Total System Intervention & Stabilizing change, Management by Objectives Facilitator and Course Coordinator Vinayshil Gautam PhD , FRAS (London) (Founder director IIM K; Leader consulting team IIM S) A AI Sager Chair Professor and first head, Management department, IITD Chairman DKIF 1 It is large scale change efforts that increase the effectiveness of an entire organizational system 2 It addresses critical issues like: 1. Communication 2. Leadership 3. Job satisfaction 3 105 year old company A construction material manufacturer and supplier company 4 In 1987, competition changed Large multinational conglomerates entered the market. Granite Rock was at disadvantage in term of profit and resources 5 The company realized that it had to change its strategy to survive Conducted customers survey to analyze its performance. 6 Results of survey: Customers were satisfied with Product Quality Customer service Customer were dissatisfied with Time taken to process special orders 7 How did Granite Rock Company satisfied dissatisfied customers? To meet customers expectations company decided to empower the employees. Company created nine corporate objectives to clarify the goals of change process cont…. 8 Individual Professional Development Plan( IPDP) Company encouraged employees to participate in decision making processes 9 A. Individual Professional Development Plan( IPDP) Job performance Career advancement goals Identifying training and expertise necessary to achieve these goals 10 Final IPDP lists Development objectives of employees Actions which are to be taken Measurement strategy 11 Measurement strategy clear time frame demonstration of new knowledge/skills process for evaluation and feedback 12 B. Involvement of employees in decision making process such as 1. Recruitment process 2. Plant expansion 3. Design ,ergonomics of new plant 13 When a company engages in a successful organization wide OD development Change occur both in organization’s system and culture Organization develops new strategies for utilization of resources more efficiently, particularly human resources 14 10 years later… Market share increase by 88% Customer satisfaction increased twice the industry standards 15 1. Survey feed back method 2. System four management 3. Grid management development 4. TQM 5. MBO 16 Developed by Mann and his associates It is a four phase process Developing a survey instrument Administering the survey Summarizing and analyzing the results Feeding back the results and creating actions plan 17 Cyclical Model Of Survey Feedback Phase I Survey Development Phase IV Feedback Action planning Implement action plan Phase II Data Collection Phase III Summary Analysis of results Source: Robert Smither, John Houston & Sandra Mclntire, 1996 18 SYSTEM 4 MANAGEMENT Rensis Likert and colleagues found that managers who are concerned primarily with schedules, close supervision and production goals are less effective than managers who use a more participative style as they develop healthy relationships with employees while pursuing organizational goals 19 20 In the beginning, the organization’s current management style is assessed using a survey instrument called the “Profile of Organizational Characteristics”. During the second phase, organizational members receive feedback on the survey results and begin action planning activities. 21 Harwood-Weldon Incorporated, a manufacturer of sleepwear 2 General Motors plant at Doraville and Lakewood Note - The system requires time to implement and even more time before improvement in productivity and efficiency can be documented. 22 Implementing of Profile of Organizational Characteristics showed Doraville close to system 4 and Lakewood close to system 2. GM decided to move Schotters, manager at Doraville to Lakewood to implement system 4 there. 23 Solidified the Lakewood management team behind a System 4 approach that encouraged innovative thinking about managementemployee relationship. Staff and supervisors received training on increasing mutual understanding, trust and teamwork. Supervisors obtained help in increasing their communication, goal setting and team building skills. 24 Workers were kept informed on future products, facility changes, selected cost data. Management provided them with regular data on how labor costs compared with similar GM plants. Supervisors job was redefined. Each supervisors received a utility trainer to assist him in various functions. Supervisors began focusing on workers and their problems. Workers were given detailed information about upcoming changes to prepare for new-model production. Workers participated in planning changes. Workers even advised engineers on redesigning their work area. 25 Lakewood made significant progress but the changes were gradual. Some bottlenecks – The effort to retrain management and workers was costly. It takes time for improved management practices to be adopted and implemented by managers, and additional time is needed to build trust and attitude that translate into improved performance. 26 This method was developed by psychologists Blake and Mouton Grid Organizational Development proposes that 2 fundamental dimensions of leadership behavior are essential for understanding managerial effectiveness. They are1) concern for people 2) concern for results 27 The concern for people refers to the consideration of the social and interpersonal concerns of others; concern for results involves issues such as the quantity, quality and overall efficiency of work outputs. By using the Leadership Grid, managers can be rated on these 2 dimensions along a scale of one (low emphasis) to nine (high emphasis). Blake and Mouton identified 5 basic managerial styles. 28 The single most significant premise on which Grid Organization Development rests is that the (9,9) way of doing business is acknowledged universally by managers as the soundest way to manage to achieve excellence. 29 30 Implementing Grid Organization Development is a six-step process that takes usually between 5 and 10 years to complete. It is one of the most comprehensive models and its implementation consists of a series of smaller interventions. It affects virtually every member of the organization. But the complexity of this intervention process has made evaluating its effectiveness difficult. Nonetheless, evidence of productivity gains, decreased costs and improved managerial performance can be found. 31 Phase 1 : The Grid Seminar Phase 2 : Teamwork Development Phase 3 : Inter-group Development Phase 4 : Designing an Ideal Strategic Model Phase 5 : Implementing the Ideal Strategic Model Phase 6 : Systematic Critique 32 “Delighting the customer by fully meeting their needs and expectations”.* Quality may include performance, appearance, availability, delivery, reliability, maintainability, cost effectiveness and price. * Department of Trade and Industry, Govt. Of UK ( www.dti.gov.uk/quality/tqm) 33 Definition of TQM Total quality management is a systemic approach to productivity improvement using qualitative and quantitative methods and involving all stakeholders to continuously improve the quality of all products and services. 34 Participative Management Continuous Process Improvement Use of teams to continually improve quality and productivity. 35 1. The customer makes the ultimate determination of quality. 2. Top Management must provide leadership and support for all quality initiatives. 3. Preventing variability is the key to producing high quality. 36 4. Quality goals are a moving target, thereby requiring a commitment towards continuous improvement. 5. Improving quality requires the establishment of effective metrics.. 37 Foundation of TQM Source: www.dti.gov.uk/quality/tqm 38 Customer – Supplier Interfaces : A series of customers, suppliers and customer-supplier interfaces form elements of “the quality chains” Commitment of senior members towards quality. Sound Quality policy Demonstration of commitment in practice. Highlighting benefits of Quality improvement to the BOP 39 Communication :Middle managers to ensure communication of principles, strategies and benefits up to BOP Managers to train people to understand the customer / supplier relationships Adopt modern methods of supervising and training – eliminate fear Eliminate communication barriers between departments to improve cooperation and teamwork 40 Culture : A culture change, e.g., from one of acceptance of a certain level of errors or defects to one of right first time, every time, needs two key elements: Commitment from the leaders Involvement of all members of the organization Major change initiatives will not be successful without a culture of good teamwork and cooperation at all levels in an organization 41 TQM Methodology PDCA cycle Plan Act (As Needed) Do Check (Analyze) 42 PDCA APPROACH WHAT? HOW? HOW WELL? PLAN DO CHECK “Do the Right Things” “Do Things Right” Strategic Leadership Planning Financial (Cost, Budget) Focus ACT Continuous Improvement 43 PLAN A plan can be to initiate a new process or improve an existing one It should be based upon customer needs, and Resolve to more effectively fulfill the organization’s mission 44 DO Do it in a manner which Is most effective Least time consuming Involving minimum wastage of resources Product quality should not be compromised 45 Check Review the gathered data to determine if the planned and implemented change has created the quality improvement intended. Act Take action, either to implement the change or change variables to see if the process can be made more effective, or “Standardize” the new, successful process 46 Create constancy of purpose toward improvement of product and service, Adopt the new philosophy. Cease dependence on inspection to achieve quality. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost often accomplished by working with a single supplier 47 Improve constantly and forever the system of production and service Institute training on the job. Institute leadership Drive out fear, Break down barriers between departments. Eliminate slogans, exhortations, and numerical targets Eliminate work standards (quotas) and management by objective. 48 Remove barriers that rob workers, engineers and managers of their right to pride of workmanship. Institute a vigorous program of education and self-improvement.’ Put everybody in the company to work to accomplish the transformation. 49 Check sheet Pareto Chart Matrix Diagram Project Task Map Systems Framework Keep, Start, and Stop 50 Four phase Approach to organizational Change: 1. Planning 2. Education 3. Implementation 4. Continuous Improvement 51 A consultant team meets with managers & key organizational members to Determine mutual expectations Identify the clients majors issues and concern This avoids need for Use of surveys Structured interviews Saves Time 52 Planning sessions are used to address organizational concerns perceived as barriers to participation Once consultant team is accepted as change agent, plans are developed for educational phase 53 Goal :To transform managers to leaders & workers into responsible employees who take pride in quality of products and services they provide. Focus : Initiating change by teaching managers and workers quality improvement techniques & statistical process control. Managers learn Deming’s 14 points & receive special training in building customer relationships. 54 Consultant team decides on pace and type of implementation process that best fits orgy's needs and circumstances Commitment of senior leadership is vital Quality mission statement (clarifying purpose of change) is written. Information packages on statistical control technique are prepared. 55 Management teams are formed to establish strategies to promote cultural change. Volunteer process improvement terms begin to form and initial pilot improvement efforts are conducted to demonstrate how new skills can be applied. 56 This deals with Integration of Quality Improvement Principles and Techniques into orgy's culture This occurs when barriers to change are removed Reward based quality improvement system is initiated Once initiation is done, org. members work continuously on exploring new ways of improving quality and refining key work processes. 57 Rene Brake Linings (RBL) is an ISO 9001 and ISO 14001 company and is a part of the $ 261 mil Rene Group(an automotive components company )which has collaborations with global majors like TRW USA & NISSHINBO Japan, a global leader in friction material manufacturing . 58 Becoming more profitable (1999) required finding new markets, but that required first managing the company better so that costs decreased as quality improved Develop a business model to generate business for long period through Uniqueness in products & technology and Uniqueness in achieving certain excellence Reduce technological dependence on another company. 59 Create new market(s) or achieve drastic expansion of existing market Unique and enhanced utilization of manpower/human resources that drives a company to supply excellent people/manpower 60 Key Focus was on Role clarity Competency development Management points and check points Systematic approach to planning 61 Initiatives Taken RBL redefined its management of processes for New Product Development System, Manufacturing Quality, Supplier Quality and Customer Quality. Each manager was required to define his role, his metrics, his measurement of performance to date and the steps being taken to improve performance. 62 (a) Each function to have unique purpose, (b) Each purpose to have role, (c) Each role to have managing points to achieve the purpose, (d) All managing points to have measure of performance, (e) All managing points to have metrics, (f) All management points to have either graphs or vital activity monitoring chart, (g) Development of metrics or indices was important, specifically for non-manufacturing areas. 63 Customer line rejections dropped from 16000 ppm in ’99 to 1750 in ’03. Plant in process rejections decreased from 2.1 % of total pieces to 0.85 % of total pieces produced. Sales per employee went up from $ 22000 to $ 40000 p.a. Number of employee suggestions went from 280 to 7500 during the period. 64 Key benefit was the continual improvement potential unleashed by TQM RBL today is the No. 1 Friction Material Manufacturer in India. They supply to Tata Motors, Maruti Suzuki, General Motors, Mahindra & Mahindra & also to Indian Railways & Srilankan Railways 65 What is it ? Introduced by Drunker Activity trap Basic idea Has many uses Relevance as an intervention technique 66 How can it be used as a tool to effect change ? Planning tool : Helps to determine what tasks are to be done to bring about the desired change in the organization Control tool : Objectives become a road map of how to get to a clearly defined distant target 67 Management by objective occurs when “a manager defines responsibilities and expectations collaboratively with subordinates, sets target dates and interim checkpoints, evaluates and provides feedback.” (Leonard & Hilbert, 2004) The essence of MBO is a process of joint goal setting between a supervisor and a subordinate, self-direction, and evaluation to effect change in a participative and collaborative fashion. 68 Goal: Goals are defined as being relatively few and longterm in their focus. It must be specific and realistic. Action plan: It specifies the methods, activities, and resources required to accomplish a goal. Objective: Objectives are defined as being relatively more numerous and short term in their focus. Must be precise and small in number 69 MACDUD criteria: Goals must be Measurable, Attainable, Consistent with company goals, Demanding, and Under the control of the individual, and Dead lined 70 What is the specific change desired ? What are the objectives of the organization ? What is the timeframe by which these objectives must be achieved ? Can you measure or gauge how well you have achieved your objectives ? 71 Intelligent choice of objectives Why a “What not How approach” ? - no need for imposing directives - promoting employee motivation, sense of self- worth, involvement -encourages participative problem-solving and decision making Result: The change is enduring because the employees “buy-in” to the process 72 In a 2004 study Google India found that though the company had brilliant engineers working for them, they tended to be loners, temperamental and work alone rather than in teams or groups. It was found many thought it a slight to their pride to ask another for help or share resources leading to wastage of time and duplication of effort. The company, seeking to get people to work more collaboratively than individually gave its people objectives for a new project in such a way that they could not achieve it alone. 73 There was no explicit requirement to work together, but the people soon found that they only way to succeed was to collaborate. This MBO approach had the inherent advantages of maintaining employee motivation, promoting a sense of involvement, creativity while a more authoritarian approach of imposing guidelines enforcing people to work in groups to bring about the same change might have backfired by bruising egos and encouraging rebellious tendencies 74 Formulate the long-term goals of the organization Develop specific and measurable organization objectives Develop departmental objectives Set group and individual goals and responsibilities by mutual agreement and collaboration Formulate and implement action plans Performance review and feedback 75 Why does this happen ? Many incorrectly implemented MBO programs focus on the demands of the organizations only and do not pay sufficient attention to the needs of individuals and their careers. 76 Result: A low degree of integration of individual' needs and organizational demands leads to employees performing at the minimum acceptable level. Learning: For the change process to be effective MBO objectives must be carefully chosen to ensure organizational needs are met but not by totally ignoring employee needs 77 Proactive support of the senior management and leadership in implementation of the MBO system If MBO is to be successful at bringing about permanent change , it must start at the top of the organization top managers must communicate why they have adopted MBO, what they think it will do, and that they are committed to it. Employees must be educated about what MBO is and what their role in it will be. 78 MBO requires time in order to work effectively. If people are given time to get used to using an MBO system, and use it properly for planning and controlling change (not for rewards or comparative evaluations), the system can serve any size organization well. The “human” issue: People, and even companies the world over, set goals every year but don’t follow them through to completion. It must be ensured that this does not happen. 79 Firstly, MBO is an effective strategic planning and control system for effecting change; it is not an effective performance evaluation or reward system. 80 Planning tool ? What tasks are to be done to bring about the change in the organization Objectives are set for the coming year or some specific timeframe and then updated and reviewed on a quarterly, monthly, and weekly basis. During analysis and review of a team, the emphasis must be on a supportive approach 81 Control Tool ? Ensuring people complete assigned tasks in the timeframe allotted Objectives become a road map of how to get to a clearly defined distant target. By continually checking progress along the path of accomplishment at regular intervals, teams and people can easily get back on the right road when they see they have wandered. 82 If a manager uses MBO to evaluate a team or a salesperson’s performance for the purpose of making salary or compensation decisions, then MBO completely loses its effectiveness. When teams and salespeople realize that they are going to be rewarded on the basis of the objectives they set, they will tend to negotiate to set them on the low side. The easiest objectives are chosen not the right objectives to bring about the intended change. 83 Second, MBO is a bottom-up, process-oriented and team-oriented planning system, not a topdown command-and-control system. 84 People in the smallest units, usually teams, initiate a set of written performance objectives. The team objectives should be action oriented ("What action do we need to take to improve the way we do our jobs?") The objectives are discussed by associates among themselves in self-managing teams, followed by agreement on the objectives to which everyone can then become committed. 85 Periodic review by the team itself to determine to what extent the objectives have been met or exceeded. Communicate results to management. MBO is best used as a system for helping people in a department or team plan their objectives to effect the desired change. Top management can use the system with department heads, and department heads can use the system with their teams and associates. 86 MBO programs continually emphasize what should be done in an organization to achieve the desired organizational change. MBO process secures employee commitment to attaining organizational goals. Organizations create a powerful motivational system for their employees by adopting MBO making the change more enduring. 87 Through the process of discussion and collaboration, communication is greatly enhanced. MBO focuses attention on appropriate goals and plans. MBO facilitates control through the periodic development and subsequent evaluation of individual goals and plans 88 An MBO system can have detrimental effects in implemented badly or improperly Individual managers may become too focused on their own objectives rather than those of the organization, and the organization may become inflexible and unresponsive to change 89 The development of objectives can be time consuming, leaving both managers and employees less time in which to do their actual work. The elaborate written goals, careful communication of goals, and detailed performance evaluation required in an MBO program increase the volume of paperwork in an organization. Lack of top management support after deciding on using it reduces its effectiveness as a tool for organizational change 90 Some managers will not or cannot sit down and work out goals with their subordinates they “assign” or “suggest” goals and plans to their people resulting in resentment and lack of commitment to the MBO program. 91 Deborah G Fliehman. and David D Auld, Customer Retention Through Quality Leadership: The Baxter Approach, Milwaukee, WI, ASQC Quality Press, 1993. Stephen George and Arnold.Weimerskirch, Total Quality Management: Strategies and Techniques Proven at Today's Most Successful Companies, New York, Wiley, 1994. Howard S Gitlow and Shelly J Gitlow, Total Quality Management in Action, Englewood Cliffs, NJ, PTR Prentice Hall, 1994. Joel E Ross, Total Quality Management: Text, Cases, and Readings, Delray Beach, FL, St Lucie Press, 1993. 92 Houston Smither & Mclntire, Organization Development - Strategies for Changing Environments ,Rangon St , NJ, PTR Prentice Hall, 1996 Heinz Weihrich, Strategic Career Management: A Missing Link In Management By Objectives , University of San Francisco, SF, January 2003 Peter Drucker , "Management: Tasks, Responsibilities, Practices", New York: Harper & Row, 1974 Milton D. Rosenau, Successful Project Management, John Wiley and Sons, NY, June 1998 Richard L. Draft, “Organization Theory And Design”, 7th edition, Thomsan Asia Pte. Ltd., Singapore, 2002 93 http://www.bambooweb.com/articles/t/o/Total_Quality _Management.html, As on 1st oct2005, 7am-9am http://www.bambooweb.com/articles/s/t/Statistical_pr ocess_control.html, As on 1st oct2005, 7am-9am iweb.tntech.edu/acamuti/orgbehavior/ As on 27th Sept'05 , 8pm-11:15pm www.superfactory.com/SEP/Office_TQM_sample.ppt , As on 27th Sept'05 , 8pm-11:15pm www.southaustraliantrails.com/tatatc/ downloads/presentations/Tom_Perrigoview.ppt 94 As on 27th Sept'05 , 8pm-11:15pm www.businessballs.com/dtiresources/ total_quality_management_TQM.pdf As on 27th Sept'05 , 8pm-11:15pm forge.fh-potsdam.de/~IFLA/INSPEL/01-4alan.pdf As on 21st Sept.'05 8:30pm - 11pm euij.hit-u.ac.jp/pg/pdf/Workshop-2004-11-26Weltgen.pdf As on 21st Sept.'05 8:30pm - 11pm www.few.eur.nl/few/research/ pubs/cs/1996/eur-fewcs-96-05.pdf (formal model) As on 21st Sept.'05 8:30pm - 11pm 95 www.mgt.uea.ac.uk/research/witcher-b/RTVJIBTE.pdf(translating vision to action) As on 18th Sept'05,9:30pm www.managementhelp.org/plan_dec/mbo/mbo.htm (MBO) As on 16th Sept'05,7:35pm www.blacksacademy.co.uk/data/BSQCMJ11.pdf As on 16th Sept'05,7:35pm www.performancesolutionstech.com/FromMBOtoPM. pdf, A Management by Objectives history and evolution As on 16th Sept'05,8:00pm 96 en.wikipedia.org/wiki/Management_by_objectives/ As on 16th Sept'05,8:15pm performance-appraisals.org/ appraisallibrary/Management_By_Objectives/ As on 16th Sept'05,8:15pm www.granitrock.com As on 26th Sept'05,5:20pm www.cif.org/nominations/nom_187.html As on 26th Sept'05,5:30pm www.graniterock.com/professionaldevelopment.html As on 26th Sept'05,5:30pm 97 Thank You 98