An Experiential Approach to Organization Development 7 th edition Chapter 12 Slide 1 Chapter 12 Goal Setting

An Experiential Approach to Organization Development 7 th edition Chapter 12Slide 1

Chapter 12Chapter 12

Goal Setting

An Experiential Approach to Organization Development 7 th edition

Chapter 12Slide 2

Learning Objectives (part 1 of 2)

Recognize how goal setting can be used as

part of OD program.

Apply major findings of research on goal

setting to develop organizational and

personal goals.


Chapter 12Slide 3

Learning Objectives (part 2 of 2)

Understand how management by objectives

(MBO) can be applied as management

system.

Experience and practice goal-setting

approaches.


Chapter 12Slide 4

Big Hairy Audacious Goals(part 1 of 2)

Employees at GE use “stretch goals.”

Other companies call these goals BHAG - big

hairy audacious goals.

These goals stimulate everyone to shoot for

extreme achievement.


Chapter 12Slide 5

Big Hairy Audacious Goals(part 2 of 2)

Major goal that GE is striving for is Six Sigma.

Six Sigma is statistical term for 3.4 defects per

million products.

For GE to attain Six Sigma requires every

employee to get on board.


Chapter 12Slide 6

Goal-Setting Theory

Goal setting may be organization-wide,

department-wide, individual, or integration of

the three.

A goal is anything an individual is trying to

accomplish and is the object of action.


Chapter 12Slide 7

Major Findings Relevant to Goal-Setting Theory (part 1 of 2)

Difficult goals produce better performance.

Specific hard goals better than “do your best.”

People may abandon goals if too hard.

Participation increases commitment to goals.

Feedback about accomplishment improves

performance.


Chapter 12Slide 8

Major Findings Relevant to Goal-Setting Theory (part 2 of 2)

Education and position in organization does

not predict success.

Goal-setting in teams deserves special

consideration.

Support of management is critical.


Chapter 12Slide 9

Our Changing World: Nissan and Renault’s Goals (part 1 of 2)

Renault of France took over troubled Nissan.

Ghosn brought in to turn Nissan around.

Ghosn had to maintain self-esteem of

employees but bring change quickly.

Ghosn first assessed Nissan’s problems.


Chapter 12Slide 10

Our Changing World (part 2 of 2)

He created cross-functional teams to study

manufacturing, purchasing, and engineering.

Ghosn set ambitious and specific goals.

Ghosn set example by observing Japanese

culture and working long hours.


Chapter 12Slide 11

Goal-Setting Model (part 1 of 3)

Difficult and specific goals are developed.

Commitment to goals achieved by:

• Mutual trust in and by upper management.

• Support by management.

• Care given to competition between

employees and teams.


Chapter 12Slide 12

Goal-Setting Model (part 2 of 3)

Overcome resistance to goals by providing:

Special training if required.

Effective reward and incentive system.

Participation by employees in setting goals.


Chapter 12Slide 13

Goal-setting Model (part 3 of 3)

Period of performance when management

support and feedback is given.

Employees may require additional resources.

Managers and employees may need to develop

action plans.

Managers provide timely and objective

feedback.


Chapter 12Slide 14

Figure 12.1Goal Setting


Chapter 12Slide 15

Management by Objectives (MBO) (part 1 of 2)

MBO is a specific technique for setting goals.

Aimed at integration of individual and

organization goals.

A system to help in planning, organizing,

problem-solving, and motivating.


Chapter 12Slide 16

Management by Objectives (MBO) (part 2 of 2)

MBO involves participation of subordinates and

their managers in setting and clarifying goals

for subordinates.


Chapter 12Slide 17

How MBO Works

Jointly identify common goals.

Define major areas of responsibility in terms of

results expected.

Use measurements as guides for operating and

assessing contributions of members.


Chapter 12Slide 18

Underlying Purposes of MBO

1. Clarify organization’s goals and plans at all

levels.

2. Gain better motivation and participation from

organization’s members.


Chapter 12Slide 19

Phases of MBO

Top management team studies system.

Team sets up methods of measuring

performance.

Goal-setting sessions are held at all levels of

organization.


Chapter 12Slide 20

Steps in MBO Process (part 1 of 2)

1. Subordinate proposes specific goals and

ways to measure them for designated time

period.

2. Subordinate and superior jointly develop

mutually agreed upon goals.

3. Period of performance.


Chapter 12Slide 21

Steps in MBO Process (part 2 of 2)

4. Feedback of results with comparison

between actual performance and goals.

5. Previous step sets stage for recycling of

goal-setting process.


Chapter 12Slide 22

Figure 12.2Steps in the MBO Process


Chapter 12Slide 23

OD in Practice: Boehringer Mannheim and MBO (part 1 of 4)

BM set up nontraditional MBO program.

Focused on having every key professional

specify how much an employee will contribute

to next year’s profits.

Program was phased in over two years.


Chapter 12Slide 24

OD in Practice (part 2 of 4)

MBO began with a two-day training session.

• Conducted by external consultant.

• Attended by management including CEO.

Employees formulate objectives for year’s

budget.

Supervisor reviews performance at quarterly

intervals.


Chapter 12Slide 25


BM’s program calculates dollar value of

objectives.

BM uses “stretch” objectives with cash bonus.

Emphasis on results, teamwork, growth in

entrepreneurs, and greater contribution.


Chapter 12Slide 26


BM traces their success with MBO to:

Implementing MBO the right way.

Tying MBO to company strategy.

Establishing financial perspective to MBO.


Chapter 12Slide 27

Criticisms of MBO (part 1 of 2)

Implementing MBO is expensive and time-

consuming.

Traditionally limited to managerial and

professional employees where costs can be

justified.

Joint goal-setting among unequals difficult and

may not be possible.


Chapter 12Slide 28

Criticisms of MBO (part 2 of 2)

MBO may be too quantitative.

Areas that cannot be quantified may be ignored.

MBO may be implemented as top dictating to

bottom.

Some OD practitioners question if MBO is OD

intervention.


Chapter 12Slide 29

Results of MBO

Difficult to measure success of MBO.

Trend of findings is generally favorable.


Chapter 12Slide 30

Key Words and Concepts

Goal - what individual is trying to accomplish

and object of action.

Goal setting - specifies desired outcomes

toward which individuals, teams, and

organization should work.


Chapter 12Slide 31

Management by objectives (MBO) - system of

management set up to help in planning,

organizing, problem solving, and motivating.

Six sigma - a statistical term for 3.4 defects

per million products.


Chapter 12Slide 32

Stretch goals - encouraging employee teams

to try for huge gains in productivity and

quality even though it is unclear how they will

get there.


Chapter 12Slide 33

Preparations for Next Chapter

Read Chapter 13.

Complete Step 1 of OD Skills Simulation

13.1.

Complete Step 1 of OD Skills Simulation

13.2.

Read and analyze Case: Wengart Aircraft.

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An Experiential Approach to Organization Development 7 th edition Chapter 12 Slide 1 Chapter 12 Goal Setting