ORGB320 - Exam 2 - Ch 6 Sec 3

Management by Objectives (MBO)

-Setting companywide goals derived from corporate strategy -Determining team- and department-level goals -Collaboratively setting individual-level goals that are aligned with corporate strategy -Developing an action plan -Periodically reviewing performance and revising goals -that top management commitment to the process is the key to successful implementation of MBO programs. -the idea of linking employee goals to corporate-wide goals is a powerful idea that benefits organizations.

Why Do SMART Goals Motivate?

-first, goals give us direction. -(When you have a goal of reducing shipment of defective products by 5% by September, you know that you should direct your energy toward defects. The goal tells you what to focus on. ) -goals should be set carefully. Giving employees goals that are not aligned with company goals will be a problem, because goals will direct employees' energies to a certain end. -Second, goals energize people and tell them not to stop until the goal is accomplished. -If you set goals for yourself such as "I will have a break from reading this textbook when I finish reading this section," you will (probably) not give up until you reach the end of the section -having this specific goal will give you the additional nudge to move forward -Third, having a goal provides a challenge -When people have goals and proceed to reach them, they feel a sense of accomplishment. -fourth, SMART goals urge people to think outside the box and rethink how they are working. -If the goal is not very difficult, it only motivates people to work faster or longer. If a goal is substantially difficult, merely working faster or longer will not get you the results. -you will need to rethink the way you usually work and devise a creative way of working -It has been argued that this method resulted in designers and engineers in Japan inventing the bullet train. Having a goal that went beyond the speed capabilities of traditional trains prevented engineers from making minor improvements and inspired them to come up with a radically different concept. [11]

SMART goal

specific, measurable, aggressive, realistic, and time-bound. -are ones that are quantifiable, have a timeline, are relevant to corporate objectives, and are difficult so that they challenge individuals but are not so difficult that they are dismissed out of hand. -ex: Walmart recently set a goal to eliminate 20 million metric tons of greenhouse gas emissions from its supply chain by the year 2015.

Specific and Measurable

Effective goals are specific and measurable. For example, "increasing sales to a region by 10%" is a specific goal, whereas deciding to "delight customers" is not specific or measurable. -If goals are not specific and measurable, how would you know whether you have reached the goal? - "doing your best" is not an effective goal, because it is not measurable and does not give you a specific target. -Certain aspects of performance are easier to quantify. For example, it is relatively easy to set specific goals for productivity, sales, number of defects, or turnover rates. -Moreover, some of the most important elements of someone's performance may not be easily quantifiable (such as employee or customer satisfaction) - metrics such as satisfaction can and should be quantified. For example, you could design a survey for employees and customers to track satisfaction ratings from year to year.

Ability

Employees should have the skills, knowledge, and abilities to reach their goals - when employees are lacking the necessary abilities, setting specific outcome goals has been shown to lead to lower levels of performance. -For example, instead of setting a goal related to increasing sales, the goal could be identifying three methods of getting better acquainted with customers.

When Are Goals More Effective?

Feedback, ability, goal commitment

Aggressive

This may sound counterintuitive, but effective goals are difficult, not easy. -stretch goals -distinguishes companies that are ranked as "Most Admired Companies" in Fortune magazine is that they set more difficult goals. -People with difficult goals outperform those with easier goals -When goals are aggressive and require people to work harder or smarter, performance tends to be dramatically higher -Research shows that people who have a high level of self-efficacy and people who have a high need for achievement tend to set more difficult goals for themselves

Feedback

To be more effective, employees should receive feedback on the progress they are making toward goal accomplishment. Providing employees with quantitative figures about their sales, defects, or other metrics is useful for feedback purposes.

Realistic

While goals should be difficult, they should also be based in reality. In other words, if a goal is viewed as impossible to reach, it will not have any motivational value. In fact, setting impossible goals and then punishing people for not reaching these goals is cruel and will demotivate employees.

Time-Bound

a statement regarding when the proposed performance level will be reached -Adding a limiter such as "by December of the current fiscal year" gives employees a sense of time urgency.

Are There Downsides to Goal Setting?

may be some downsides to goal setting. -First, as mentioned earlier, setting goals for specific outcomes may hamper employee performance if employees are lacking skills and abilities needed to reach the goals -Second, goal setting may prevent employees from adapting and changing their behaviors in response to unforeseen threats -For example, one study found that when teams had difficult goals and employees within the team had high levels of performance expectations, teams had difficulty adapting to unforeseen circumstances. -Third, goals focus employee attention on the activities that are measured. -This focus may lead to sacrificing other important elements of performance. -Fourth, an aggressive pursuit of goals may lead to unethical behaviors - If employees are rewarded for goal accomplishment but there are no rewards for coming very close to reaching the goal, employees may be tempted to cheat -For example, when Sears gave its auto repair staff a $147 per hour sales quota, the result was overcharging of customers and the performance of many unnecessary repairs.

Goal commitment

refers to the degree to which a person is dedicated to reaching the goal. -It has been proposed that making goals public may increase commitment to the goal, because it creates accountability to peers -When individuals have a supportive and trust-based relationship with managers, goal commitment tends to be higher. -When employees participate in goal setting, goal commitment may be higher. -Last, but not least, rewarding people for their goal accomplishment may increase commitment to future goals.