Post on 14-Oct-2014
SETTING OBJECTIVES AT LZ COMPANY
A critical evaluation in Management by Objective approach
Xuanqun Chen
Project submitted in part fulfillment of the
Master of Business Administration
XXXX Business School
XXXX University — January 2007
Acknowledgements
The author would like to express her particular gratitude to her supervisor, Dr. PM,
for his help and guidance throughout the project, especially his enlightens for her
reflections and observations.
She would also like to take this opportunity to thank all the tutors who taught her
various knowledge with different mental models. Their persistence and preciseness
at work leaves a deep impression to the author and encourages her to carry out this
work.
Many thanks to her big family: her husband and daughter, her parents and parents-
in-law, her sister, who give their great support and understanding throughout the
Academic year while the author is studying in UK.
Last but not least, her gratitude also goes to all her colleagues, the staff in XXXX
University, the staff of XXXX) Company Ltd. and all the people who give her kind
help in achieving this project.
Setting Objectives at LZ Company
Content
Abstract................................................................................................................ i
List of Tables....................................................................................................... ii
List of Figures..................................................................................................... iii
Chapter 1: Introduction........................................................................................1
1.1. Profile of XXXX(Guanghou) Ltd.............................................................1
1.2. Management by Objectives:...................................................................2
1.3. Research objectives:..............................................................................4
Chapter 2: Literature review:...............................................................................5
2.1. MBO and Its Main Elements..................................................................5
2.2. Objectives in MBO approach.................................................................6
2.3. Objective setting.....................................................................................6
2.3.1. Characteristics of objectives and objectives setting:.....................7
2.3.2. Procedures of objectives setting...................................................7
2.3.3. Objectives and strategic vision and mission.................................9
2.3.4. Objectives and decision-making:................................................10
2.3.5. Integrating objectives into organization targets...........................11
2.3.6. Objective and department...........................................................12
2.3.7. Objective and individuals............................................................13
2.3.8. Objectives and plan....................................................................13
2.4. Primary barriers of good objective setting............................................14
2.5. Conceptual framework.........................................................................16
Chapter 3: Research Methodology...................................................................20
3.1. Research philosophy............................................................................20
3.2. Research strategy................................................................................21
3.3. Critical evaluation of the research methods selected...........................23
3.3.1. Quantitative and qualitative research methods...........................23
3.3.2. Questionnaire.............................................................................25
3.3.3. Semi-structured interview...........................................................28
3.3.4. Secondary data...........................................................................30
3.4. Triangulation.........................................................................................32
3.5. Reliability and validity...........................................................................33
3.6. Cross Mapping Matrix..........................................................................34
Chapter 4: Findings...........................................................................................36
4.1.1 Education level of the participants...............................................36
4.1.2. Knowledge of Management........................................................37
4.1.3. Knowledge of MBO target setting before LZ Ltd.’s introduction. .38
4.1.4. Conclusion and comments for the general situation:..................40
4.2.1. Strategic vision and mission.......................................................42
4.2.2. Integration of the strategic decision-making with the vision and
mission..................................................................................................43
4.2.3. Integration of targets...................................................................44
4.2.3.1. The accordance of the company’s targets with vision and
mission...........................................................................................44
4.2.3.2. The integration of departmental targets with the company
ones................................................................................................45
4.2.3.3. The accordance of individual targets with the departmental
ones................................................................................................47
4.2.4. Goal review and action plan match.............................................50
4.2.4.1. Action plan to carry out company targets...........................50
4.2.4.2. Action plan to carry out department targets.......................51
4.2.4.3. Personal action plan to carry out individual targets...........52
4.2.5 Conclusion and comments for objective one...............................52
Chapter 5: Conclusions and recommendations.................................................57
Appendices........................................................................................................64
Appendix One: The ground rules and checking list for setting
effective targets..............................................................................64
Reference:.........................................................................................................71
ii
Abstract
XXXX) Ltd. is one of the major manufacturers of cosmetics of skin care, hair
styling and care in China. After its privatization in 1996, it attempted to make
greater achievements by regenerating its managerial system. Management by
Objective (MBO) is one of the main approaches they took. But, to the
disappointment of the management, the result was not as good as expected;
especially the target setting processes appear to burden the staff.
This study takes a critical look at the existing target setting of the MBO
approach in this company. It assesses the procedures of its target setting, the
characteristics of the process, and the inlooks of the staff’s attitude and
performance. To obtain an in-depth and detailed understanding of the attitudes
and evaluate the barriers, questionnaires with 50% coverage of the total staff in
the company were carried out and 12 people from the company were chosen
for semi-structured interviews. In addition, secondary data from the company
was sought and content analyzed. Both qualitative and quantitative data was
collected and considered.
This investigation identified the barriers to setting appropriate and achievable
targets as: lack of management skill, lack of proficiency, insufficient awareness,
and fear of Failure. In addition, some other barriers are: too strong an incentive
orientated, top-down communication, and insufficient knowledge of staff views.
Neglect of the company in review and adjustment of the programme
implementation are also identified as factors preventing setting targets
successfully.
i
List of Tables
Names of Tables Page No.
Table 1. The Management By Objectives Process 5
Table 2.4. Six Mistakes in Objectives Setting That Kill MBO Program 16
Table 3.3.2a. Staff Selection Allocation of LZ Company for Questionnaires 26
Table 3.3.2b. List of advantages and disadvantages of questionnaires 28
Table 3.3.3. Staff Selection Allocation of LZ Company for Interview 29
Table 3.3.4. List of advantages and disadvantages of Secondary data 32
Table 3.6. Cross Mapping Matrix of the research 35
Table 5.3. Implementation Plan for Improving the Target Setting in LZ 62
ii
List of Figures
Name of Figures Page No.
Fig. 2.3.2. Example of an objective-setting cascade 8
Fig. 3.2. Time Line for Implementation of Research for the Project 22
Fig. 3.3.2a. The Organisational Structure of LZ (XXXX) Company 25
Fig. 4.1.1. Employees education level 37
Fig. 4.1.2. Knowledge of Management 37
Fig. 4.1.3. Knowledge of MBO 39
Fig. 4.2.2.The integration of the managerial decision with the vision and mission 43
Fig. 4.2.3.1.Company targets and its vision and mission 44
Fig. 4.2.3.2. The accordance of departmental targets with the company ones 45
Fig. 4.2.3.3a. The percentage of individual knowing the personal targets 47
Fig. 4.2.3.3b.The accordance of individual targets with the departmental ones 48
Fig. 4.2.3.3c The invigoration of individual targets to employee 49
Fig. 4.2.3.3d. The invigoration of individual targets to employee by interview 49
Fig. 4.2.4.1. Action plan to carry out company targets 50
Fig. 4.2.4.2. Any action plan to carry out department targets 51
Fig. 4.2.4.3. Any action plan to carry out individual targets 52
Fig. 4.3. Barriers in targets setting in MBO approach 54
iii
Chapter 1 : Introduction
1.1. Profile of XXXX(Guanghou) Ltd
The XXXX) Ltd. (“LZ Ltd”) is one of the largest firms in the field of skin care, hair
styling and care in China; and its brand is constantly expanding. Founded in
1978, the company was state-owned. In 1996, it was privatized and became a
Limited Company registered under the name of a Mr. Li. The company now
covers 13,800 square meters of facilities buildings, and manufactures hundreds
of different products for skin care and hair treatment. There are 3 sister
companies based in Shanghai, Beijing and Shenzhen cities respectively; with
it’s headquarters based in XXXX
It has possessed the biggest share in the Chinese market for skin care and hair
cosmetics since the beginning of the 1990’s. However, as the competition was
getting severe and with significant changes in the management due to the
initiation of privatization in 1996 resulted in the company losing market share. In
1994, 73% of customers rated XXXX products highly for their quality and for the
after sales service. In addition, 68% felt that the products were value for money.
In late 1998, the figures had fallen to 67% and 56% correspondingly (LZ
Investigation, 1998). In 1999, the CEO replaced the General Manager and
some key managers of the group at headquarter in XXXX Simultaneously,
some new management approaches were employed including Management by
Objectives (Hereunder abbreviated as MBO), which was considered one of the
most crucial.
According to the Provisional Regulation for Chinese Criteria of Small and
Medium Size Enterprises (SMEs) associated issued by National Economic and
Trade Commission, National Planning Commission, Ministry of Finance,
1
National Statistics Department of China in 2002, the criteria for SMEs field of
manufacturing in China are: with less than 2000 staff, or with less than 300
million RMB sales, or with less than 400 million RMB in total capital, among
which, the criteria for middle business should meet the following requirement:
with or with above 300 staff, with or with above 30 million sales, with or with
above 40 million total capital; and the rest are small business.
Thus, the research is carried out within the scope of small business in China
and specifically the SMEs based in southern China—XXXX city, one of the five
richest cities and a pioneer in the economic reform of China. In XXXX, there
were 80184 SMEs, among which 8142 are of medium sized and 72052 were of
small size by the end of 2004 (GZSB, 2006). SMEs represent 99.81% of the
total number of enterprises in XXXX, with 69.82% of total invested capital (ibid).
Among these SMEs, above 38% have the experiences of trade with or
cooperated with foreign enterprises (GZFTECB, 2005). The managers in that
area are encouraged to learn new techniques and management knowledge for
the cooperation or competition among such vast foreign-oriented business
environment.
Western managerial theories have been introduced to China since the early
twentieth century. The translation script of Scientific Management by Mr. Mu
Ou-chu in 1919 and its systematic practice in some Chinese companies,
symbolized the start of introducing a western style of management in China
(Zhou, 2006). The adoption of western management techniques has been
expanding and growing since economic reform in the early 1980s. Therefore,
the introduction of MBO in LZ was not a new practice in the city at the time.
2
1.2. Management by Objectives:
Drucker (1954) popularized the conception of MBO, which became a popular
management tool for the past 60 years. The importance of setting clear long-
term objectives, translating the long-term into more immediate goals and
allowing employees to work out ways to achieve those goals were recognized
by Drucker (1954) and Raymond (2006). MBO shifts the focus of management
thought to productivity - output - away from work efforts – inputs (Romani,
1997).
However, to the disappointment of some managers, the outcomes of MBO were
not as good as they expected. The company’s goals were not always heeded,
as its managers were not working towards such goals devoutly and entirely.
Besides, managers varied significantly in their understanding of this approach
and content of the goals. This resulted in company performance missing the
targets set. Thus, some managers disliked the implementation of MBO, and
even interpreted target setting as a burden. They complained about the
procedures for target setting and some even tried to evade the meeting on
target setting.
Why did the MBO approach not work well in LZ? Was it too complicated to be
implemented in LZ or was it too simple? Why could the management of LZ not
improve their management performance? What were the barriers? These
questions puzzled the top managers and they started to review their operation
of MBO, trying to discover the problems that impacted upon their
implementation of MBO.
Odiorne (1965) indicated that the first step of MBO programme is to identify,
the goals of the organization. The literature on MBO raises some important
questions concerning the method of setting targets; hence, it is very important to 3
find a good way of setting objectives (Lewis, 1980). Some researchers argue
that the only truly unique trait of MBO might be that the subordinate manager
becomes involved in the process of periodic goal setting as it shares much in
common with conventional theory of planning, which may be viewed as a
motivation device (Kendall, 2002). Thus, to a great extent, target setting is
one of the key steps to ensure the success of an MBO programme.
1.3. Research objectives:
After careful study and review, the top manager summarized the following
questions in implementing MBO: It had been difficult for LZ to conduct target
setting. The most complaints centred on the complex procedures for target
setting. There were mis-understandings around how LZ managers integrated
the objectives of their management / strategies with management of his/her
targets. Once the targets were set, they were put aside and not referred to at
work.
Synthesizing the above questions, the objectives of this project are:
1. To critically evaluate how LZ set targets in MBO approach;
2. Identify the barriers for implementing an MBO approach in LZ management;
3. To provide informed recommendations.
4
Table 1 The management by objectives process
Essential elements Key stages
Goal-setting 1 Establish long-range strategic objectives
2 Formulate specific overall organizational goals
3 Agree departmental objectives
4 Set individual performance targets
Action planning 5 Draw up action plans
Self-control 6 Implement and take conrrective action
Periodic reviews 7 Review performance against objectives
8 Appraise overall performance, reinforce appropriate behaviour, and strengthen motivation through:
Management development
Reward
Career and HR planning
Source: Price (2004) adapted from Raia (1974)
Chapter 2 : Literature review:
2.1. MBO and Its Main Elements
The essence of MBO is individual goals jointly grafted by the employee and
supervisor that serve as the basis for planning, performance, and evaluation
(Gibson et al., 2003). MBO enjoyed a long period of recognition after being
introduced to Japan and being rediscovered by Americans, in 1992, MBO was
reported to be common within 80% of the Fortune 500 firms (Odiorne, 1992).
Adapted from Raia’s concept of MBO in 1974, Price (2004) points out that MBO
encompasses four main stages: goal setting, action planning, self-control and
period reviews, detailed in the following Table 1:
Although Price (2004)
5
highlights the four stages as the main elements of the MBO process, he did not
mention the inter-relationships among elements, nor did he mention which
part(s) is(are) more important. It could also be that process of the MBO
mentioned above is premised on a unitary framework which might not be true in
reality. The action plan, self-control or period reviews might bring adjustment to
the objectives setting, which needs the anticlockwise direction of the process.
2.2. Objectives in MBO approach
The importance of objectives in the general business environment has been
studied by the Hay Group of Philadelphia, whose survey of managers in 1997
showed that the two greatest causes of team failure were changing objectives
and unclear goals (Neuborne, 1997, cited in Jaques, 2005). Objectives are
frequently termed targets or goals, which indicate what should be achieved at
the end of an activity –a point to be hit or a desired result (Hale and Whitlam,
1998: 78), and all these terms mean the same in this research. One of the
main reasons that MBO systems can be motivating is that they provide a target
for people (Gillespie and Harrison, 2000). Such a target is a type of guideline
against which employees are judged, for comparison, whether they are doing
well or not, as well as the direction, which they are driving for.
2.3. Objective setting
The main purpose of MBO is that the leader discusses the objectives with the
subordinates, gives proper help during administration and evaluates the degree
of achievement according to schedule (Jeng et al. 2001). Such discussion
provides a medium for objectives integration. The integration of objectives is the
essence of MBO for it provides opportunities for members of the organization to
make appropriate contributions to the attainment of team, departmental and
corporate goals to upholding core values by achieving a shared understanding 6
of performance requirements throughout the organization (Armstrong,
2003:488).
2.3.1. Characteristics of objectives and objectives setting:
Drucker (1999:59) “believes objectives are needed in every area where
performance and results directly and vitally affect the survival and prosperity of
the business”. Hale and Whitlam (1998:125) “divided objectives into:
organizational, departmental, managerial, technical and individual ones”.
Thomas (1990) claims good objectives have 3 features in common: 1. They
make a significant difference to the company when fulfilled. 2. Staff members
are committed to meeting them. 3. The objectives are specific and measurable.
While Beardwell and Holden (1997) argue that objectives are generally jointly
agreed upon by the employee and manager and used to measure and assess
employee performance, otherwise, unreachable objectives might de-motivate
because people will not see any point in trying. The objectives integration
process is not just about cascading downwards. There should also be an
upward flow which provides for participation in goal setting and the opportunity
for individuals to contribute to the formulation of their own objectives and to the
objectives of their teams, functions and, ultimately, the organization (Armstrong,
2003).
2.3.2. Procedures of objectives setting
The real value of MBO is participation in the objective setting process, not the
objectives themselves (McConkey, 1972; Olsson, 1968; Jeng et al., 2001).
Emery (1989:42) declared that Organisational Goal Setting Process should be
processed as below:
It is essential that top executives draw up a list of the company's overall goals or
7
mission as they are sometimes called. These overall goals should then be shared
with middle and lower level managers. In turn, these managers must devise their
own set of goals so that their departmental goals mesh with the overall goals.
Finally, managers should periodically negotiate individual work goals with their staff.
So the organisation’s strategic objective would determine the objectives at the
functional level, which in turn would determine the objectives at the department
level, which in turn determine objectives at group level, which in turn determine
objectives at the individual level. In theory, if all parts of the organization
achieve their strategic objectives, then the strategic objectives at organizational
level will have been achieved (Torrington and Hall, 1998). It is illustrated in
figure 2.3.2.:
Figure 2.3.2.: Example of an objective-setting cascade
Chief Executive and Board
Functional managers
Departmental managers
Team/group leaders
Team/group members
Source: Torrington and Hall, (1998)
However, arguments relating to targeting were presented even in the 1960s.
Levinson (1972) argues that the assumption that employees will carry out
organizational goals with enthusiasm; even if these goals are against his/her
own personal goals is a fallacy. The common practice is that a person’s
individual goals be discussed in appraisal during objective setting so that, to an
extent they are discussed so they can be compared and contrasted with
organizational goals. Only through this process, can good performance and 8
satisfaction be achieved. In addition, Locke (1978) argues the process of goal
setting must always be considered in relation to the wider organizational context.
Mosard (1984) concludes objective setting fundamental tasks as below:
Fundamental Tasks Of Objective Setting
1. Identifying major needs or goals.
2. Developing a hierarchical structure of the identified needs and goals.
3. Identifying the degree of interaction among objectives, constraints, alterable, and persons involved.
4. Identifying major premises and assumptions.
It should also be remembered that when objectives are set, it is necessary to
have some review and checking. A “good” objective should be RESULTS
centered, measurable, time- and cost- bounded, realistic, desirable, and
attainable (Beck and Hillmar, 1976:167). Normally, a checklist and periodical
review is a must in objective setting. Hale and Whitlam (1998) establish the
ground rules for effective target setting and the list of characteristics helping to
check whether the targets are effective enough. (See Appendix One for details.)
2.3.3. Objectives and strategic vision and mission.
MBO is a synthesis and overall management system, which combines
corporate mission, management concept, vision, strategy, objective and all the
other company resources and reach expected objective by the circle of Plan,
Do, Check and Action (Lu, 2004). The elements that ultimately determine a
company’s success are strategic decisions. They rely on “the vision of the
management team to match the company’s strengths with the opportunities in
the market” (Gillespie and Harrison, 2000:7).
9
Such point of view is close to Drucker’s (1999) who also declares there is a link
between the company’s vision, mission and the objectives of all levels and calls
for attention to the integration of such links. It is difficult to cascade objectives
down through the organization if there is no clear idea of what the organization
was attempting to achieve (Gillespie and Harrison, 2000).
When the company has defined its vision and mission, it can begin to develop a
strategy. In other words, it can begin to attach long term and short term
objectives to its vision and mission. Willging (2006) contends managers should
have the skill of both strategic thinking and strategic planning so as to carry out
strategic management. Strategic thinking is the process organizations use to
determine what their future should look like. Strategic planning, on the other
hand, focuses on how to achieve the vision derived from strategic thinking.
However, he also points out that most companies are more effective in strategic
planning than strategic thinking, perhaps because senior company officials tend
to have an operations background. Such backgrounds are better preparation for
strategic planning than for strategic thinking, and even the most successful
operators may not have had the opportunity to develop the skills required for the
latter.
2.3.4. Objectives and decision-making:
Gillespie and Harrison (2000:70) claim that the first stage of a scientific or
structured decision-making process should be objective setting. Objectives
are both the driving force behind the actions an organisation takes and the
way in which performance will be assessed. All organisations and individuals
have objectives and values, either explicit or implicit that guide their decisions
to some extent (Keeney & McDaniels, 1999).
Scherrer (2003) points out the necessity of strategic decision making 10
processes to ensure short-term and immediate goals are aligned with
decisions made for the company's long-term success. When immediate goals
are not integrated into the strategic decision making process the company
operates in an 'ad hoc" manner and the board loses control of the company.
2.3.5. Integrating objectives into organization targets
It is very important to integrate the vision, mission, and strategic decisions with
organisational objectives. Clarity of organizational values and the integration of
multiple objectives have become increasingly important as managers are
dealing with more complex decision-making tasks. Unless an organization's
mission and direction are translated into measurable performance targets an
organization's mission statement is just window dressing (Walls, 1995).
In China, it is even listed in Labour Union Law (People’s Congress, 2001) that
an organization should hear the Labour Union’s opinion (Normally one
organization establishes its own labour union which is under the governance of
the labour union authorization of the government according to the Labour Union
Law of China.) when it makes key management and development decision; to
ensure the process of management decisions combine with the organizational
target setting.
Objective-setting cascades are frequently used to communicate the mission and
strategic objectives of the organization to the whole organization (Torrington
and Hall, 1998:126). Similarly, Brown (2003) considers corporate objectives and
strategies are often used as drivers for management development and aim to
achieve multiple outcomes. Gillespie and Harrison (2000:9) claim that
successful business has a good overall direction, which determines the
business success as they believe “if firms do not have a clear idea where they
are going, it will not be surprising if they never get there”! 11
However, organization target setting consists of long-term and short-term ones;
whether the vision and mission is fully in alignment with the organizational
objectives, or whether the short–term target setting is consistent with the long-
term ones and goes along with company vision and mission remains uncertain.
2.3.6. Objective and department
Moore (2006) argues that departments (or groups or teams) must align their
targets with the organizational one as to a higher purpose, that is the
superordinate goals - goals that have a higher purpose than any one group and
align all groups to that purpose giving each a common goal and sense of
identity. More importantly, whenever there is a conflict between groups, each
must always revert to the superordinate goal/measures in making decisions.
Once more, this is based on a unitary view of organizations.
Wang (2003) specifies the importance of team cooperation in MBO as the
kernel. He claims when an organization sets clear objectives, it cannot achieve
them without close internal cooperation. It is very important that departments or
operating groups break down and share organizational objectives. However,
the departments or groups that carried out the appointed or shared targets
might not always understand the role of their department’s goal in the context of
the company’s?
However, it is not simple to build up the internal cooperation, though it is
important. It relies a great deal on the cooperative attitude, as well as teamwork.
The management skill of team work building, the organizational culture, the
individual values and some other factors have lots of impact on it. Joseph and
Harper (2001) point out MBO targets are agreed upon by profit centres,
divisions and individuals, but if the participating parties do not have a
common agreement on the targets, there will be difficulty in achieving them. 12
2.3.7. Objective and individuals
Objectives should advance the company's corporate vision; whilst aligning the
employees' vision in line with the company's main objectives. Kaplan and Norton
(2001) point out those personal goal-setting processes are a means to guarantee
success for a company. By setting out clearly what is expected from individual
employees, workers know what is expected of them and can derive a sense of
achievement when objectives are achieved. Also by aligning the assessment of
individuals to the objectives of the organization as a whole, it is more likely that
the efforts of individual employees will be of direct benefit to the organization as
a whole (Gillespie and Harrison, 2000).
Thus, the individual alignment is important in the procedure of target setting.
However, not every individual knows of this and sometimes they just accept the
targets without alignment to their own involvement. Nor is it common for every
individual to possess the skill of integrating his or her own targets into
organizational and departmental ones. Wang (2005) points out that problem
might occur when the individual is not given the chance of information and
discussion of the company objectives under the whole context. Gillesipie and
Harrison (2000) protest that if the employee is given an objective out of context
and does not think that it is attainable (having had little opportunity to discuss it);
they are unlikely to be motivated to achieve it.
2.3.8. Objectives and plan
Odiorne (1992) argues that it is not enough to have good goals, managers must
define goals with plans to match, which demonstrates that there is enough
forward thinking to assure the goals are tough, realistic and attainable.
13
2.4. Primary barriers of good objective setting
Dating back to 1968, Olsson indicates that mistakes or misunderstandings may
occur in objective setting. Successful managers will always relate objectives to a
person’s own interest and activities in the organization. Following are some
barriers mentioned in the study of target setting in the literature research.
Insufficient communication or education to create awareness: A
prerequisite for implementing MBO is that all employees understand the set
target and its setting procedures. It should be conveyed in all communication
media and vehicles and reinforced by the personal behaviour of executives
(Kaplan and Norton, 2001). Moore (2006) contends that even before writing up
goals and objectives, however, corporate officers need to communicate their
vision and mission to company employees in a manner that elicits both
employees understanding and "buy-in".
Incompetence in target writing skill: Drucker (1999) points out that a real
difficulty of target setting lies not in determining what objectives are needed, but
in deciding how to set them. There is only one productive way to make it: by
determining what shall be measured in each area and what the yardstick of
measurement should be. Zeng (2005), the famous researcher who wrote a
series book on the study of Chinese-style management in China, also argued
that target setting is not just giving out orders, it is a prolongation and duration
which needs aggregation of various management behaviors and involvement.
Managers who favour a Unitarist outlook need to pay more attention to the
interaction in target setting. Scientific and specific target setting will likely be
other difficulties for traditional Chinese managers who used to give macro-
managerial decisions (Yu, 2003).
14
Lack of Management skill: Beiman (2006) reported in his study that Chinese
are comfortable with MBO for it is clear, direct, functionally focused, and often
cascaded from a superior's key objectives. However, to set strategic objectives
that materially enhance the likelihood of success, Jaques (2005) argues that a
much more detailed approach is needed, such as copious advice for setting
goals and objectives, most notably the principle of setting SMART goals
(Specific, Measurable, Attainable, Realistic, Timely). Likewise, Mathews (1994)
states managers need to get familiar with the content of the managerial job to
understand the content of managerial goals.
This lack of management skill blocks target setting which will lead to a failure in
MBO in the end. In a survey over 300 diverse businesses implementing MBO
programmes, McConkey (1972) summed up twenty ways to kill them, among
which there are six relating to objective setting resulting from improper skill in
target setting. Table 2.4. below presents some abstractions from his lists:
15
Table 2.4: Six Mistakes in Objectives Setting That Kill MBO Program
(Source: McConkey, 1972)
Fear of Failure: Fear of failure, especially one that results in losing face,
deters many Chinese managers from clearly defining goals (Zeng, 2003).
Rogers (1993) explains that it does take courage to raise expectations and set
oneself up to be judged by the world's most exacting critics.
2.5. Conceptual framework
With the objective of evaluating the procedures of target setting in the MBO
Weakness Performance Examples
Quantify everything Insist that only highly quantified objectives will be
approved.
Stress objectives,
not the system
Have the manager only focus on writing their isolated
objectives without drawing attention on how their
objectives will fit into, or operate under, the system.
Have objectives but
no plans
No requirement for formulating realistic plans to make
the objectives become an actuality, or no test to the
plan for realism is a beautiful way to murder an MBO
program.
Dramatize
short -term objectives
Operate on the ungrounded premise that if you take
care of the present, the future will take care of itself.
Blending all
objectives
Another way to emasculate MBO is to fail to coordinate
all objective from different department managers.
One-man show in
setting objectives
Not taking time and effort to discuss the objectives
with them is the real key to killing MBO.
16
approach at LZ, the author sums up the literature discussed above and links
them into a conceptual framework shown in figure 2.5 below. The first stage of
the framework is to make sure the organization has a clear vision and mission.
These are the factors to be considered and referred when company is making a
strategic decision, which will be related to the objectives setting as a
prerequisite for target setting. Basing on such processes, the targets of
organization, department or group and individual are integrated and composed.
In this stage, an assumption that there is a fit among these three parties within
the integration of targets, which is shown as the heart of these three circles that
overlap together. This fit represents agreement on their best bit in agreeing the
target setting, which may otherwise be divisive. The argument here is that such
fit is not always met with the barriers such as the ability to integrate, skill of
communication existing in between. MBO programme participators should
always try to enlarge the overlap to reach better target setting. For the last
stage, attention is to be given for the matched action plan with the proper review
for future implementation.
17
IndividualGoalSetting
DepartmentGoal
Setting
Organisa-tional Goal Setting
Figure 2.5: Conceptual Framework
Identify Intermediate Goal
From long-range Goal
Barriers of goals integration
Barriers of goals Barriers of goals
integration integration
Fit from goals integration
Source: The Author (2006)
There are other factors which exert influence on the model and need to be
taken in any study of the relationships underpinning the elements of the
Strategic Vision and Mission
Strategic Decision-making
Goal review and action plan match
18
framework. The geographical position of the firm and the internal environment
of it, such as its culture, management system and average level of management
skills, as well as the external environment of the firm such as the political,
environment, social, technology, economy and legal situations. And further
exploration of barriers to integrate the targets so as to reach an implemental
and motivating MBO for the firm is necessary in any future study.
19
Chapter 3 : Research Methodology
3.1. Research philosophy
Research philosophy considers the main philosophical positions that underlie
the designs of management research, i.e. how do philosophical factors affect
the overall arrangements (Easterby-Smith et al., 2002)? Saunders et al.
(2003:83) introduce three different approaches to research: positivism,
interpretivism and realism. This research utilizes realism and the explanation is
below:
This project attempts to understand why it is difficult for LZ to conduct target
setting? What is happening in their procedures? What are the barriers for LZ to
integrate the objectives of their management strategies with organizational and
managers’ targets. How to make target setting practical and motivating for both
managers and staff? Interpretivism provides a philosophy to probe questions of
this nature; i.e. where social constructions of the research subjects are very
salient. In operation, managers may have different interpretations of the
situations that affect their actions and decisions.
Interpretivism seeks to understand the subjective reality of those that they study
and the related motives, actions and intentions (Saunders et al., 2003). Such an
approach supports research into the critical evaluation of target setting in LZ.
The research explores how LZ carried out targets setting, from top managers to
staff. It examined the procedure of target setting and explained what they were
doing and researched those factors that really influence them and how these
factors interacted? These research outcomes were analyzed in the context of a
social situation in which such events were happening and where the LZ existed.
However, it also needs to seek explanation of causal relationships between
20
variables in this research, such as the cause of de-motivation of target setting in
the MBO approach and the barriers preventing LZ integrating objectives of their
management strategies with organizational managers’ targets. Thus, some
objectives also stemmed from the positivism philosophy were also employed for
the control to some testing of hypothesis (Saunders et al. 2003).
In such cases, where positivism and interpretivism conjoin, the philosophy is
realist. Saunders et al. (2003) also conclude that realism is based on the belief
that a reality exits that is independent of human thoughts and beliefs. However,
in application, it shares some philosophical aspects with positivism as well as
interpretivism (ibid). Easterby-Smith et al. (2002:35) argue that none of these
different approaches can be considered as “completely pure applications of
their assumed paradigms”. In this paper, it took use of the paradigms of realism
which is contributed by both positivism and interpretivism with the methods of
qualitative and quantitative data collection and analysis.
However, conducting realist studies can be costly due to extended research
time (Kim, 2003). Since the author is studying in the UK at the moment and it is
not possible to conduct some of the fieldwork at the company in-person, a
research timeline plan was made (see Figure 3.2. below) to guarantee the
fulfillment of the research is on time and on track.
3.2. Research strategy
The research strategy identifies precisely what is going to be done and how will
it be carried out to reach the objectives (Raimond, 1993). In this research, case
study was selected as it is a research strategy of solving problems,
understanding phenomena of interest and generating additional knowledge in
that area (Sekaran, 2000). Here, the case study was focused on LZ.
21
However, to some extent, the nature of the study depends on the stage to which
knowledge about the research topics has advanced (Sekaran, 2000). Bell
(1999) gives a word of warning: single researchers working within a limited
timescale need to be very careful about the selection of a case study topic.
The focus of this research is a single case: LZ (XXXX) Company. Since the
author has been entrusted to give management advice to the corporation, and
being a close friend of its CEO for years, it was very accessible to get needed
information and to carry out an in-depth study. Besides, it was practical for them
to assist with the research so as to generate answers to the questions of “why”
and “how”. A specific and holistic strategic planning is necessary to be
established at the very beginning. The Time Line for the Research (See Figure
3.2. below) was established to make sure every step was in accordance within
the schedule.
Figure 3.2. Time Line for Implementation of Research for the Project
1 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 21Sel ect topi cs 8 Oct.
Questi on draf t 5 Nov.
Pi l ot Q. nai rs 30 Nov.
Pi l ot i ntervi ew 3 Dec.
Revi ew Pi l ots 10 Dec.
Adj ustment 10 Dec.
I ssue Q. nai rs 24 Dec.
I ntervi ew 24 Dec.
Secondary Data 24 Dec.
Anal ysi s 14 J an.
Compl ete
StageFour
J anuary Stage Four
Time Line for Implementati on of Research for the Proj ect
StageThree
Stage ThreeStage TwoStage OneOctober Novemeber December
StageOne
StageTwo
Moreover, it is necessary to employ a number of “field-based research methods”
22
(Lewis, 1980) such as in-depth interview, different data collecting and collection,
various analysis steps. Through this triangulation, validity and reliability were
achieved.
There are several challenges in conducting case study research: it can be time
consuming, depends on skilled interviewers, care is needed in drawing general
conclusions from a single case and in ensuring rigorous research. Despite this,
the result of case research is still of very high impact.
3.3. Critical evaluation of the research methods selected
3.3.1. Quantitative and qualitative research methods
Quantitative research
A great deal of management research will involve some numeric data, or
contain data that could usefully be quantified to help in answering research
question(s) and meet objectives (Saunders et al., 1997:287), and so does this
research. It uses numeric data to present findings in the form of graphs and
tables. These convey a sense of solid, objective research with “an aura of
scientific respectability” (Denscombe, 1998:177). In this research, some
questions were set to obtain quantified answers both in questionnaire and
interview. Specific notice was devoted to secondary data, such as the
company’s annual report, company files and staff’s target dialogue records.
However, according to Denscombe (1998), the disadvantages of quantitative
analysis are: quantitative data could cause “garbage out” if it is not treated
scientifically, especially with computers. Thus, it was important not to analyze
the quantified data exclusively; it was put into the context of the LZ Company in
its culture and past practices as well as the context of the individual
performance in the company with the combined information of quantitative data.
23
Together with the analysis from qualitative data, the possibility of unilateralism
was reduced to a minimum.
Qualitative research
Berg (1989) reckons that, in some senses, all data are qualitative; they refer to
essences of people, objects, and situations. The process of qualitative data
research are not in a “one-step” single directed action, it consists of four
concurrent flows of activity defined as: data reduction, data display, and
conclusion drawing / verification and moves among these four “nodes” (Miles
and Huberman, 1994:10), which is illustrated in figure 3.3.1:
Figure 3.3.1:
Sources: Miles and Huberman (1994:12)
So, in the beginning of the research, the researcher collected as much data as
possible, including company records, first time meeting with relevant staff of the
company, and a questionnaire pilot. Then analysis and review were conducted
to reduce pointless data, necessary adjustment was applied and selected
targets and questions were refined. The intelligence generated from the
beginning gave guidance and set samples for the following research, which
incorporated into future interviews to check out the emergent ideas and
understandings, just like “an iterative process” (Easterby-Smith et al. 2002:82) 24
Being guided by the realism research philosophy, this research also worked
with qualitative data, sharing an intense interest in personal views and
circumstances. However, qualitative research should try to avoid being
impressionistic and subjective as this is one of the most common disadvantages
of qualitative research (Bryman and Bell, 2003). Because qualitative research is
difficult to replicate and lacks transparency with the problems of generalization
(ibid), attention and relative precautions were taken, such as detailed recording
for tracing back, clear and systematical selection and analysis during the
operation.
3.3.2. Questionnaire
Questionnaire is the technique of data collection by preset questioning in a
replicable way for descriptive and explanatory “facts and opinions” (Easterby-
Smith et al., 2002:133), so that behaviour and attributes can be analysed
(Saunders et al., 2003). It is a good way of collecting certain types of
information quickly and relatively cheaply (Bell, 1999), and it is suitable for this
project to get answers to the questions and meet the objectives.
There were 232 staff in LZ (including the GM himself) in September 2006. They
were divided into nine departments that are shown in the following company
organization chart:
Figure 3.3.2a.: The Organisational Structure of LZ (XXXX) Company
Source: LZ (XXXX), 2006, September.
The questionnaire (See Appendix Two for detail.) was issued to seven of the
nine departments (Excluding Legal and Public Relationship departments as
GM of LZ(GZ)(232)
HR(18)
MarketingandSales (36)
Finance(12)
Logistics(13)
R&D(8)
Operation(128)
Legal(4)
QC & SHE(9)
PublicRelationship
(3)
GM of LZ(GZ)(232)
HR(18)
MarketingandSales (36)
Finance(12)
Logistics(13)
R&D(8)
Operation(128)
Legal(4)
QC & SHE(9)
PublicRelationship
(3)
25
their offices are not in XXXX). 80% of staff selected by departments at random
were given the questionnaire, except production, together with their department
heads. As not every one of the production department had experienced MBO,
only 30% of them were selected at random and were given the questionnaire,
together with the managers and line heads. Thus the total number of employees
taking the questionnaires was 116, which are allocated as in the following table
3.3.2a:
Neutralism and non-subjectivity was needed as Harris (2001) states that
questionnaires and interviews may be influenced by the subject's view of what
the researcher might want to hear, by reluctance to talk about sensitive ethical
issues, and by imperfect recall.
Staying in UK, it was not possible for the author to take in-person
questionnaires to the company; this was carried out by a third party. Knowing
the importance of thorough understanding, the author conducted a pilot with the
help of her colleague at the very beginning, aiming to reach the same
understanding and operation for the mass questionnaire. Bell (2005:147) points
out that all data-gathering instruments should be piloted to test how long it takes
recipients to complete them, to check all questions and instructions are clear
and enable the researcher to remove items which do not yield usable data.
The pilot questionnaire was distributed to five people from the HR department of
Depart-mentTotalStaff
Ratio ofSelect.
1.00 0.80 0.80 0.80 0.80 0.80 0.30 0.00 0.80 0.00
SelectedStaff
1 14 29 10 10 6 38 0 7 0
Total Selection: 116Average Ratio of Selection: 0.50
GM
1
Table 3.3.2a. Staff Selection Allocation of LZ Company for Questionnaires
P.R.
18 36 12 13 8 128 4 9 3
R&D Oper. Leg-al QC&SHE
HR Mkt&Sal.
Fin. Logistic
26
LZ including the HR manager. HR department was chosen because it was the
main department that prepared, carried out and reviewed the target setting, and
it was this department that introduced such management concepts to the whole
company. Adjustment took place to the question-design, skill of questioning and
data sourcing. Before the final questions for the questionnaire were fixed, they
were re-examined by two native English speakers to avoid bias or
incompleteness in English expressions, since the author is not a native English
speaker. Still, it is recognized that the questionnaire might have a drawback as
the author did not issue and explain the questionnaire in-person to the
participants.
To have a quick and full collection of the questionnaire reply, the entrusted
colleague of the author’s went to the plant and issued the questionnaire
department by department with the introduction by the board director, who gave
full support to the research. 116 questionnaires were issued with the help of
staff in the HR department. But the explanation and collection were conducted
by the entrusted colleague, so as to minimize the concern of confidentiality from
participants. The questionnaires were anonymous and confirmation of
confidentiality was informed too. These were to obtain a free and frank answer
to the questionnaire.
The following table lists advantages and disadvantages of questionnaires:
27
Table 3.3.2b.: List of advantages and disadvantages of questionnaires
Advantages Disadvantages
Wide Coverage. Poor responses rate.
Cheap. Incomplete or poorly completed answers.
Eliminate effect of personal interaction with researcher.
Limit and shape nature of answers.
Cannot check truth of answers.
(Source: Denscombe, 2003:161)
Knowing the existence of disadvantages of the questionnaire, two other
research methods were introduced to offset the weak points.
3.3.3. Semi-structured interview
This research used Semi-structured interviews because it involved some
closed- and open-ended questions for collecting straightforward data and
allowed interviewees to explain more complex feelings and attitudes (Kulic,
2005). The major advantage of the interview is its adaptability, for it to follow up
and provide “ideas, probe responses and investigate motives and feelings” that
a written response can never do (Bell, 1999:135). Such method upheld
qualitative data collecting while offsetting some weakness of the questionnaire.
However, there are weaknesses in an interview too. They are time-consuming
and highly subjective. Therefore, among the 116 questionnaire respondents of
LZ, only a relatively small number (12 in total) were interviewed. Since it was
28
not directly conducted by the author, it is possible to have a danger of bias,
especially when most of the interviews were conducted by the author’s
colleague, who might have a different interpretation of the data or phenomena.
The objective of this project is more related to qualities, such as individual
motivation, stress, and initiative, where interviewees might easily offer
ambiguous answers or become confused. Thus, the interviewer should possess
the skill of conversation control and be sensitive to interviewees’ reactions, so
that lines of inquiry can be changed and adapted (Easterby-Smith et al.
2002:89).
Since the MBO management scheme had been implemented in the whole plant
for years, and mass training had been carried out in the first year of its issue, it
was possible to approach every department and every manager for interview.
To have a holistic picture on the phenomena of how LZ carries out such
schemes, selections for the interview were divided into different departments
based on their numbers of employees, but two from one department was
necessary to find out interpretations from both the top and the lower level of
employment. Hence it provided a critical evaluation of the process of target
setting from different perspectives. Selected interviewees from the company
were allocated in as below:
Interviews (See Appendix Three for detail.) were conducted after they had the
Depart-mentTotalStaff
Ratio ofSelect.
1.00 0.17 0.06 0.17 0.15 0.25 0.02 0.00 0.22 0.00
SelectedStaff
1 3 2 2 2 2 3 0 2 0
Total Selection: 17Average Ratio of Selection: 0.07
9 3
QC&SHE
P.R.
1 18 36 12 13 8 128 4
Logistic R&D Oper. Leg-alGM HR Mkt&Sal.
Fin.
Table 3.3.3. Staff Selection Allocation of LZ Company for Interview
29
questionnaire, so that they had a better understanding and were familiar with
the topics. However, a pilot interview with the HR manager was also conducted,
based on similar reasons for a pilot questionnaire. Another purpose of the trial
interview was to get some warming up of the company for a bigger scale of
interview and questionnaire allocation. It was conducted by entrustment to the
experienced colleague there. However, it should be noticed that there might be
a different style and way of understanding of the interview since they were
conducted by the entrusted colleague. It might cause different interpretations of
the answers. Knowing the existence of such drawbacks, the author conducted
two interviews with web-camera with the General Manager and the HR
manager. These interviews were conducted at night in UK time as the time
difference between UK and China is eight hours. The distance interview
enabled the author to obtain first-hand experience and information through the
operation. Such experiences and information were exchanged with one
entrusted colleague of the author’s, thus to reduce the limitation of semi-
structure and absence of in-person operation.
Good concerns were given to protect the information contributed by the
interviewees, such as confidentiality and ethical right. It was necessary to
minimize the risk for the interviewees of exposure and embarrassment: loss of
standing, employment, self-esteem (Denzin and Lincoln, 1998).
3.3.4. Secondary data
Secondary data are those collected by others, not specifically for the research
question at hand (Frankfort-Nachmias and Nachmias, 1996). Since secondary
sources are interpretations of events of the period (Bell, 2005), it is suitable to
apply this research method. There are many sources, such as the public reports
30
of companies, company policies, published academic research, annual report
and the internal documents produced by LZ as it was opened in 1978.
Being close to the management team, especially with the owner of the plant, it
was possible for the author to access most of the secondary data from LZ. It
was clear to both the author and the General Manager that data relating to
finance or production techniques will be confidential and not open to the public.
This research used a wide range of company data, e.g. the vision statement,
performance appraisal forms and the staff handbook, to investigate value
structures, working atmosphere and other factors that influence employees’
behavior in the organization. Knowing these might not be enough, the author
examined company files, which keep all the records of important faxes, memos,
and minutes of meetings, reports, and announcements, to seek information.
Secondary data provided evidence of what was done at the time (Harris, 2001:3).
It was good to employ secondary data as a research method here as it jointly provided
"triangulation", increasing the validity and reliability of research with findings
from primary data (Christopher, 1998). Besides, it cost much less than the
collection of primary data and had the advantage of time flexibility.
List of advantages and disadvantages of secondary data have been listed in
Table 3.3.4. below.
31
Table 3.3.4.: List of advantages and disadvantages of secondary data
Advantages Disadvantages
Access to data. Most researchers will find access to the sources relatively easy and inexpensive.
They are secondary source generally reply on something which has been produced for other purposes and not for the specific aims of the investigation.
Cost-effective. Credibility of the source.
Permanence of data. Social construction. Documents can owe more to the interpretations of those who produce them than to an objective picture of reality.
(Source: Adapted from Denscombe, 2003)
3.4. Triangulation
Triangulation might be defined as the combining of two or more methods of data
collection in the study of the same phenomenon in some aspect of human
behaviour (Cohen et al., 2001; Fielding and Fielding, 1986). It is in contrast to a
single-method approach.
There are strong and weak points in triangulation. The strong points are: the
use of a variety of methods to examine a topic might result in more robust
findings with higher internal validity. Furthermore, recommendations for
managers could be made with greater clarity and confidence (Scandura and
Williams, 2000). The weak points, Oppermann (2000) argues, are the virtual
impossibility to obtain “truth”, what remains as strength of it is in the addition
32
and breadth of insight into particular issues.
However, the use of different investigators helped identify and recognize bias,
and each different source of data provided a unique perspective. These are the
main reasons for triangulation in this research. The triangulations selected are:
time triangulation (That is data collecting at two main stages: the targets setting
and reviewing stage after one month of the setting.); combined levels of
triangulation (That is to interview and observe levels of individual, mid-level
managers, and top managers.); investigator triangulation (That is to involve
more than one observer or interviewer.); and methodological triangulation (That
is to use the different methods on the same object of study.), which are the main
components in Denzin’s (1970, cited in Cohen et al., 2001:113) list of
“methodological triangulation”.
3.5. Reliability and validity
Reliability and validity are ways of demonstrating and communicating the rigour
of research processes and the trustworthiness of research findings (Roberts,
2006).
Reliability refers to the consistency of the measure of a concept. Classically, the
criterion of reliability is whether the research instruments are neutral in their
effect, and would measure the same result when used on other occasions
applied to the same ‘object’ (Saunders et al., 1997:213). To increase reliability,
the researcher confirmed findings by revisiting data in different circumstances or
by a different investigator. Additionally, to make sure the research was reliable,
fairly detailed notes of the process of the research decision were kept, as well
as other methods including ensuring technical accuracy in recording and
transcribing and accurate operation in computing.
33
Validity is a question of how far it can be sure that a test or instrument
measures the attribute that is supposed to measure (Easterby-Smith et al.,
2002:134). The project focuses on internal validity in this research. To achieve
it, the author considered accurate indications of the treatment of an independent
variable in the case of research, as well as the attitudes or knowledge of
respondents in the case study.
However, Bell (2005:117) professed validity is an altogether more complex
concept. If the results, however, can be seen as produced by the way the
experiment or survey was conducted then the results are internally invalid.
Researchers are prompt to jump to answers and no longer measure what they
claim to measure once internal research process produces the results. To make
this research attain validity, the author takes Denscombe’s (2003:274)
suggestions to checks on the validity as followed:
H a ve th e in s ta n ce s se le c te d fo r in ve s tig a tio n b e e n ch o se n o n e xp lic it a n d re a so n a b le g ro u n d s a s fa r a s th e a im s o f th e re se a rch a re co n ce rn e d ?
H a th e rese a rch e r’s se lf b e e n re co g n ize d a s a n in flu e n ce d in th e re se a rch b u t n o t a ca u se o f b ia se d a n d o n e -sid e d re p o rtin g ?
H a ve th e fin d in g s b e e n ‘tria n g u la te d ’ w ith a lte rn a tive so u rce s a s a w a y o f b o ls te rin g co n fid e n ce in th e ir va lid ity?
D o th e co n clu sio n s d o ju s tice to th e co m p le xity o f th e p h e n o m e n o n b e in g in ve s tig a te d a n d a vo id ‘o ve rs im p lifica tio n s’, w h ile a lso o ffe rin g in te rn a l co n sis te n cy?
Many ways were used to examine the validity and reliability in this research,
such as triangulation, sources comparison and data checking with other various
possibilities. At the same time, it was tested whether this instrument was likely
to get the same responses, and to brainstorm with other people like colleagues,
pilot questionnaires with respondents and fellow students of the author.
34
3.6. Cross Mapping Matrix
Before implementing the research in the field world, a Cross Mapping Matrix
was produced to make sure the selected research methods all targeted the
objectives, as well as producing triangulation without neglects. This Matrix
shows the inter-relationship of the objectives, research methods (RM) and
concepts in conceptual framework (CF). It tells how the two objectives of the
research are carried out by questionnaire, semi-structured interview and
secondary data. It presents the purposes and aims of every question in the
questionnaire and interviews in RM which are relating to which part in CF, as
well as presenting the secondary data being researched matched to which
objectives. Table 3.6. shows their relationships.
Table 3.6.: Cross Mapping Matrix of the research:
35
R.M.C.F.
QuestionaireSemi-structure
InterviewSecondary Data
StrategicVision and
Mission1 1.2
Company Constitute,Annual Report, Company
Newsletter,
ManagementDecision
2 3 Same as above
Org.Goal
3.4 4Staff Manual, Annual
Report,
TeamGoal
5.6 5.6Staff Manual, Department
Plan and work report,
Individual Goal
7.8.9 7.8Staff Manual, Job
Description, Work Record
Org.Goal
10 11Staff Manual, Annual
Report,
TeamGoal
11 12Staff Manual, Department
Plan and work report,
Individual Goal
12 13Staff Manual, Job
Description, Work Record
R.M.C.F.
QuestionaireSemi-structure
InterviewSecondary Data
Barriers oftarget setting
13.14 9. 10Staff Manual, Job
Description, Work Record
Objective 1: Evaluation of target setting procedures in LZ
IntegratedGoal
MatchedAction Planto the Goal
Objective 2: Identify the barriers for MBO approach in LZ
Source: the author, 2006
36
Chapter 4: Findings
This chapter contains analysis and some commentary on the quantitative and
qualitative data gathered through questionnaire, semi-structured interview and
secondary data.
The research is concentrated on the internal performance of managers and
staff; therefore external factors which might also impact the target setting of the
MBO were excluded.
This chapter consists of three parts: The first part is the analysis and
commentary for objective one, which is to critically evaluate the targeting setting
procedures of MBO approach in LZ Ltd. The second part is related to the
answers for objective two, which is to identify the barriers to the target setting in
LZ Ltd. It then comes to a conclusion that summarizes the findings with a
general comment. The last part provides a recommendation based on the
analysis and commentary.
4.1. General characteristics of the employees in the selected case
Questionnaire:
Among the 116 persons who took the questionnaires, there was one general
manager; twelve departmental managers (including the deputy managers), four
section officers, and the rest are staff of the company.
4.1.1 Education level of the participants
This data uncover the education level of employees of LZ Ltd. which, to some
extent, reflects their foundation for understanding management and related
concepts, as well as their ability to master or cooperate with management
approaches.
37
The data collected shows the majority (64.66%) of employees have relatively
low education level, and most of them work in the operational and logistic
departments. 31.9% of the participants are of college and graduate level; and
most of them are departmental (deputy) managers or section heads.
4.1.2. Knowledge of Management
This item is to take a look at the employees’ ability to understand some
management concepts such as “team building, active communication, and
strategic planning”.
38
This figure shows the majority (64%) seldom heard of management while only
13% of the participated employees experienced as manager for more than one
year. It should be noticed that the selection of the employees for such a
questionnaire are targeted for the examination of an MBO approach, thus all
managers of the targeted departments were selected for the questionnaire.
This, in reverse, means it is possible a higher percentage of employees know
little about management concepts will occur within the un-selected staff who did
take the questionnaire in LZ.
The knowledge of management concepts is very necessary for the
implementation of MBO approach, especially target setting. LZ utilises Target
Dialogue as the main method of setting targets for employees, which is a
dialogue between the target setter, normally the manager, and the target
executor, normally his or her subordinate. It is a one-to-one dialogue where both
parties negotiate what targets the subordinate should meet next year, usually
with the presence of the HR staff as an assistance. Thus, the concepts of
management, such as strategic planning, managerial decision, communication
skills, SMART target setting are all new and less-practiced for them.
4.1.3. Knowledge of MBO target setting before LZ Ltd.’s introduction
This is to find out how many of the employees possess the experiences and
understanding of the MBO before LZ Ltd. commenced such programme.
39
The situation shown above reflects that not many employees really knew about
such a programme before the company’s introduction. And it is important but
difficult to let them understand before they really carry out.
Findings from Interview:
Twelve 12 people were interviewed. Among them, 6 are of managerial level,
while the rest are of staff level. During the semi-structured interview, 4 of the 12
admitted that management theories are new to them. And 8 of them admitted
the MBO programme is new to them, while only 2 of the 12 said they knew and
experienced target setting of the MBO approach before it was introduced to LZ.
The managers all found it hard to implement such a programme while it was not
so popular and little resonance can be found at the very beginning of the
implementation.
Before implementing such a programme, the HR department had ever
conducted some training of the practices, giving a rough introduction on the
concepts of MBO, and SMART targets, as well as how to conduct a dialogue to
fix the targets contenting both sides. (These can be found in the proof of
secondary data.) One point was commonly (9 of the 12 interviewees)
mentioned, that employees found the training on MBO and the related basic
40
management knowledge very useful, although some express an dissatisfactions
over the insufficiency of training provided by the company. All the interviewees
expressed their expectation for further training or coaching on such programme.
Findings from Secondary data:
In the company’s training feed back reports, training records were found which
demonstrated that the HR department’s attempt to make prevalent the theories
and operation of the MBO programme. The training records were kept as:
Time Training Contents Attendances
15th December, 1999 Introduction of MBO Managers of all departments
3rd March, 2000 Introduction of MBO Key staffs of LZ Ltd.
18th July, 2000 Introduction of MBO All staff of LZ Ltd.
Those conducting the training for the managers of all departments were trainers
from public training company, and all department heads attended, including the
general manager. The trainer who conducted the rest of the training was the HR
manager himself, with 99.2% of the total staff attended. The ranking mark by
the HR department was 8.7, which was a very high mark already (The full mark
would be 10.) The ranking marks by the attended trainees were 8.2, also a high
rank compared to the ranking recorded for other training. But there were some
comments on the record calling for more training on such a concept; some of
the commentaries in the records were suggestions for some in-depth case
study or visit to other companies who have implemented such programme for
further understanding of it.
4.1.4. Conclusion and comments for the general situation:
Based on the above data, the following conclusion and comments were
generated by the author:
41
A. The employees’ competences of conducting target setting in MBO approach
were very low. They did not have enough knowledge of what it was, how to
operate and what is the use of it. Before the introduction of the MBO
programme into the company, not many people knew about MBO management
concepts, nor did they experience target setting in such a programme. Some
managers had less than one year’s experience in management, which means
they may have lacked the management skills needed for conducting the target
setting as most stemmed from western countries.
B. The company made some effort to introduce the MBO programme to
employees, especially for the introduction of target setting and record keeping.
However, that is not enough. The training for MBO was mainly to introduce the
concepts of MBO, and the procedures of target setting; there was no coaching
on how to carry out such programme (i.e. no hands-on training). Though the
trainees were introduced to what programme it was, and how it operated in a
normal procedure, they were not sure how to work it out successfully; there
were no demonstrations or samples on how to set targets with motivation for
both sides. They were informed with the written procedures with lots of assistant
paper and forms, but lack of practice.
C. There were not only few attempts on collection of the feed back on the
conduct of such a programme, but also less attention was paid to the
commentaries on the training. Training for the MBO programme, especially the
skill of setting SMART targets was welcomed by all employees. However,
whether it was sufficient or not is another question. Whether the coverage of the
contents was comprehensive was not mentioned. Besides, there was no feed
back on whether the attendants can master the skill of target setting is also a
question, although the procedures of target setting were well introduced during
42
the training.
D. No trial of implementation or pilot for testing was carried out before the mass
conduction of the programme. All departments and staff carried out the
approach at the same time, leaving no space for adjustment or revision of the
procedures or contents.
4.2. Findings for Objective 1: Evaluation of target setting procedures in LZ
4.2.1. Strategic vision and mission
This section is trying to see if the company has set up a vision and mission
before it carried out the MBO programme. This is the foundation for MBO, as
well as the aim of target setting in MBO. The answers from questionnaires show
that all the participants know the vision and mission of the company, which
proves that the company is conducting a lot of promotion and publicity of such
information. In the semi-structured interviews, all interviewees claimed they
were familiar with the vision and mission. Repeated presentation can be found
in various secondary data such as the company annual report, company
product advertisement, staff manual and Company Image Manual (this is a
booklet giving all the fixed sizes of company logo, trade marks and company
vision written design).
Obviously, LZ has set a clear vision and mission before it makes managerial
decision and sets up targets. This supports the previous findings from the
academic research (Drucker, 1999; Gillespie and Harrison, 2000) that if the
organization has no idea of what the organization attempts to achieve, it is
neither possible nor meaningful to set targets.
43
4.2.2. Integration of the strategic decision-making with the vision and
mission
This item is to exam whether the company integrates its vision and mission into
its managerial decision; whether these decisions are based on company’s final
targets.
The figures above show 95% of employees think the company is making
decisions according to its vision and mission. Only 5% of them thought it is not
strongly integrated. Results from the semi-structured interview reflect that 11 of
the 12 interviewees thought the company integrates their vision and mission to
the decision. One expressed his doubts on such integration. The secondary
data being researched are the company files, where the agenda and minutes of
the managerial meeting were recorded. In the agenda of the top managers
meeting held in December 2005, there was a discussion of targets for 2006;
and in the minutes of this meeting, discussion for setting targets for the
company were held. It was recorded that the general manager required the
management make decisions with the reference to the company vision and
mission.
This suggests managerial decisions of LZ are aligned with the decisions made
for the company’s long-term success, which supports the previous finding
(Scherrer, 2003) from the academic research that strategic decision making
44
processes should be aligned with its vision and mission.
4.2.3. Integration of targets
4.2.3.1. The accordance of the company’s targets with vision and mission
This is to examine whether the company’s target setting is in accordance with
its vision and mission, which are the premier for an MBO target setting.
While being questioned if they know the company’s vision and mission, all the
employees completing the questionnaire or being interviewed answered “Yes”.
And all of them could recite or repeat the company vision, “To make life more
comfortable for our customers”, immediately. However, not all participants think
the company’s target setting is in accordance with the company’s vision and
mission. There are still 12% of them who considered it inconsistent with the
company’s vision and mission in the questionnaire and only 1 of the 12
interviewees thinks they are inconsistent.
The secondary data researched is the company annual report, staff manual
(which keeps all the terms and regulations for all staff to follow), and company
files (which hold the record of the important memos and faxes, minutes of
important meetings, all notice or circulated documentation within the LZ Ltd.). In
the above secondary data, the company vision and mission are clearly shown in
45
the publicity, and the target for the operating year can also be found from such
sources. In the company files, Target Dialogue Forms with targets of the
company for 2006 were recorded. It has been circulated by all departments with
the signature of all the department heads. It is recorded that it had been
placarded on the company information board for one week.
4.2.3.2. The integration of departmental targets with the company ones
This part is to check whether the departmental target setting is in accordance
with the company ones; whether the departments set targets according to the
main targets of the company.
Through the questionnaire, interview and secondary data, it was confirmed that
every department has its own target. Among the 116 participants in
questionnaires and the 12 in interviews, nobody said that he/she does not know
his/her department target. However, while being asked to specify the contents,
2 of the 12 interviewees could not make it; and they are of non-managerial
level.
The integration of targets between the company and the departments are not
very good, as the result from the questionnaire reflects that only 76% consider
his/her department targets are consistent with the company one, which is 12%
46
less than the figure in company ones with its vision and mission.
While the result in interview reflects one interesting phenomena: 8 of the
interviewees think the department targets are inconsistent with the company
ones, among which 6 of them are managers, including the general manager;
while the remaining 4 who think they are not so consistent are all staff of non-
managerial level. While being asked “what was the most difficult part in setting
appropriate and achievable targets for your department?” the answers to such
question are summed up as:
A. The supervisor did not listen to our points and there is no chance to alter his/her
minds.
B. The company targets are too demanding which is difficult for us to achieve after
they are broken down to department targets. There is no chance to adjust the fixed
targets and the department managers feel they are forced to follow the targets and
set theirs in accordance to the company ones.
C. The supervisor did not have the communication skills to motivate the department
managers joining in the target setting procedures dedicatedly.
From the secondary data researched, it is not difficult to find the departments
targets being written on the Target Dialogue forms, including one for the general
manager himself. From the files, it is obviously that the department targets are
assigned by the general manager to the department manager with the signature
of both parties. The secondary data shows that the department targets are
integrated with the company ones, for the company targets are shown on the
first few lines of the Target Dialogue forms, serving as the reference for the
department to set its own targets.
There was no evidence whether furious negotiation or bargaining was
progressed. Nor were any records found about group discussions among the
47
department. Besides, there was only name of general manager and the
department manager with no proof of acknowledgement by the staff within the
department. No circulating signature or any records of reading. No record of
placard either.
These findings support previous research (Wang, 2003) that team cooperation
is an important factor for the success of MBO. It also reflects the academic
research (Joseph and Harper, 2001) that MBO targets should be agreed upon by
profit centres, divisions and individuals, otherwise there will be difficulty in
having them achieved.
4.2.3.3. The accordance of individual targets with the departmental ones
This part is to check whether every staff knows his/her target for the year 2006;
whether the individual target is set in accordance with departmental ones; and
whether these individual targets are motivated as intended.
While all participants of the questionnaire or interview admit that they know
what department target is, as mentioned above, not all the participants know
what his/her target is. There are still 15.52% of the people from questionnaires
who admit they are not sure about their individual targets. All these people are
of non-managerial level.
48
From the semi-structured interview, 4 of the 12 interviewees, who are all of non-
managerial level, can not specify his/her individual target. This is because some
workers of the operation department don’t have a fixed target for the whole
year. They carried out their instructed targets of the month through their section
heads. From the interview with the HR department, this is re-confirmed.
The secondary data explained that Target Dialogues are conducted by the key
staff only. There are three copies of such records, with one by the individual
himself/herself, one by HR department in the company file, and one by the
department head.
Among the 116 questionnaire participants, 72% think their individual targets are
in accordance with the department ones. This number is not as high as the
expected one by HR department of LZ. There are still 28% of them do not think
what they are doing is supporting the department’s targets.
During the semi-structured interview, there are 8 people who think their
individual target is integrated with the departmental ones. Only 3 claim they are
inconsistent and 1 claims he/she does not know as he/she has no individual
target.
49
This item demonstrated that targets set for the individuals don’t have a high and
general positive motivation for the employees, which it is supposed to have by
the managers. Actually only 14.66% of them think they are highly motivated by
his/her targets. In contrast, 42.24% think they are not motivated; and 12.07%
even think they are de-motivated.
The results of the interviews are slightly better: 2 of the 12 consider it very
strongly motivating; 7 of the 12 consider it motivating; 2 consider it not
motivating and 1 considers it de-motivating. The chart below is the result from
the interview.
The reasons for a higher percentage of invigoration are probably because 6 of
50
the interviewees are department managers. Besides, it should be
acknowledged that such answers are generated through face-to-face talking,
while pressures might occur during the conversation.
These findings support the previous academic findings (Wang, 2005; Gillesipie
and Harrison, 2000) that employees should be given an objective within the
context with chances to discuss for a clear understanding, so that they are likely
to be motivated to achieve it.
4.2.4. Goal review and action plan match
4.2.4.1. Action plan to carry out company targets
Fig. 4.2.4.1. Action plant to carry out company targets
100.00% 0.00%0
20
40
60
80
100
120
140
Yes, I think so. No, I don't think so.
While all the participants think the company has an action plan to carry out its
targets, not all of them can give details of the plan. In the interview, 4 of them
claimed that they were not informed about the detailed action plan from their
supervisors; these 4 participants are of the non-managerial level. These show
the insufficiency in making the company actions known to all staff. There might
be problem in communicating information of actions the company to take to
everyone in LZ.
The secondary data did not provide very clear records on how the action plans
51
are set up, but records of the action plan can be found in the minutes of the
managerial meeting held in December 2005.
The findings from LZ are in accordance with the academic finding (Odiorne,
1992) that it is not enough to have good goals; mangers must define goals with
plans to match. This reflects that in the procedures of target setting, it is
necessary to have a matched action plan, otherwise, the targets are only some
words written on the paper stored in the files.
4.2.4.2. Action plan to carry out department targets
The majority of questionnaire participants think the departments have an action
plan to match targets. This means the department targets might only be a nice
described destination to some of the staff, and they are not told how to make it,
nor were they motivated to be action-oriented in aligning department targets
with company’s, though there are only 12.93%.
The results from interview show a similar situation. 10 of the 12 know that the
department has an action plan while 2 of them don’t.
52
4.2.4.3. Personal action plan to carry out individual targets.
In the answer of this question from questionnaires, 58.62% admit they don’t
have any personal action. But it should be pointed out that 38 of the 116
questionnaire participants are from the operation department and most of them
don’t have a target for the whole year. This figure shows not many employees
are motivated or required to set up his/her own action plan. They don’t know
exactly how to match or implement their targets with an action plan.
The results of interview provide better figures. (It could result from the high
percentage of managerial level among the 12 interviewees.) 9 of the
interviewees have a personal action plan and 3 don’t. This reflects that
employees of a higher position were encouraged to have their individual action
plan to fulfill their targets.
4.2.5 Conclusion and comments for objective one
In summary, in the investigation on how LZ set targets illustrated clearly that
there are some parts of the procedures that need to be noticed. Although the
procedures themselves are commonly accepted by the employees, some
particulars of preparation or action should be taken into considerations, which
are boiling down to the following items:
A. Lack of communication with the staff from the top down. As mentioned in
53
Chapter two, it is important that corporate officers need to communicate their
vision and mission to company employees even before writing up goals and
objectives, however, in a manner that elicits both employees understanding and
"buy-in" (Moore, 2006). However, in LZ Ltd., few channels were built or found in
delivery of such information. Staff are prompt in losing their interest in
involvements.
B. The popularization of the MBO and the target setting procedures are not
enough. Although the company did attempt to educate its employees in the
operation of such a programme, the result was not good enough. Some further
action or practices were obviously needed but not given, and little attentions
were paid to the feed back. Little adjustments or revisions were made for
improvement. When it was introduced, there was not enough discussion or
popularization to make it more acceptable and understandable by lower level
managers.
C. The general competence or comprehension of the managers to the theories
of management is not very high, which is one of the reasons target setting
became difficult. It represents the finding from Willging (2006) that managers
should have the skills of both strategic thinking and strategic planning to carry
out strategic management.
4.3. Findings for Objective two: Identify the barriers in target setting
procedures in MBO approach in LZ Ltd.
Finding from Questionnaire
The following item answers the question “What barriers do you think exist in
target setting procedures in MBO approach of your company?”
54
Based on the previous research and findings from Zeng (2005), Jaques (2005),
Mathews (1994), and McConkey (1972), a set of barriers was placed in the
questionnaire for the employees to identify the main barriers they considered in
implementing target setting.
The most selected one is “insufficient management skill”, 62 in 116
questionnaires chose it. The next is “lack of skill in target setting’, which is
54/116, the third one “not enough awareness” has 22 participants’ choose, 18
participants considered fear of failure is also a barrier to them. There are 5
participants who have additional ideas which are listed as:
A. Too much paper work which generates confusion.
B. Not enough time to negotiate targets with the supervisor.
C. Too much pressure while targets are linked with income of employees. It is not
fair that employees are judged only based on the fulfillment of targets, which is too
result-oriented. Besides, it gives lots of pleasure for the employee in setting targets
when they think of the connection of bonus or compensation. (This was mentioned
by two participants.)
55
D. The targets set for both the company and the department are so fixed that it
seems no margin of changs can be made, which makes it hard to make a practical
target for the individual.
Findings from Semi-structured interview
While being asked about the barriers for the target setting procedure in MBO
approach, similar reasons were summed up. In addition to the above ones listed
from questionnaires, the following were mentioned by some of the interviewees
as barriers to the target setting:
A. Not enough knowledge of the MBO and the Target Dialogue programme.
B. There was a one-man show, which means the supervisor decide everything
without any discussion with the listener, in the target setting procedure; the
subordinates are just being instructed on the targets for him/her for next year with no
chance of negotiation.
C. Too much pressure from the strong connection of incentive system.
Findings from secondary data
No evidence was collected with clear links pointing to barriers to target setting.
However, some points can be deducted from the lack of changes to the targets
in the targets record file, which means that once the target had been set, there
were no changes at all for the executors. There was no feed back recorded in
the files, which might indicate that interaction between the target setter and
receiver were very rare and not active.
4.3.4 Conclusion and comments for objective two
The findings from above show the company has set targets in the procedures
described in the conceptual framework in Chapter 2. They support the previous
research from various academics (Zeng, 2005; Mathews,1994;), which argue
that target setting is not an isolated action, but needs a lot of management 56
competence to carry it out. Managers need to fully understand their
responsibilities and functions as a manager, not just give orders.
They also support the previous finding (Jaques, 2005; McConkey, 1972) that to
set strategic objectives that materially enhance the likelihood of success, a
much more detailed approach is needed, including copious advice, complete
mastery of the principles of setting SMART targets, and theories of setting
motivating targets.
The findings also reflect some lack of completion during the implementation of
target setting in LZ, such as not enough consideration to the department’s
actual ability in fulfillment and placing targets only from the top down; the
invigoration of staff is considered insufficient; the action plan to ensure the
targets being set are carried out accordingly were neglected. These result in a
not very welcome target setting in the LZ Company.
57
Chapter 5: Conclusions and recommendations
5.1. Conclusions
There is a plethora of academic research (such as: Moor, 2006; Zeng, 2005;
Brown, 2003; Wang, 2003; Yu, 2003; Gillespie and Harrison, 2000; Drucker,
1999; Terrington and Hall, 1998; and Mosard, 1984) about the procedures of
targets setting in MBO and how targets should be set, as well as what barriers
might be encountered. These academic researches are supported by the
findings in LZ.
The procedures of target setting in LZ are in accordance with the conceptual
framework mentioned in chapter 2. It set up the vision and mission to decide the
long-term goals for the company’s success. It makes managerial decisions
based on its vision and mission. When it set targets for the company, it pays
attention to the integration of targets from company, department and individual.
With recording of all the targets, it has not forgotten to have the action plan to
follow up the set targets. These findings reflect that LZ is procedurally in
accordance with the conceptual framework mentioned in chapter 2. However,
they have not paid enough attention to the details, nor the interaction with the
employees.
The findings also reflect that the company paid attention to the introduction of
the MBO programme, and they give education and training to increase the
awareness of the employees in understanding such a programme too. They
also paid attention on the forms of how to carry out the target setting, such as
having meetings on deciding the company targets, meetings with the
department heads, and dialogues with individuals. But little attention was paid to
the results and real feelings of the employees. Most of the actions are on the 58
surface, not mentioning the re-adjustment according to the actual reaction or
feed back in time. In some cases, the traditional Chinese-style managers are
setting targets like issuing orders, not caring whether the targets are SMART
enough for implementation nor whether such targets motivate the staff. And
action plans were not prevailing in LZ after targets were set, which will likely
lead to a lack of action taking or misdirected in performances.
In summary, although much attention has been paid to such procedures, little
attention had been put into details while executing. In actual operation, there
are some particular parts being neglected, in the area of:
A. Preparation, such as it has not get everyone well prepared for the implementation
of MBO, a lack of preparation for everyone with complete understanding of operation
for setting targets.
B. Operation, for example it carried out the programme in full-scale without
guarantee of readiness all over the company.
C. Examining, such as it did not examine the results of target setting by interval, nor
did it check whether every one has his/her action plan to match it.
The barriers mentioned in previous academic research have been
acknowledged as barriers in target setting in LZ as well, which are shown as
below:
Lack of management skill.
Lack of proficiency in target setting.
Insufficient awareness.
Fear of Failure.
In addition, this research identified some other barriers that were not mentioned
in the above academic research. The employees found it hard and compressive
59
to set targets with strong links of incentive compensation. The employees also
feel depressed by the one-man show styled target setting in some occasions,
which is in support of the previous findings (Zeng, 2005; Yu, 2003) in academic,
highlighted as some traditional Chinese managers’ characterized style.
In addition, the employees complained they were confused by too much paper
work and recording, which becomes a barrier for them in setting targets. It is
probably because they are not well instructed with the operation details, nor are
they well illustrated in the benefits of such paper recording.
It might also be difficult for employees to carry out the actual practice of such a
programme. Although relative education and training had been conducted by
the HR department, with high staff coverage (all members of LZ were included)
of introduction for MBO and target setting had been carried out, reviews or
checks of the actual operation and real mastery of the participants were not
taken. No pilots or trials of the operation of target setting were carried out.
Moreover, neglect also exists in feed back from the staff.
5.2. Recommendations
From the case study, the following recommendations are generated:
A. Ensure the introduction of the programme is sufficient and involves all
relevant staff. Enough preparation is necessary, no matter in terms of time or
involvement. It will help increase awareness and popularization of the
programme if more time is given to staff to understand it.
B. Various education or training methods should be applied to increase the
ability of the staff. Except for training in introduction style, other forms of
training/education could be introduced to provide different perspectives to
strengthen the understanding and mastery of the theories, such as coaching,
trial practices and learned from samples.
60
C. Improve management skills in communication, motivating target setting and
writing are necessary for employees. Although the mass education level of LZ is
not high, the education level for the management is. It will not be too difficult to
improve their managerial competences, especially the communication skills,
motivation-oriented dialogue and action-oriented planning.
D. It is necessary to ensure tools of MBO with all the forms and papers for
target setting, such as Target Dialogue, are understood by users, as well as
how to make good use of them instead of just keeping records. Application of
such forms in daily work has a more significant meaning than keeping them as
accessories or modern fads of the company.
E. More attention should be paid to the ability of after-lesson feed back once
some training is issued. Likewise, more attention should be paid to feed back
after a new programme is inaugurated, especially when it is relating to people
management. Top management should give chances for their subordinates to
speak their opinions. Sometimes, people who work out the programme know
how to achieve it better than people who decide it.
F. Top management’s support in the programme will be helpful to
implementation of it. If top management pays more attention to results and
changes of the programme, high awareness and seriousness on such
programme will be given, which is still a common situation in some companies,
especially stated-owned companies in China at the moment.
5.3. Areas for further research.
This research intends to discuss the best way to set targets in the MBO
approach, seeking the elements that attract or de-motivate people taking part,
and to conclude what key factors cause the failure or success of objectives
setting to avoid mistakes or neglect in the future.
61
However, some suggestions can be made for further research. Firstly, both the
quantitative and qualitative data are collected from one case study, LZ (XXXX)
Company only. Further research can benefit from a bigger environment
comparison such as its affiliated companies and its external environment.
Secondly, further research may give a more complete answer if data are
collected from a longer period; for instance, from the whole cycle of target
management including result appraisal. Thirdly, target setting can be examined
more clearly in a wider study closely linked with the company strategy,
management decision-making and development planning. Fourthly, further
research on contents of goals and the method of goal selection can be linked.
Further research can also focus on rationality of the target setting and
implementation management. Firstly, it can use different research methods to
compare the results in different spatial-temporal circumstances. Secondly, the
qualitative research on factors such as culture and sub-culture within the
company can be employed too. Thirdly, it could investigate individual reactions
deeply and closely by qualitative research such as case studies. Fourthly, more
updated books will provide help in systematic understanding of the trend of
MBO development. Last but not least, replication research in some areas such
as negotiation of target setting, as well as comparison with significantly different
targets such as quantitative and qualitative ones could be used to test the
validity of the model.
62
Implementation Plan:
Table 5.3.: Implementation Plan for Improving the Target Setting in LZ
Timeline: March 2007 – March 2008 (starts from March)
Goals Action Steps Est.Cost Timeline (check by months)
M A M J J A O S N D J F
A. Re-introduce
MBO Program
1. Detail training of MBO program to all staff, from theories to skill. £50
2. Introduce in various ways, including select one section for pilot. £0
B. Check if staff
master actual
operation
3. Expand the experiences from the pilot and learn from the
models.
£0
4. Employ other methods to introduce tools of MBO, such as
samples, listening materials, practice kit and group discussion.
£50
C. Improve
management
skills, such as
communication,
5. Improve communication skills for the managers, by training and
case study.
£2000
6. Training (coaching) key staff’s basic management skill, such as
communication, target writing, and time management.
£1000
63
target writing,
listening and
motivation.
7. Give lectures to all staff in managerial levels to strengthen their
understanding of management theories. Proper samples are set
and learning from other is encouraged.
£500
D. Re-introduce
the tools of MBO
8. Print out explanation of Target Dialogues and their using method
in brochures. Publish the correct samples. Exercises and
correction for staff that needs.
£800
E. Chances for
staff complains
9. Place a “Suggestion Box” in the public for feed back collection. £5
10. HR staff goes into the working group for investigation. £0
F. Unified the
understanding of
MBO programme
11. At least two overall meetings to emphasize the importance of
targets relating to company vision. Develop a shared and unified
understanding of the targets from top to down.
£0
64
Append ices
Appendix One: The ground rules and checking list for setting effective targets
The ground rules for setting effective target:
Focus on expected outputs;
Ensure a balance between quantitative and developmental targets;
Invest time in agreeing success criteria-it pays off at assessment;
Pitch targets so they are achievable but stretching;
Demonstrate management support for the process through action;
Involve employees in deciding their own target areas;
Use targets to help manage change and establish organizational culture.
Check list for setting effective targets:
Be measurable.
Include expected completion date or deadline or agreement on what
would be condisdered good/poor achievement in terms of time scale.
Focus on a maximum of six issues. Identify areas of the job where
improvement will have most impact. Balance organizational, departmental,
managerial, technical and individual targets.
Be achievable but stretching.
Be negotiated and agreed. Manager and subordinate should prepare
separately. Both meet to negotiate and agree targets.
65
Be subject to mid-term modification by agreement, if external circumstances
/ conditions change.
Entail a two-way commitment. The manager is committing to assist and
provide the necessary resources for target to be achieved. The subordinate is
committing to work towards the targets.
Sourcing: Hale and Whitlam (1998, p. 127)
66
Appendix Two: Questionnaire
Thanks for giving your time in filling this questionnaire, which is designed to
examine how XXXX (XXXX) Cosmetics Company Ltd. sets targets in
Management By Objectives (MBO) approach and to identify what barriers have
existed in this programme so far. All the information filled in will be kept
confidential and not revealed to anyone but the researcher. The questionnaire
will not be analysed on an individual basis, only aggregate results will be
published. No signatures are needed and please express your prompt feelings
as well as true comments.
Please tick the right answer that represents your opinion or state it where
needed.
1. Do you know the vision and mission of your company?
A. Yes B. No
2. To what extent do you think that managerial decision is integrated with the
vision and mission?
A. Very strong B. Strong C. Fair D. Not at all
3. Does the company have a target for this year?
A. Yes B. No
4. Do you think your company’s target is in accordance with its vision and
mission?
A. Yes B. No
5. Did your department have any clear targets for 2006?
67
A. Yes B. No
6. If “yes” in question 5, when your department set targets for the year, do you
think it was integrated with those of the company?
A. Yes B. No
7. Do you have a target of your work for the whole year?
A. Yes B. No
8. If “yes” in question 7, how much do your think your target for work is related
to your own development?
A. Strongly linked B. Fairly linked C. Not Linked D. Against
9. How much does your target motivate you?
A. Very motivated B. Motivated C. Not motivated D. De-motivated
10. Does the company have an action plan to carry out its target?
A. Yes, B. No.
11. Does your department have an action plan to carry out the target?
A. Yes, B. No.
12. Do you have any action plan to carry out your own target?
A. Yes, B. No.
13. What barriers do you think exist in target setting procedure in MBO
approach of your company? (You can choose more than one selection so long
they are representing your expression or write down your own in the space
provided.)
68
A. Managers lack of skill or experiences in target setting.
B. Lack of education or training to raise awareness.
C. Lack of skill of target setting.
D. Fear of failure.
E. Others (Please specify.)
_____________________________________________________________
14. Your personal information:
Your present
position
General Manager (or deputy)
Department Manager (or deputy)
Section Officer (or deputy)
Staff
Your
Education
Qualification
Of or below high school
College graduate
Graduate
Post gradute
Knowledge
of
managemen
t concepts
Experienced as manager for more than one
yearExperienced as manager for less than one
year Never experienced managing but know its
conceptsKnow little of management concepts
Knowledge
of MBO
targets
experienced targeting in MBO program
beforeNot experienced before, but know
something about it never heard of it until I came to this
company
69
Appendix Three: Questions for Interview:
1. What is the vision and mission of your company?
2. How were the vision and mission integrated into managerial decisions?
3. What was your company’s objective(s) for 2006?
4. Was your department objective integrated with your company’s? If yes, how?
If not, why not?
5. What was the most difficult part in setting appropriate and achievable target
for your department?
6. What was the target assigned to you for 2006?
7. Which part do you like most in the process of your own target setting? And
which part do you dislike most in the process of your own target setting?
8. What did the company do to ensure company targets were met?
9. What did your department do to ensure the targets were met?
70
10. What did you do to ensure your targets were met?
11. When did you find target setting difficult?
12. What barriers did you encounter when you set target?
71
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