ndividual goals based on their responsibility and field of expertise.
In the formative years of industrial complexes after industrial revolution, most corporations are family-controlled or peer-controlled, with lower level employments hired from outside sources. Since they were not part of the initial vision of the organization, the manager kept them out of the loop and only passed down the relevant instructions needed to be followed. This method, although still widely popular among sentimentalists and authoritarian managers, the changing times and workers’ rights movements have brought forth the fact that despite its effectiveness, traditional goal setting has various disadvantages:
- Dividing a goal into sub-goals for each department and further compartmentalization of the objectives can be a cumbersome process. It also reduces transparency among the various departments and leads to inefficient and uncommunicative work space environment.
- Most decisions that are made by top management in this way are ambiguous- leaving it to be subject to individual biases and interpretations. This can defeat the purpose of setting the goal. The manager who makes the decisions at the executive levels is often unaware of the situation in his subordinate levels. Megalomania and egotism are rampant in the traditional method, which can cause mass confusions and disastrous consequences.
- The downward flow and constant modifications in various levels of management causes loss of clarity and inability to understand a particular goal and properly carry out the steps to achieve it. When a goal is passed down the corporate ladder, it is modified and amended by each consecutive level, which ultimately results in a different final goal than originally set. This prevents proper understanding of the goals and their fulfillment.
One of the features of traditional goal setting is the formation of a means-end chain, which an interconnected network of goals which requires reaching all goals in one level in order to reach the goals in the next level. Often one goal is required to be completed at one level in order to open the possibilities to the next goal. In essence, the solution of one goal becomes the parameters of the next one. The lower level goals are the defining parameters of the higher level goals, thus making it imperative to go through the entire structure step-by-step. The use of one set of sub-goals as means to achieve the sub-goals at the next level is the essence of this particular style.
Management by Objectives (MBO): in MBO approach, the superior and the subordinate managers jointly identify the common goals and define each department’s major areas of responsibility in achieving the goals. The mutual setting of objectives between each level of management is the essence of this philosophy. The subordinates are given opportunity to set objective for their key areas of responsibility.
Control of people shifts to control over operations in this approach. MBO has the following basic elements:
- Performance feedback: the mutual setting of responsibilities by both supervisor and subordinates makes it possible to use the objectives comparative standards for evaluation the performance of the subordinates.
- Specificity of goals: the employees from all level of the job contribute in coming up with precise goals and mutual setting of objectives and sub-goals as per their respective expertise.
- Mutual decision making between higher and lower levels of management: MBO is result oriented process, which means that the ends completely justify the means, and focus in not laid on the approach taken to solve the problem.
- Pre-defined and non-negotiable time period: since the decisions are taken collectively, the objectives are well known and predefined, with accurate time estimations required to complete the job.
MBO has shown to increase performance and productivity among employees, due to the use of mutually identified goals as a standard for evaluation of performance. The driving factor of MBO is that is assimilates both manager and his employees,