectives. It’s very fundamental that each employee participates in determining individual objectives which are in line with the objectives of the whole organization as determined at the strategic planning stage. This calls for communication between management and employees. The objectives of the organization will therefore be discussed and shared throughout all levels of the organisation so that every employee understands what is expected of him/her and then they can determine what part they will play to ensure fulfilment of the grand objectives.

Everyone will know exactly what is expected of them and therefore will be motivated to achieve these goals and will in turn exercise informed decision making. This participatory process ensures that all objectives are coordinated right from the corporate objectives, departmental objectives, team objectives right through to individual objectives. It’s important that the objectives are monitored. If objectives are SMART, they will therefore be measurable.

A system of monitoring the achievement of objectives is very essential because it enables early detection of any deviation from the set objectives thus preventing serious problems from happening. The process of monitoring works well if it’s not an annual affair but is done frequently in the form of coaching by the superiors. This process should therefore ensure the growth and development of the individual and at the same time achieving best performance for the organisation as a whole.

The aim of Management by objectives is therefore to improve performance at all levels of the organisation. There will be a need to set up a performance evaluation system that is linked to MBO. Management by objectives makes the evaluation processes very easy to implement because it removes the element of subjectivity. Employees will be evaluated and rewarded for achieving the objectives they would have been involved in setting. Constant feedback is very important as an organisation implements the MBO technique.

l Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy (ACCA P3), advanced performance management (P5) and entrepreneurship. He is the Managing Consultant of Shekina Consulting (Pty) Ltd and provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans, tender documents and on how to build and sustain high-performing organisations. For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062  or WhatsApp +266 62110062  .

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