Man N Org Dev Complete

Management and Organization Development Q.1 Discuss the characteristics of management. A.1. Following are the characteristics of management: Organized Activities: Management is a process of organized activities. Groups of people cannot be involved in the performance of activities without organized activities. Management comes into existence where a group of people are involved in achieving a common objective. The organized activities may take a variety of forms ranging from a tightly structured organization to a loosely-knit organization. Existence of Objectives: The existence of objectives is a basic criterion of every human organization. The organizational objectives are the desired state of affairs which an organization attempts to realize. This realization of objectives is sought through the coordinated efforts of the people constituting an organization. Decision-making: Management process involves decision making at all levels. Decisionmaking describes the process by which a course of action is selected as the way to deal with a specific problem. If there is only one alternative, the question of decision making does not arise. The quality of alternatives which a manger selects determines the organization’s performance, and the future of the organization. Relationship among resources: The essence of management is integration of various organizational resources. Resources include money, machine, materials, and people. Management is concerned with the proper utilization of human resources which, in turn, utilize other resources. Working with and through people: Management involves working with people and getting organizational objectives achieved through them. Working through people is interpreted in terms of assigning activities to subordinates. Q.2 Explain the difference between Management Development and Organization Development A.2Organization development:Simply put, an Organization Development practitioner is to an organization as a physician is to a human body. The practitioner "diagnoses" (or discovers) the most important priorities to address in the organization, suggests a changemanagement plan, and then guides the organization through the necessary change. There are different definitions and views on how the change should occur.

Today's organizations operate in a rapidly changing environment. Consequently, one of the most important assets for an organization is the ability to manage change -- and for people to remain healthy and authentic. Consider the following definition of OD: “Organization Development is the attempt to influence the members of an organization to expand their candidness with each other about their views of the organization and their experience in it, and to take greater responsibility for their own actions as organization members. The assumption behind OD is that when people pursue both of these objectives simultaneously, they are likely to discover new ways of working together that they experience as more effective for achieving their own and their shared (organizational) goals. And that when this does not happen, such activity helps them to understand why and to make meaningful choices about what to do in light of this understanding.” -- Neilsen, “Becoming an OD Practitioner”, Englewood Cliffs, CA: Prentice-Hall, 1984, pp. 2-3. Experts might agree that the following definitions of OD represent the major focus and thrust of many of today's OD practitioners. "Organization development is a system-wide application of behavioral science knowledge to the planned development and reinforcement of organizational strategies, structures, and processes for improving an organization's effectiveness." -- Cummings and Worley, "Organization Development and Change", Sixth Edition, South-Western Publishing, 1997, p.2. "Organization Development is a body of knowledge and practice that enhances organizational performance and individual development, viewing the organization as a complex system of systems that exist within a larger system, each of which has its own attributes and degrees of alignment. OD interventions in these systems are inclusive methodologies and approaches to strategic planning, organization design, leadership development, change management, performance management, coaching, diversity, and work/life balance." -- Matt Minahan, MM & Associates, Silver Spring, Maryland OD Practitioners: "Organizational Physicians"? The system of organizations is very similar, if not the same as, the system of human beings -- after all, organizations are made up of humans! Therefore, when trying to understand the field of organization development, it might be useful to compare aspects of the field of organization development to aspects of the field of medicine. For example, the study of the theories and structures of organizations (often in courses called "organizational theory") is similar to the study of anatomy and physiology of human systems. Similarly, the study of organizational behavior is similar to the study of psychology and sociology in human systems. Finally, the study and field of organization development compares to the study and field of medicine regarding human systems.

That is, in OD, practitioners might work in a manner similar to "organizational physicians" intending to improve the effectiveness of people and organizations by: 1) Establishing relationships with key personnel in the organization (often called "entering" and "contracting" with the organization); 2) Researching and evaluating systems in the organization to understand dysfunctions and/or goals of the systems in the organization ("diagnosing" the systems in the organization); 3) Identifying approaches (or "interventions") to improve effectiveness of the organization and its people; 4) Applying approaches to improve effectiveness (methods of "planned change" in the organization), 5) Evaluating the ongoing effectiveness of the approaches and their results. Maturation of the Field OD has a rich field of research, theory, models and practice, with roots in community and management development. The Organization Development Institute provides an historical view of organization development. The topic of organizational change has received a great deal of attention over the past several decades, as organizations face new and complex challenges like never before. Correspondingly, the field of Organization Development is receiving a great deal of attention now, too. As the field has grown, so has the diversity of perspectives on the field. The question "What is OD?" is now quite common in discussions among those interested in the field. OD does not have a standard code of ethics or universal accrediting body. Thus, many assert that OD is a field, rather than a profession. The OD Institute admirably does suggest levels of certification for OD practitioners, (see the next section, Suggested Competencies for OD Practitioners), but these do not appear to have become standard for practitioners who consider themselves to be OD professionals. The OD Institute has also suggested an International Organization Development Code of Ethics. The Organization Development Network is a large organization that also focuses on developing the field and serving its members, many of whom are OD practitioners. Many people assert that OD is a field that works from a systems perspective and according to humanistic values to help people change. Other people respond that other fields or professions, such as trainers and community organizers, also work from a systems perspective and according to humanistic values and, thus, that description is not unique to OD. They assert that OD must proclaim a scope for their field and suggest that

a more apt description of OD is that it is a field that works from a systems perspective and according to humanistic values to enhance the performance of organizations. Another area of diversity about perspectives on Organization Development is in regard to how people view organizations. Some focus on the structures, operations, positions, procedures, etc., while others focus on the human relations and interactions. Still others focus on the politics and power, while others focus on the cultures and values of the organization. The following article gives more information about these perspectives: Understand the Preferred Lens Through Which You View Organizations Concurrently, there seems to be strong focus on "soft" skills in OD, for example, coaching, leadership development, facilitation, conflict management, process consulting, etc. However, many would assert that the "hard" skills, such as Balanced Scorecard, quality management initiatives (TQM, Six Sigma, etc.), strategic analysis, etc., should also be a focus in OD. The following article gives more information about these perspectives: What Type of OD Practitioner Are You? Concurrent to these diverse views, there seems to be strong agreement that the phrase "organizational change and development" describes the core purpose and practice of what OD practitioners do -- so much that the phrase "organizational development" is often used interchangeably to refer to the field itself. Management development:- Management Development is best described as the process from which managers learn and improve their skills not only to benefit themselves but also their employing organizations. [1] In organisational development (OD), the effectiveness of management is recognised as one of the determinants of organisational success. Therefore, investment in management development can have a direct economic benefit to the organization. Managers are exposed to learning opportunities whilst doing their jobs, if this informal learning is used as a formal process then it is regarded as management development. In 2004 the spend per annum per manager on management and leadership development was £1,035, an average of 6.3 days per manager. [2] What management development includes: • • •

structured informal learning: work-based methods aimed at structuring the informal learning which will always take place formal training courses of various kinds: from very specific courses on technical aspects of jobs to courses on wider management skills executive education: which might range from courses for (perhaps prospective) junior managers or team leaders o Level 2 Teamleading (ILM)

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NVQ Level 3 Certificate in Management /Studies Diploma in Management /Studies MSc/MA in management or Master of Business Administration (MBA) degrees.

The term 'leadership' is often used almost interchangeably with 'management' Leadership which deals with emotions is an important component of management which is about rational thinking..[1] The Management Charter Initiative (MCI) originally set out management competencies for management S/NVQ’s, these competencies are now part of the National Qualification Framework (NQF), it is from these competencies that managers can be assessed and development needs determined. To enhance the skills, knowledge and abilities to improve organizational mechanisms. Approaches to Management Development • • • • • • • • •

Dysfunction analysis Mentoring Coaching Job rotation Professional development Business Workflow Analysis Upward feedback Executive education Supervisory training

Action Learning Many management qualifications now have an action learning element. Action Learning recognises that individuals learn best from experience, so that process is structured. Action Learning sets allow individuals to try out different approaches to solving issues and problems..[1] Coaching • o o o o o o

An effective learning tool Impact on bottom line/productivity Intangible benefits Aids improvement of individual performance Tackles underperformance Aids identification of personal learning needs

Management education One of the biggest growth areas in UK education since the early 1980’s has been the growth of university level management education. As well as weekly part time attendance at College/University many students are also undertaking distance learning. Whereas there were only two business schools in the early 1970’s, there are now over a hundred providers offering undergraduate, postgraduate and professional courses. Q.3 Explain the three stage Model of Change process. A.3 The three stages of the change process Besides understanding the change process, educators also need to become more skilled in its use. As Miles (1986) and Fullan (1991) have demonstrated, the change process consists of a series of three overlapping phases: initiation, implementation, and institutionalisation (see figure below). Although these phases often co-exist in practice, there are some advantages in describing them separately as we did in School Improvement in an Era of Change (for more detail see Hopkins et al., 1994: 36-8). It is particularly important to understand what happens during each phase and what behaviours within each phase make for success. The initiation phase is about deciding to embark on innovation, and of developing commitment towards the process. The key activities in the initiation phase are the decision to start, and a review of the school's current state as regards the particular change. Matthew Miles (1986) made an analysis of the various stages of school improvement. This is a list of factors that Miles believes make for successful initiation: • the innovation should be tied to a local agenda and high profile local need • a clear, well-structured approach to change • an active advocate or champion who understands the innovation and supports it • active initiation to start the innovation (top-down is OK under certain conditions) • good quality innovation. Implementation is the phase of the process that has received the most attention. It is the phase of attempted use of the innovation. The key activities occurring during implementation are the carrying out of action plans, the developing and sustaining of commitment, the checking of progress and over-coming problems. The key factors making for success at this stage, according to Miles (1986), are: • clear responsibility for orchestration/co-ordination (head, coordinator, external consultant) • shared control over implementation (top-down is not OK); good cross-hierarchical work and relations; empowerment of both individuals and the school • mix of pressure, insistence on `doing it right', and support • adequate and sustained staff development and in-service training • rewards for teachers early in the process (empowerment, collegiality, meeting needs, classroom help, load reduction, supply cover, expenses, resources).

Figure: The three overlapping phases of the change process (Miles et al., 1987) Institutionalisation is the phase when innovation and change stop being regarded as something new and become part of the school's usual way of doing things. The move from implementation to institutionalisation often involves the transformation of a pilot project, to a school-wide initiative, often without the advantage of the previously available funding. Key activities at this stage according to Miles (1986) are:

• an emphasis on `embedding' the change within the school's structures, its organisation and resources • the elimination of competing or contradictory practices • strong and purposeful links to other change efforts, the curriculum and classroom teaching • widespread use in the school and local area • an adequate bank of local facilitators, (e.g., advisory teachers) for skills training. Many change efforts fail to progress beyond early implementation because those involved do not realise that each of these phases have different characteristics and require different strategies for success to be achieved. On the difficulty of managing multiple changes in times of flux Differentiating between the three phases of initiation, implementation and institutionalisation is very helpful, as is the articulation of the appropriate activities at each stage. Nowadays however one is rarely involved with just one innovation. A school can be going through a number of change cycles at any one time. This places great stress on the organisational capacity of the school and the confidence and maturity of those leading the change process. How to build this capacity and confidence is the key challenge for authentic school improvement efforts. In the early phases of a school improvement effort, the process of initiation, implementation and institutionalisation will be going on on at least two levels. The first is at the classroom level - putting into practice a change in curriculum and instruction. At the level of the school, the cycle of initiation, implementation and institutionalization is concerned with capacity building – the process of learning how to change. In particular, the way in which in-service activities, planning and enquiry are organised in order to support authentic school improvement. Once a school has developed the `capacity to change' then successive cycles of innovation become much easier. In the early stages of a school improvement effort where the schools' organisation is not well attuned to change, more effort needs to be given initially to building capacity and possibility limiting the amount of classroom change (see chapter 8). Once the capacity is in place then managing multiple cycles of innovation become both possible and desirable. A second issue raised by the initiation, implementation and institutionalisation analysis, are the skills required of change agents. Besides the specific activities required during each of the phases, there are also a series of `cross cutting' or generic skill clusters that characterise the behaviours of effective change agents. There are a number of reviews of change agent skills: for example, from the organisation development literature (Schmuck and Runkel, 1985); from accounts of school improvement (Hopkins et al., 1996: chapter 7); and the research on change agents themselves (Miles et al., 1988). A review of this research and experience suggests the following abilities to be the most important: • to generate trust

• to understand and diagnose the state of the school's organisation • to plan into the medium term and to see the bigger picture • to work productively in groups • to access the required technical resources and advice be it research, good practice, or specifications of teaching and learning • to give people the confidence to continue. There is however another key skill needed for managing the contemporary process of change. It is the ability to deal with complexity. Traditional mindsets based on rational approaches to school improvement will not work in the current climate, and if employed will probably make matters worse. It is not that educational change is irrational, but as Patterson et al. (1986) noted, it is often non-rational and does not respect normative logical conventions.

Michael Fullan has over the years been at the cutting edge of thinking about educational change. His most recent work, in particular the Change Forces Trilogy, has reflected on the dialectic between rationality and chaos. The tension between top-down versus bottom-up change in a situation where change is multi-dimensional and pervasive, was a major theme in the first volume, Change Forces. In this book, Fullan identified `eight basic lessons of the new paradigm of change' (Fullan, 1993: 21-2). These lessons provide an appropriate summary of this review of educational change for the purposes of authentic school improvement. They resonate with what has already been written; and examples of how they work in practice are seen on the pages that follow. As Fullan warns, however, each lesson is something of a paradox (which should be no surprise), and they should be regarded as a complete set, each benefiting from the wisdom of the other seven (see table below). Table: Fullan's eight basic lessons of the new paradigm of change Lesson 1 You can't mandate what matters. (The more complex the change the less you can force it.) Lesson 2 Change is a journey not a blueprint. (Change is non-linear, loaded with uncertainty and excitement and sometimes perverse.) Lesson 3 Problems are our friends. (Problems are inevitable and you can't learn without them.) Lesson 4 Vision and strategic planning come later. (Premature visions and planning blind.) Lesson 5 Individualism and collectivism must have equal power. (There are no onesided solutions to isolation and group-think.) Lesson 6 Neither centralisation nor decentralisation works. (Both top-down and bottomup strategies are necessary.) Lesson 7 Connection with the wider environment is critical for success. (The best organisations learn externally as well as internally.) Lesson 8 Every person is a change agent. (Change is too important to leave to the experts, personal mind set and mastery is the ultimate protection.)

Q.1 Explain the organizational effectiveness A.1 The phrase, “organizational effectiveness,” is commonly referred to when discussing organizations that have achieved maximum performance. Perhaps one of the best overviews of the concept of organizational effectiveness is provided by Herman and Renz (2002). The authors identify nine fundamental propositions about organizational effectiveness. Their propositions were written about nonprofit organizations. However, they also apply to organizations in general and, thus, their

descriptions are modified in the following paragraphs to apply to organizations in general. 1. Organizational effectiveness is always a matter of comparison. When determining the effectiveness of an organization, to what are you comparing the organization to conclude whether it is effective or not? For example, are you comparing to a certain set of best practices or to another highly respected organization? 2. Organizational effectiveness is multi-dimensional. Organizational effectiveness cannot be measured by one indicator. For example, a budget surplus or a strong product outcome does not guarantee that the organization has achieved overall maximum organizational effectiveness. 3. Boards make a difference in organizational effectiveness, but how is not clear. There is a correlation between effective Boards and effective organizations. However, it is not clear that one necessarily causes the other. 4. Organizational effectiveness is a social construction. The concept of organizational effectiveness is “in the eye of the beholder.” One person might have a completely different interpretation than another person. 5. More effective organizations are more likely to use correct management practices. / The authors are careful to point out that the reverse is not necessarily true – that organizations that use correct management practices will be judged as being effective. (The correct practices were identified during focus groups in various studies.) 6. Claims about “best practices” warrant critical evaluation. The authors explain that the results of their study do not agree with the wide assertion that certain practices, for example, automatically produce the best Boards. 7. Measures of responsiveness may offer solutions to differing judgments. This proposition reframes the concept of effectiveness for an organization to be about how well that organization is doing in responding to whatever is currently important. 8. It can be important to distinguish different types of organizations. This is true to make progress in understanding the practices, tactics and strategies that may lead to organizational effectiveness. 9. Network effectiveness is as important to study as organizational effectiveness. This proposition recognizes that the effectiveness of an organization might depend to a great extent on the effectiveness of the wide network of organizations in which the particular organization operates. Suggested Capacities for Organizational Effectiveness Letts, Ryan and Grossman (1998) suggest four key capacities for organizational effectiveness. These

capacities were suggested for nonprofit organizations. However, they also apply to organizations in general and, thus, their descriptions are modified in the following paragraphs to apply to organizations in general. 1. Adaptive capacity is the ability of an organization to maintain focus on the external environment of the organization, particularly on “performing” (meeting the needs of customers), while continually adjusting and aligning itself to respond to those needs and influences. Adaptive capacity is cultivated through attention to assessments, collaborating and networking, assessments and planning. 2. Leadership capacity is the ability to set direction for the organization and its resources and also guide activities to follow that direction. Leadership capacity is cultivated through attention to visioning, establishing goals, directing, motivating, making decisions and solving problems. 3. Management capacity is the ability to ensure effective and efficient use of the resources in the organization. Management capacity is accomplished through careful development and coordination of resources, including people (their time and expertise), money and facilities. 4. Technical capacity is the ability to design and operate products and services to effectively and efficiently deliver services to customers. The nature of that technical capacity depends on the particular type of products and services provided by the organization. In addition, a fifth key capacity has been mentioned. 5. Generative capacity is the ability of the organization to positively change its external environment. This capacity is exercised by engaging in activities to inform, educate and persuade policy makers, community leaders and other stakeholders. Suggested Aspects for Performance Blumenthal (2003) suggests improved performance might result from improvements in one or more of the following four aspects: 1. Organizational stability is in regard to whether services are consistently delivered and the organization survives. 2. Financial stability is based especially on short-term survival, for example, the ability to pay its bills. Financial stability is often ignored as an area of importance during capacity building. 3. Program quality (products and services) is based on indicators of impact, including adequate research about effective programs and an outcomes management system. This aspect also is often ignored.

4. Organizational growth is based on attracting resources and providing more services. Blumenthal adds that growth alone is not an indicator of performance. Putting Best Practices into Perspective While working to improve the effectiveness of organizations, consultants often refer to various performance standards as conveyed in “best practices” and “standards of excellence.” The performance standards correspond to the levels of quality in certain organizations that are widely viewed by others as being high performing organizations. Those views usually reflect conventional wisdom, but not necessarily findings from research. Consultants often use the standards to assess the quality of practices in their client’s organization and then what must be done to improve that quality. Although the practices and standards can be somewhat useful in getting some quick perspective on the quality of a particular function, you need to be careful about how you choose them and about how you draw conclusions from any comparisons. The best use of best practices for an organization depends on a variety of factors, including the culture of the organization, nature of the products and services that the organization provides, expectations of major stakeholders, and effects of change in the environments of the organization. The open systems concept of equifinality suggests there is no one right way, or best practice, for leading, managing or guiding organizations and change. If you are working in a highly collaborative approach with your clients, you are much more likely to work toward best practices in a manner that aligns those best practices with the nature and needs of your client’s organization. Q.2 Discuss the bases of social power. A.2 Bases of Social Power According to a widely-cited set of power bases used in Social Psychology, there are six fundamtmtal bases of social power (French & Raven, 1959; Raven, 1990). Detailed views of each are available from several sources (French & Raven, 1959; Kipnis, 1976; Raven, 1990). In brief, the list includes coercive, legitimate, leward, expert, referent, and informational power.

In the remainder of this paper, we explore the usefulness of differentiating the bases of power in an MIS context, and describe the first of a series of studies we are planning to conduct. METHOD Subjects: We selected a convenience sample of systems analysts employed in two major corporations in Pennsylvania. Of the 38 questionnaires distributed by a contact in each company, 29 usable responses were received by the contact. Instrument A questionnaire was developed, including items based on key phrases used by French and Raven’s (1959) and Raven’s (1965) descriptions of influence tactics. One item was developed for each power base. Each item included a five-point scale asking if the power tactic was used at or between the anchors of “not at all” (1) to “very much” (5). Respondents were given the opportunity to specify a tactic not listed in the questionnaire by using an item that covered “other tactics,” Procedure: Two copies of the questionnaire were issued to each developer. Developers were asked to recall two recent (within about one year) incidents in which they influenced a user toward a desired outcome. Respondents were instructed to first choose an incident involving a user of lower status, and the second, a user of higher status in the organizational hierarchy relative to the respondent. RESULTS Results will be presented just after each research question they attempt to address. 1. Are the bases of power distinct behavioral categories? To answer this question, we used a 1x6 ANOVA to detect a significant difference between the bases of power. The findings suggest that respondents indeed distinguished between the various power bases. 2. Which bases of power seemed to be used most often? A post-hoc analysis of cell means (as outlined by Hays, 1988) determined that an honestly significant difference in cell means would be .59 at the .05 level. Our results reveals that informational power was used significantly more frequently and intensely than coercive, legitimate, and reward power, and that referent power was used significantly more than coercive power. 3. Would a shorter list of power bases be more appropriate? Two sources of data would help us determine if a shorter list of power bases would be more appropriate. First, if

there were extremely high correlations between certain power bases, it would indicate that there are several variables measuring the same thing. Second, a factor analysis could reveal potentially common “profiles,” where several power strategies seem to be in use at the same time. A preliminary factor analysis was run under two sets of assumptions, both using Vanmax rotation and minimum eigenvalues of 1. Factor 1 was composed of coercive, legitimate, reward, and informational power, and factor 2 was composed of reward, expert, and referent power. Factor 1 might be labeled “manipulative,” in that this profile describes a developer who tries to use force, position, strong arguments, and even rewards to influence a user. Factor 2 might be labeled “benevolent,” in that a developer of this profile most likely attempts to befriend the user with rewards, expert help, and friendliness. We speculate that rewards in this case might be used more for building relationships than for attaining results, as is likely the case in the first profile. 4. Does relative status make a difference? We compared the values in the higher user status case against the lower user status case in two ways. First, paired t-tests, and then chi-squared analysis was used. The means were then subjected to paired t-tests. Only the coercive base of power appeared to differ between developers and users of high versus low status (t=2.O; one-tailed p=. 028). As expected, coercion was used more with lower status users. Because there was high skewing of power tactics, responses were recoded into dichotomous categories: 1 (not at all) versus 2 through 5 (power base used even a little). None of those differences was significant. It appears that there is little contribution from considering the relative status of the user. 5. Are respondents able to recognize their tactics? We examined the “other” category to discover just what was contained therein; nearly all of them appeared to belong to one of the named categories. All of the analysis was redone with recoded data. The ANOVA results again indicated strong differences between power bases. Finally, the t-test and chi-square results are completely non-significant. With the exception of the t-test results, ali of the analyses were much stronger and more interpretable after recoding the “other” category. This indicates that respondents are probably not completely aware of the power tactics they use.

METHODOLOGICAL ISSUES AND FURTHER RESEARCH NEEDED We found that a survey can be used to gain self-report data on power bases. Respondents can distinguish between them, and informational and referent power seem to stand out among the other bases from the respondents’ point of view. There is promise for future exploratory and confirmatory factor analysis in investigating power bases. However, respondents are reluctant to classi~ certain behaviors along some of the dimensions, and relative status does not appear to make a difference in power bases used. Interestingly, analyzing and recoding a catch-all “other” category, distributing its contents over the other power bases, appears to have substantial evidence of merit, even in this preliminary study. There are several limitations of this study, and future work is needed to learn more about power bases in MIS. Further scale development and replications with larger samples are needed. Multiple-item questions would enable psychometric analysis and refinement of a power instrument. Replication with larger samples would enable closer examination of the questions posed in this paper. The subconscious nature of power base usage (Markus & Bjom-Anderson, 1987), evidenced to some extent here (because of the items falling into the “other” category), might warrant a combination of qualitative and quantitative techniques. This combination would allow a researcher to witness first-hand the power bases, rather than rely on respondents to be conscious of or admit to their usage. It would also allow consideration of important contextual factors, and the Critical Incident Method (Flanagan, 1959) might be useful to gain this information. Further research will allow further investigation of one of the most venerable but elusive problems in MIS research. Perhaps by understanding better the bases of power and influence in an IS context, we can eventually seek ways of securing cooperation between developers and users. Q.3 Explain the process of management by objectives. A.3 Management by Objectives (MBO) is a process in which a manager and an employee agree upon a set of specific performance goals, or objectives, and jointly develop a plan for reaching them. The objectives must be clear and achievable, and the plan must include a time frame and evaluation criteria. For example, a salesperson might

set a goal of increasing customer orders by 15 percent in dollar terms over the course of a year. MBO is primarily used as a tool for strategic planning, employee motivation, and performance enhancement. It is intended to improve communication between employees and management, increase employee understanding of company goals, focus employee efforts upon organizational objectives, and provide a concrete link between pay and performance. An important factor in an MBO system is its emphasis on the results achieved by employees rather than the activities performed in their jobs. Implementing an Mbo Program To be successful, an MBO program should be part of a small business's overall system of planning and goal setting. The first step in implementing MBO is to establish long-range company goals in such areas as sales, competitive positioning, human resource development, etc. A small business owner may find it helpful to begin by defining the company's current business and looking for emerging customer needs or market trends that may require adaptation. Such long-range planning provides a framework for charting the company's future staffing levels, marketing approaches, financing needs, product development focus, and facility and equipment usage. The next step in establishing an MBO system is to use these long-range plans to determine company-wide goals for the current year. Then the company goals can be broken down further into goals for different departments, and eventually into goals for individual employees. As goal-setting filters down through the organization, special care must be taken to ensure that individual and department goals all support the long-range objectives of the business. Ideally, a small business's managers should be involved in formulating the company's long-range goals. This approach may increase their commitment to achieving the goals, allow them to communicate the goals clearly to employees, and help them to create their own short-range goals to support the company goals. At a minimum, a successful MBO program requires each employee to produce five to ten specific, measurable goals. In addition to a statement of the goal itself, each goal should be supported with a means of measurement and a series of steps toward completion. These goals should be proposed to the employee's manager in writing, discussed, and approved. It is the manager's responsibility to make sure that all employee goals are consistent with the department and company goals. The manager also must compare the employee's performance with his or her goals on a regular basis in order to identify any problems and take corrective action as needed. Formulating goals is not an easy task for employees, and most people do not master it immediately. Small business owners may find it helpful to begin the process by asking employees and managers to define their jobs and list their major responsibilities. Then the employees and managers can create a goal or goals based upon each responsibility and decide how to measure their own performance in terms of results. In the Small Business

Administration publication Planning and Goal Setting for Small Business, Raymond F. Pelissier recommended having employees create a miniature work plan for each goal. A work plan would include the goal itself, the measurement terms, any major problems anticipated in meeting the goal, a series of work steps toward meeting the goal (with completion dates), and the company goal to which the personal goal relates. Small business owners may also find it helpful to break down employee goal setting into categories. The first category, regular goals, would include objectives related to the activities that make up an employee's major responsibilities. Examples of regular goals might include improving efficiency or the amount and quality of work produced. The second category, problem-solving goals, should define and eliminate any major problems the employee encounters in performing his or her job. Another category is innovation, which should include goals that apply original ideas to company problems. The final category is development goals, which should include those goals related to personal growth or the development of employees. Dividing goal setting into categories often helps employees think about their jobs in new ways and acts to release them from the tendency to create activity-based goals. Another requirement for any successful MBO program is that it provide for a regular review of employee progress toward meeting goals. This review can take place either monthly or quarterly. When the review uncovers employee performance that is below expectations, managers should try to identify the problem, assign responsibility for correcting it, and make a note in the MBO files. Small Business Owner Involvement Given that MBO represents an unusual way of thinking about job performance for many employees, small business owners may find it best to introduce MBO programs gradually and to include a formal training component. A small business's managers can be introduced to MBO through a classroom seminar taught by the small business owner or by an outside consultant. Either way, it is important that the managers be allowed to express any doubts and reservations they may have, and that the training include preparation of an actual goal by each participant. When MBO is brought back to the small business, it may be best to start slowly, with each employee only preparing a few goals. This approach will allow employees to learn to prepare goals that are achievable, develop ways to measure their own performance, and anticipate problems that will prevent them from attaining their goals. Another factor determining the success of MBO programs is the direct involvement of the small business owner. Pelissier noted that the small business owner needs to champion the MBO system from the beginning, as well as set an example for the company's managers, in order for it to succeed. Since managers have a natural tendency to focus their attention upon their own functions rather than on the goals of the overall organization, it can be difficult to educate them about MBO. It is also important for the small business owner to remain patient during the implementation phase: in fact, Pelissier claimed that it may take three to four years before an MBO program creates quantifiable

results in a small business. As David Dinesh and Elaine Palmer indicated in their article for Management Decision, partial implementation is one of the major potential problems associated with MBO programs. Implemented correctly, however, MBO can provide a number of benefits to a small business. For example, MBO may help employees understand how their performance will be evaluated and measured. In addition, by allowing them to contribute to goal setting, it may increase the motivation and productivity of a small business's employees. MBO also stands to provide a small business's employees with the means to prioritize their work on a daily basis. Although employee performance evaluation is still a complex task under an MBO system, MBO can also provide an objective basis for evaluation. However, it is important to note that an employee's failure to meet preestablished goals can be attributed to many things besides personal failure. For example, the failure to meet goals could result from setting the wrong objectives, not taking into account company restrictions that may impinge upon performance, establishing an improper measures of progress, or a combination of all of these factors. Overall, establishing an MBO system in a small business may be difficult, but it is usually worth it. The most difficult aspect of implementing MBO may be simply getting people to think in terms of results rather than activities. Even when an MBO system is implemented well, a small business may encounter problems. For example, employees may set low goals to ensure attainment. Similarly, managers' objectives may focus on the attainment of short-term rather than long-term goals. Finally, employees and managers alike may fall victim to confusion and frustration. Some of the most common reasons for the failure of an MBO program include a lack of involvement among the top management of a small business, inadequate goal setting on a company-wide basis, implementation of an MBO system that occurs too rapidly, or the failure to instruct a company's managers and employees in the basics of MBO. But even though establishing an MBO program may be problematic, it can also offer significant rewards to small businesses.