How to Implement Management by Objectives in the Workplace

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VOLUME 6 NUMBER 4 1994

How to Implement Management by Objectives in the Workplace
Terry Ingham
Is management by objectives dead? Not so long ago I would have said yes, not because the idea was bad – like many of the “good practice” ideas of the late 1980s it is a good idea. The problem was, and still is, implementing objectives where it counts, on the shopfloor, or in the office. If anyone out there has been successful in doing that and getting their employees and staff to “buy in”, by taking ownership of the company or organizational objectives, then I would be very interested to know how they have achieved it. What is more, if on top of that you have then managed to get employees to take responsibility for and be committed to those objectives, as well as understanding them and using them as a tool to manage, measure and improve performance, then I would be very much surprised if not amazed. By now you may well be asking yourself, “Where is this all leading?” I will tell you. Until recently I had just about given up trying to implement management by objectives, from a shopfloor point of view that is, until I visited Sweden recently and saw a Swedish method of management of change by objectives. What I saw in Sweden truly surprised me. I visited companies in the private sector and organizations in the public sector and what was common to both was the difference from what I have seen in many companies (but not all) in this country. Instead of disillusioned, demoralized, uninterested and uncommitted staff, I saw a focused and enthusiastic workforce with a real sense of purpose. This whole mindset, apparently, was brought about by a change in management style. A change to a management style which has produced measurable results, improved performance and noticeably improved morale and commitment. All because the people affected by the change, the employees, have been given a say and responsibility for that change. The TQM Magazine, Vol. 6 No. 4, 1994, pp. 53-54 MCB University Press, 0954-478X

How then was all this achieved? It was achieved through a method called resultkontrakting or, in English, contracting for results. How then does this masterpiece of modern management work? What new revolutionary ideas does it hold and have we seen it all before? The answer to that question is probably yes. The reason I am discussing this is because we never seem to learn from our lessons. I think it was Crosby who once said, “Good management practices are all about common sense; the problem is that they are not that common or more people would use them!” I think this phrase sums up well how I feel about the Swedish method – not really any new ideas, but a good rework of some of the old ones. More importantly, however, is how the method achieves the results and the framework it provides. So how does it work? It works by getting the group involved (which can be a department, section, team or even a group of individuals who do not work together but do have a common purpose) to complete a “contract for improvement”. We would probably call it an action plan in this country. It really does not matter what you call it; what does matter is the results it achieves and, believe me, resultkontrakting achieves results! The process starts by collecting some basic information about the people involved. Information like “Who is going to be involved?”, “How long is the contract going to last?” and “Who is going to sign the commitment and take responsibility for the contract?” The other thing that must be agreed at this stage is “What is the group’s purpose?” (this probably being the most important question at this stage to ask). The next task the group would need to do is to agree who the stakeholders are in the process and what demands do they have? You can see from Figure 1 how this works; the numerical grid is completed to undertake the gap analysis. The gap analysis works by applying a number in the bottom right-hand corner of the grid, which...
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