Chapter 12
Goal Setting
Learning Objectives (part 1 of 2)
▪
Recognize how goal setting can be used as
part of OD program.
▪
Apply major findings of research on goal
setting to develop organizational and
personal goals.
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Learning Objectives (part 2 of 2)
▪
Understand how management by objectives
(MBO) can be applied as management
system.
▪
Experience and practice goal-setting
approaches.
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Big Hairy Audacious Goals
(part 1 of 2)
Employees at GE use “stretch goals.”
Other companies call these goals BHAG - big
hairy audacious goals.
These goals stimulate everyone to shoot for
extreme achievement.
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Big Hairy Audacious Goals
(part 2 of 2)
Major goal that GE is striving for is Six Sigma.
Six Sigma is statistical term for 3.4 defects per
million products.
For GE to attain Six Sigma requires every
employee to get on board.
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Goal-Setting Theory
Goal setting may be organization-wide,
department-wide, individual, or integration of
the three.
A goal is anything an individual is trying to
accomplish and is the object of action.
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Major Findings Relevant to GoalSetting Theory (part 1 of 2)
▪
Difficult goals produce better performance.
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Specific hard goals better than “do your best.”
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People may abandon goals if too hard.
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Participation increases commitment to goals.
▪
Feedback about accomplishment improves
performance.
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Major Findings Relevant to GoalSetting Theory (part 2 of 2)
▪
Education and position in organization does
not predict success.
▪
Goal-setting in teams deserves special
consideration.
▪
Support of management is critical.
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Our Changing World: Nissan and
Renault’s Goals (part 1 of 2)
Renault of France took over troubled Nissan.
Ghosn brought in to turn Nissan around.
Ghosn had to maintain self-esteem of
employees but bring change quickly.
Ghosn first assessed Nissan’s problems.
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Our Changing World
(part 2 of 2)
He created cross-functional teams to study
manufacturing, purchasing, and engineering.
Ghosn set ambitious and specific goals.
Ghosn set example by observing Japanese
culture and working long hours.
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Goal-Setting Model (part 1 of 3)
Difficult and specific goals are developed.
Commitment to goals achieved by:
•
Mutual trust in and by upper management.
•
Support by management.
•
Care given to competition between
employees and teams.
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Goal-Setting Model (part 2 of 3)
Overcome resistance to goals by providing:
▪
Special training if required.
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Effective reward and incentive system.
▪
Participation by employees in setting goals.
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Goal-setting Model (part 3 of 3)
Period of performance when management
support and feedback is given.
Employees may require additional resources.
Managers and employees may need to develop
action plans.
Managers provide timely and objective
feedback.
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Figure 12.1
Goal Setting
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Management by Objectives
(MBO) (part 1 of 2)
MBO is a specific technique for setting goals.
Aimed at integration of individual and
organization goals.
A system to help in planning, organizing,
problem-solving, and motivating.
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Management by Objectives
(MBO) (part 2 of 2)
MBO involves participation of subordinates and
their managers in setting and clarifying goals
for subordinates.
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How MBO Works
Jointly identify common goals.
Define major areas of responsibility in terms of
results expected.
Use measurements as guides for operating and
assessing contributions of members.
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Underlying Purposes of MBO
1.
Clarify organization’s goals and plans at all
levels.
2.
Gain better motivation and participation from
organization’s members.
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Phases of MBO
Top management team studies system.
Team sets up methods of measuring
performance.
Goal-setting sessions are held at all levels of
organization.
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Steps in MBO Process (part 1 of 2)
1.
Subordinate proposes specific goals and
ways to measure them for designated time
period.
2.
Subordinate and superior jointly develop
mutually agreed upon goals.
3.
Period of performance.
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Steps in MBO Process (part 2 of 2)
4.
Feedback of results with comparison between
actual performance and goals.
5.
Previous step sets stage for recycling of
goal-setting process.
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Figure 12.2
Steps in the MBO Process
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OD in Practice: Boehringer
Mannheim and MBO (part 1 of 4)
BM set up nontraditional MBO program.
Focused on having every key professional
specify how much an employee will contribute
to next year’s profits.
Program was phased in over two years.
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OD in Practice
(part 2 of 4)
MBO began with a two-day training session.
•
Conducted by external consultant.
•
Attended by management including CEO.
Employees formulate objectives for year’s
budget.
Supervisor reviews performance at quarterly
intervals.
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OD in Practice
(part 3 of 4)
BM’s program calculates dollar value of
objectives.
BM uses “stretch” objectives with cash bonus.
Emphasis on results, teamwork, growth in
entrepreneurs, and greater contribution.
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OD in Practice
(part 4 of 4)
BM traces their success with MBO to:
▪
Implementing MBO the right way.
▪
Tying MBO to company strategy.
▪
Establishing financial perspective to MBO.
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Criticisms of MBO (part 1 of 2)
Implementing MBO is expensive and timeconsuming.
Traditionally limited to managerial and
professional employees where costs can be
justified.
Joint goal-setting among unequals difficult and
may not be possible.
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Criticisms of MBO (part 2 of 2)
MBO may be too quantitative.
Areas that cannot be quantified may be ignored.
MBO may be implemented as top dictating to
bottom.
Some OD practitioners question if MBO is OD
intervention.
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Results of MBO
Difficult to measure success of MBO.
Trend of findings is generally favorable.
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Key Words and Concepts
▪
Goal - what individual is trying to accomplish
and object of action.
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Goal setting - specifies desired outcomes
toward which individuals, teams, and
organization should work.
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▪
Management by objectives (MBO) - system of
management set up to help in planning,
organizing, problem solving, and motivating.
▪
Six sigma - a statistical term for 3.4 defects
per million products.
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▪
Stretch goals - encouraging employee teams
to try for huge gains in productivity and
quality even though it is unclear how they will
get there.
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Preparations for Next Chapter
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Read Chapter 13.
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Complete Step 1 of OD Skills Simulation
13.1.
▪
Complete Step 1 of OD Skills Simulation
13.2.
▪
Read and analyze Case: Wengart Aircraft.
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