The concept of Management by Objectives (MBO) dates back to the 1960s. The MBO methodology acknowledges that employees want purposeful work, and that they expect their managers to work with them in the creation of meaningful work objectives.
MBO is built on five cornerstone principles known as SMART, which is an acronym for specific, measurable, achievable, realistic, and time-based.
Let’s take a look at them in practice.
When I first began to implement MBO as a manager, I found myself struggling with some of the MBO methodology that I learned from books and consultants. These sources tended to begin with corporate strategic objectives, then get into department objectives, and then drill down into goals. I found this was too complicated and that it had too many layers of objectives. We simplified our approach by identifying the corporate objectives and then setting our department and individual goals. This simplification enabled us to get past the complication of the methodology so we could implement the practice without confusion.
The second thing that we did as a group was to meet as a department to set the goals that we felt would best support the corporate objectives. Afterwards, the next step was for individual employees and their immediate supervisors to work together to define individual work performance goals that supported what we needed to accomplish as a department of the business. This collaboration relaxed the anxieties of doing a new process and made goal definition collaborative. Goals were placed into a syntax of “To ________, by_______,” which helped us with making the goals specific. One goal example was: “To review and revise batch job execution for efficiency so we can reduce our overnight processing window from all night to four hours or less.” The linkage into the corporate objective was that it would move the company closer to a goal of “always open” 24/7 business for a global market.
SEE: CIO priorities: How to set goals that matter (ZDNet)
Ilan S. Jayaraman, leader of the Ignite Quality and Test Product development, automation and cognitive/artificial intelligence for IBM, manages a 30 member team that was supporting a suite of more than 40 applications with 42,000 function points. He wanted to improve his team’s customer satisfaction ratings, so he used MBO. Jayarman worked with his team to define specific goals that were intended to complete projects sooner and garner better customer satisfaction ratings, but he also insisted on measurable goals that could be continuously measured so that everyone engaged could be sure that goals were on track. Specific and measurable goals were set for every phase of every project. Individually measurable goals were set that tied back to overall project goals, and targets (and progress) were reviewed weekly so any deviations could be spotted and acted upon. Project productivity improved by 17%, and project error rates fell by 66%.
Shanelle Mullin, a marketer with a background in content marketing, analytics and PR who now works with content development at CXL and CXL Institute, discussed how she had helped startup companies in the past with the creation of revenue-generating marketing strategies.
“The key to setting achievable marketing goals is to spend time evaluating your current position,” said Mullin, in a blog post. “Many startups set lofty, unattainable goals and end up discouraged, which can be detrimental in the early days…. Take the time to really understand your growth levels to date. If you run a popular blog and traffic has increased by 8-10% for the last four months, you know that a 12-15% month-over-month increase in blog traffic is a challenging yet attainable goal. Don’t be the startup that shoots for 20% or the startup that considers anything above 8% a win….What’s important is that your core goals are tied to major business objectives
A fourth pillar of SMART methodology is setting realistic goals for work. These goals should be easily achievable, but they should also contain some “stretch” that challenges staff to outperform merely achievable work.
One of the best examples of setting realistic goals is with companies whose IT departments have made the decision to move their IT infrastructures away from in-house systems and into the cloud. The approach that most companies adopt is to move systems one at a time to the cloud, instead of using an all-at-once “big bang” approach. Using the one-at-a-time approach allows staff to look back after a period of time, say, a year, and see that the goal was achieved. The next phase, which might involve moving all financial systems, might begin in year two. By using a phased project approach with realistic goals that have high likelihood of being achieved, managers can keep their staff morale high because everyone can see the progress that is being made. They also avoid the risk of many things going wrong when a “big bang” approach that is likely to have missed doing something somewhere goes live.
SEE: The secrets of setting IT goals that work (ZDNet)
The all-time best time-based project was Y2K. Every company knew that it had to have the dates on all of its systems fixed before the new century turned, and there was no room for project delays. At the time, this created an enormous sense of mission in IT professionals. IT’ers from different companies met at coffee shops to take a break, give each other a few high-fives, and get back to work. Work hours were 24/7 at many organizations. I don’t know if we’ll ever be in a time-pressed situation like Y2K again-but the idea of putting time limits on all projects and tasks is critical for goal realization. Without these limits, tasks tend to stretch out. I have even seen a few cases where they never end because managers forgot that they assigned employees to open-ended work without timeframes and never checked back.
Sixteen years ago, Robert S. Kaplan and David P. Norton wrote a book called, “The Strategy-Focused Organization.” In it, they stated, “A mere 7% of employees today fully understand their company’s business strategies and what’s expected of them in order to help achieve company goals.”
Understanding of company goals doesn’t appear to have improved a lot. In 2016, Betterworks, a commercial software firm, conducted a survey about employee sentiment at work. In the survey, only 32% of women and 25% of men said that they understood how their work contributed to company goals.
By implementing techniques like MBO and applying MBO’s five rules of specific, measurable, achievable, realistic and time-based goals, companies (and their IT departments) can go far to ensure that everyone on-staff understands his/her personal goals, how these link into department goals, and how the department’s overall work links into corporate strategy.
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