Management by Objectives


The Management by Objectives process system improves employee performance and will lead to accomplishing more company goals.
It is a performance management method which establishes management and employee goals to ensure they are on the same page.
It utilizes human resource methods including performance appraisals, project reports, and job descriptions.

  • Management by Exception – only critical problems (exceptions) need to be discussed between the monthly meetings
  • Communications up, laterally, and down.
  • Focus on the projects that are the most important.
  • Means to objectively measure performance and accomplishments each year.
  • A method to significantly increase the accomplishments each year, which in total propels the company to a higher level of performance.

Excerpts from Company Success Toolbox

THE ART OF SUPERVISION by William M. Thompson

Objectives and Time Management

To be successful, you must know where you’re going or you won’t get there. And you surely won’t get anyone to follow you. First and foremost, you must have objectives. Most managers agree that management big objectives are one of the best methods of management, but we have made the concept complicated, so few people use it. It’s quite simple and it does work. This is it:

Merely list your objectives under “O” and fill in the results under “R” when you have completed them. If you do not know what the objectives are, then you must establish them with your supervisor.

Since you cannot accomplish all of the objectives of the company or your department by yourself, share them with your employees. In effect, give your job away. It is critical to the success of the program that objectives be in writing, so there is a clear understanding between you, your supervisor and your employees. To ensure that the objectives are accomplished, you should break the major objectives into smaller components or projects. Using this chart will help. Use it to communicate up to your supervisor and down to your employees.

You essentially have two management styles to choose from.

You can be a reactionary person and just react to the influences you encounter each day. Or, you can be the other type, a results-oriented manager. You decide what needs to be accomplished, and then you and your employees do it.

Now that you have your objectives established with your supervisor and your employees (and they have their projects identified), there are three things that will keep you from accomplishing your goals. They happen to all of us every day. They are:

• the in-basket
• visitors
• telephone calls
There are also three solutions:
• Don’t look in your in-basket more than once a day. If you do, you will waste time thinking about each letter, problem, request, etc. Let them accumulate for a day.
• Either close your door or, if that is not possible, go to another room for a couple of hours so you can work on your objectives.
• Ask someone to answer your telephone. Just be sure to advise them when you will return so the caller will be available when you call back.
Remember, either you control the job or it controls you. I discovered this approach when I returned from vacation. I realized that the first two or three days back after an absence were the most productive days of the year. The reason is quite simple—you have to be efficient because you are trying to catch up. Y ou handle the biggest problems first and ignore the minor problems. During the other days of the year we do just the opposite.

So if you want to manage your

time, follow these three suggestions. Y ou will be astonished at how successful you and your employees will be. There is another method that you might employ. Come to work one hour early and stay one hour late. You won’t have many interruptions, that’s for sure. Also, the “things I got to do today” pad is very helpful if you do two things. Use it every morning and secondly, make sure that your objectives are on the list; otherwise you will spend your day on ants instead of elephants.

When you are establishing your objectives, remember that most companies or organizations are quite simple; we just -make them complicated. Y ou can uncomplicate your job if you make the following chart.

List all your responsibilities and if they can’t be listed under 1, Income Producing, or E, Expense Reduction, then don’t do them. You’re wasting your time and your company’s money if you’re working on anything else.

Establishing objectives and managing your time go together. Both take some self discipline, but I don’t know any successful leader who doesn’t use both techniques. Also, you can employee these ideas in your personal life. When anyone I tells me that they can’t do something because they don’t have enough time, I ask them one question: “How much time do you spend watching television each week?”

The average is 42 hours a week.


Establishing Your Objectives

You now know you are different from the individual contributors in your organization and certainly different from the employees who report to you. One of the main differences is that you, unlike your employees, are required to develop a plan to ensure that you and your people accomplish what you are expected to do. Having a well thought out plan can make the difference between success or failure. The more complete your plan, the better the chance for success. If you are managing by reaction (to your customers, employees, peers, supervisors), then you will have things happen to you and your future will merely depend on luck. People like to work in an organized atmosphere. They will perform better if you have a plan and they clearly understand what you are trying to accomplish and what they should be achieving.

The most important aspect of any plan is objectives. For example, a supervisor had a meeting with all his salesmen and outlined a very detailed plan. They were given literature about the product, sales training, expense accounts and automobiles. They were given a pep talk and told to go get the business. The sales people got in their automobiles, took off and a month later reconvened with their supervisor. All of them had met with failure. They didn’t know where they should go to get the business. They weren’t given any goals or targets. Consequently they just wandered around for a month. “People have to know where they are going or they will never get there” – is an old but valid cliché. If you believe in Douglas MacGregor’s Theory X then you realize people have a need to work, and to get satisfaction from their work. A sense of accomplishment is a basic need. Therefore, your main responsibility as a supervisor is to establish objectives for your employees so they will know where to direct their efforts.

Establishing objectives is normally a top-down exercise, though it should be done in consultation with subordinates. It should not be merely the supervisor’s plan, which is then given to the individual to accomplish. People are much more enthusiastic about accomplishing something if they believe they participated in the process of defining what they need to accomplish.

For the process to be successful each company needs to have a management by objectives plan (see form). A good example is a plan we implemented with a regional retail sporting goods company. We first met in an all day session with the president/owner and the six senior members of management. We wrote a Mission Statement (see chart) that identified the company’s purpose, their market, and the products and services that they provided. We then identified the strengths and weak-nesses of the company – approximately 50 each. Then, we listed the company objectives for the next year and for 5 years. We then proceeded to a critical part of the program. Each division manager presented goals for their division. We cross referenced those to the 50 weaknesses, ensuring that someone was responsible for improving or eliminating the weaknesses. Also, in the process we established accountability and responsibility for each objective to be accomplished. All of this was prepared in a written program. Everyone got a copy of the entire project, including their own list of objectives.

Sometimes these exercises are just that – exercises with no tangible follow-up. Like many budgets, they are well prepared and then filed and forgotten until the end of the year. To prevent this from happening and to establish a method of follow-up we took several steps.

First, the objectives for each Division Manager were attached to their Performance Appraisal Form, including target dates for completion. This became a method of measuring the individual’s progress and performance. The form was reviewed with the manager twice a year.

Secondly, we created a monthly senior management meeting to review progress towards accomplishment of the objectives. To track the various projects necessary to accomplish the overall objectives, we developed The Project Report (see form).

Now, if you as a supervisor are fortunate enough to be working in a company with this type of system, you have your objectives established and are prepared to take the next step. If your company doesn’t have such a system, prepare your own objectives. Review them with your supervisor before you advance to the next step – implementing The Project Report Form. This is essentially a Management By Objectives system, one of the best methods of management. MBO is quite simple, but often it is implemented in a cumbersome way so some people avoid it. However, it does work and all you need to do is list your objectives on the left side of the paper and leave the right side blank. At the end of a period of time write in the results next to your objective – you have a Management By Objectives program.

If you ask each one of your employees to list their objectives for their job and you (as their supervisor) do the same thing, undoubtedly the lists will be different. If you did the same thing with your supervisor the results wouldn’t match. The problem we supervisors experience on a daily basis is that we don’t know what is expected of us, and therefore, our employees don’t either. Output and productivity suffer as a result. We don’t expect enough of our employees because we haven’t established in writing what our expectations are. Employees are then left on their own to decide what is to be done. Most will take the path of least resistance – which means less work is accomplished. If allowed to operate “in a vacuum” (without direction) they will make decisions each day as to what should be accomplished. At the end of the day/week/month or year you will just have to accept what they decided to do. Most employees would really want to accomplish more to achieve greater satisfaction and pride. But they can’t do two things, establish objectives and set priorities.

I was one of these typical employees until I began working for a supervisor who required me to complete The Project Report. At first, I resented the report and him. It meant that he had a method of keeping track of what I was doing and what I was not accomplishing. The problem was further amplified because he required me to meet with him bi-weekly to discuss the report. Our relationship deteriorated rapidly.

But a funny thing happened. As he persisted I finally decided that I had better cooperate and get the projects done, and do them on time. As I began working more diligently on projects, I found two changes occurred. I was getting much more accomplished, because I was working on the projects and not spending my time on other activities. Secondly, I was developing a new sense of accomplishment, satisfaction, and pride! It even got to the point where I eagerly looked forward to the meetings, so I could show him what I had done. Now, I wouldn’t be half as successful without the Project Report, and my employees are also successfully using it.

How do you use the form? It appears quite simple so how does it accomplish so much? First, as mentioned previously, you have to know where you are going or you will never get there. You and your supervisor need to establish your objectives. You should make a list in draft; discuss your differences, and agree on one list of objectives. You then identify the projects needed to achieve your objectives. These are activities or goals that lead to each objective. Merely indent them, under the appropriate objective on the form.

Establishing priorities is the next step. This is where your supervisor can assist you a great deal because he or she knows more about the overall plans for the department and the company. It is their responsibility to set priorities. The Status Section is a brief report of where you are in the process. If you haven’t started a project, just indicate “Not begun.” When projects are accomplished, if you have a lot of them, transfer them to another page titled “Completed Projects.”

The above is only the beginning and end of the form’s use. The in between is the critical step. Give a copy of the report to your employees and discuss it with them. If they don’t know where they are going how can they help you get there? Ask them to prepare a report for their jobs. Compare your list with their’s and arrive at a mutually agreed upon list. Be sure to include some of your projects, or portions of them, on their list. This is called delegating.

At this point you have already accomplished a lot. You, your supervisor, and your employees, all know what is to be accomplished. But there is more that can be achieved. Give a copy of your Project Report to your peers. In every organization there should be good lateral communication because of interaction between departments. This helps avoid over-lapping effort. Your peers know what you are working on and what you are not. They learn your priorities and the dates set for finishing your projects.

What we have established is accountability and responsibility, but there is one more critical step – “Follow-up.” You now need to establish regular meetings with your supervisor, and shortly thereafter, a meeting with your employees. This can be done individually, which is how I used the form when I had my first department. I set it up on a separate basis so each employee would have the same one-on-one time with me. But then one of my employees suggested that all of us get together at the same time to discuss all of our projects. We changed our method, shared copies of each others reports, and a remarkable thing occurred. Teamwork increased dramatically, petty differences went away and previously lacking spirit of cooperation developed. The reason this happened is that they could all see and appreciate the amount of work being done by their

peers. They began to know what was being done, when it was scheduled, and where projects overlapped. As a result they coordinated better. Being a supervisor is being a leader. In order to provide leadership you not only have to motivate, encourage, reward, discipline, etc., you also have to establish direction. Once that is established it has to be properly communicated. That is what the Project Report does.

There are other benefits. You should accumulate items you want to discuss with each employee. Bring them up at the Project Report meeting. Employees should do the same. This will greatly reduce the number of times you interrupt each other. After all, they are already working on the projects you established and these discussions will help you ferret out the performers from the non-performers. You’ll know what’s being worked on and what isn’t. You will completely avoid favoritism because the projects are either done on time, or they are not.

The results will be clear at the end of the year – which will assist you in determining salary increases and promotions. Also, you will have a lengthy list of achievements (probably 50% more than last year) to present to your supervisor for consideration during your performance and salary review.

You have essentially two choices in your management style. You can let employees decide what they think should be done and when. Or you can take the initiative, establish objectives, and follow-up by using The Project Report. Once you begin using it you won’t be able to manage without it. You and your employees will accomplish more because their time and yours will be spent on the important tasks. When you vacation or leave the office for a week or two you’ll be surprised at how much is accomplished. That is because people know the work to do and you won’t be there to interrupt them. Successful individuals employ totally different approaches to their work or careers than do average individuals. Studies have shown that high achievers have many common characteristics. They exceed previous levels of performance. One way is, high achievers avoid the so-called “comfort zone” – that attitude which prevails when an individual feels relaxed and in a comfortable position. When that occurs, the achiever sets higher personal goals, requests additional responsibilities, or sometimes leaves the company for a greater challenge.

High performers are driven in their work by goals they themselves set. It’s like the saying, “You can train animals but people have to train themselves.” You can present information but each one must absorb, digest, and implement it to change their own behavior. Also, goals established by individuals are usually higher than goals given them by their supervisor. Contrary to popular belief, successful performers are not workaholics exhibiting Type A Behavior. When you see this type person

in action, just remember if you watch them long enough they will run out of energy and you will eventually pass them. The best performers realize the value of vacations and weekends without work. It is a time to recharge the batteries so you can think better and be more effective when you return to work.

Handling supervision responsibilities is another area of difference. High performers are masters of delegation. They recognize that the success of the group is paramount and their role is to provide the direction. They don’t get bogged down in details – like fixing the broken coffee pot! High performers also surround themselves with the best people they can find, because unlike most people they are not insecure about their position.

You have to like what you are doing to be successful. You can work twice as hard at something you don’t like and be only half as successful. Another way to say this is “you have to utilize your strengths and minimize your weaknesses.” Risk takers (calculated risks, not gambles) are generally more successful. They realize to be successful you have to put yourself in new and challenging situations. Then, rise to the occasion.

Most of us use only a small percent of our ability. It’s like climbing a ladder – if you reach a few rungs above where you are, you will pull yourself up higher. If you don’t, you will remain where you are. Attitude has a lot to do with success! If you mentally project yourself into a successful situation it has a better chance of occurring. If you are negative, doubtful, or hesitate, it will be conveyed in your presentation and you will defeat yourself. So, set your goals high, work hard (but don’t over-do it) and go for it! You will be amazed at your new successes. The alternative is to stay right where you are.