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

Reference:

Armstrong, M. (2003). Human Resource Management Practice. 9th ed. London:

Kogan Page Limited.

Beardwell I. and Holden L. (1997). Human Resource Management: A

contemporary Perspective. London: Pitman Publishing.

Beck, A. C. and Hillmar, E. D. (1976). Making MBO/R Work. Philippines:

Addison-Wesley Publishing Company.

Beiman, I. (2006).Using The Balanced Scorecard Methodology To Execute China

Strategy. Cost Management; Vol: 20, Iss: 4; pg.9

Bell, J. (1999). Doing Your Research Project: A Guide for First-time

Researchers in Education and Social Science, 3rd ed. Buckingham: Open

University Press.

Bell, J. (2005). Doing Your Research Project: A Guide for First-time

Researchers in Education and Social Science, 4th ed. Buckingham: Open

University Press.

Berg, B. L. (1989). Qualitative research methods for the social sciences.

Boston: Allyn & Bacon.

Brown, P. (2003). Seeking success through strategic management

development, Journal of European Industrial Training. Vol.27, Iss. 6/7; pg. 292,

12 pgs.

Bryman, A. and Bell, E. (2003). Business Research Methods. Oxford: Oxford

University Press.

72

Christopher, C.J. (1998). The use of secondary data in business ethics

research. Journal of Business Ethics. Vol. 17, Iss. 4; p. 423.

Cohen, L., Manion, L. and Morrison, K. (2001). Research Methods in Education, 5th

ed. London: RoutledgeFalmer.

Denscombe, M. (1998). The Good Research Guide: for small-scale social

research projects. Buckingham: Open University Press.

Denscombe, M. (2003). The Good Research Guide: for small-scale social

research projects. 2nd ed. Buckingham: Open University Press.

Denzin, N. K. and Lincoln, Y. S. (1998). Strategies of Qualitative Inquiry.

London: Sage Publications.

Drucker. P. F. (1954). The Practice of Management. New York: Harper & Row.

Drucker, P. F. (1999). The Practice of Management. Oxford: Butterworth-

Heinemann.

Easterby-Smith, M., Thorpe, R. and Lowe, A. (2002). Management Research:

An Introduction. 2nd ed. London: Sage.

Emery, R. A. (1989). Goal Setting, Australian Accountant. Vol. 59, Iss. 10; p.

42.

Fielding, N.G. and Fielding, J.L. (1986). Linking Data. Beverly Hills: Sage.

Frankfort-Nachmias, C. and Nachmias, D. (1996). Research Methods in the

Social Sciences. 5th ed. London: Arnold.

Gibson, J. W., Tesone, D. V. and Blackwell, C. W. (2003). Management Fads:

Here Yesterday, Gone Today? S.A.M. Advanced Management Journal. Vol.68,

73

Iss. 4; pg. 12.

Gillespie, A. and Harrison, S. (2000). Objectives and Strategy: An Analytical

And Evaluative Approach To Business Studies. London: Hodder and

Stoughton.

GZFTECB. (2006). XXXX Foreign Trade and Economic Cooperation Bureau

Report. XXXX: Trade and Economic Cooperation Bureau.

GZSB. (2006). XXXX Statistics Bureau Report. XXXX: Statistics Bureau.

Hale, R. and Whitlam, P. (1998). Target Setting and Goal Achievement: A

Practical Guide for Managers. 2nd ed. London: Kogan Page.

Harris, H. (2001). Content analysis of secondary data: A study of courage in

managerial decision making, Journal of Business Ethics. Vol. 3, Iss. 4; p. 191.

Jaques, T. (2005). Systematic objective setting for effective issue management,

Journal of Public Affairs. Vol. 5, Iss. 1, pg.33.

Jeng, Y. C., Chen, C. A. and Chen. C.C. (2001). “The Application of Systematic

Management to Taiwan’s Vocational High Schools of Industrial Programmes”

Global J. of Engng. Educ., Vol.5, No.2.

Joseph, F. C. and Harper, A. R. (2001). The problems with managing by

objectives and results. Quality Progress; Vol: 34, Iss: 3; pg.39

Kaplan, R. S. and Norton, D. P. (2001). Building A Strategy-Focused

Organization, Ivey Business Journal. Vol. 65, Iss. 5; p. 12.

Keeney, R. L. and McDaniels, T. L. (1999). Identifying and structuring values to

guide integrated resource planning at BC Gas. Operations Research. Vol.47,

Iss. 5; pg. 651.

74

Kendall E.L. (2002). Management by Objectives in Medium Sized Frims,

Industrial Management. Vol. 16, Iss. 3; p.9.

Kim, S. (2003). Research Paradigms in Organizational Learning and

performance: Competing Modes of Inquiry, Information Technology, Learning,

and Performance Journal. Vol. 21, Iss. 1; p. 9.

Kulic, K. R. (2005). The Crisis Intervention Semi-Structured Interview, Oxford

Journals: Brief Treatment and Crisis Intervention. Vol. 5, Iss. 2, pp. 143-157.

Levinson, H. (1972). Management By Objectives: A Critique, Training and

Development Journal. Vol. 26, Iss. 4; p. 3.

Lewis, M. (1980). Management By Objectives: Review, Application, & Relationships

with Job Satisfaction & Performance, The Journal of Academic Librarianship. Vol. 5,

Iss. 6; pp. 329-334.

Locke, E. A. (1978). The Ubiquity of the Technique of Goal Setting in Theories

of and Approaches to Employee Motivation, Academy of Management. The

Academy of Management Review (pre-1986); Vol. 3, Iss. 3; p. 594.

Lu, W. S. (2004). Management by objectives in small and Medium Enterprises :

A case study of Yiu Hwa Engineering Co., Ltd. eThesys of Sun Ye Shan

University of Tai Wan, etd-0812104-144526.

LZ Investigation (1998). XXXX Investigation Statistics File. XXXX: Investigation Filing

Section of Administration Department in XXXX (XXXX) Ltd. Company.

Mathews, L., Rmitchell, T, George, J. F. and Wood, R. (1994). Goal Selection in

a Simulated Managerial Environment. Group & Organization Studies (1986-

1998); Vol: 19, Iss: 4; pg.425.

75

McConkey, D. D. (1972). 20 Ways to Kill Management By Objectives,

Management Review. Vol. 61, Iss. 10; p. 4.

McConkey, D. D. (1976). How To Manage By Results. 3rd ed. New York:

AMACOM.

Miles, M. B. and Huberman, A. M. (1994). Qualitative Data Analysis. 2nd ed.

London: Sage Publications.

Moore, R. (2006). Organizational alignment: Why it is so important, Plant

Engineering. Vol.60, Iss. 5; pg. 39, 2 pgs.

Mosard, G. R. (1984). Objectives and Alternatives in the Context of Systems

Analysis and MBO, Engineering Management International. Vol.3, Iss. 1; p. 15.

Odiorne, G. S. (1965). Management By Objectives: A System Of Managerial

Leadership. New York: Pitman Publishing Corporation.

Odiorne, G. S. (1979) Setting Creative Goals, Training and Development

Journal. Vol. 33, Iss. 7; p. 14.

Odiorne, G. S. (1992). MBO Means Having a Goal and a Plan Not Just a Goal,

Manage. Vol. 44, Iss. 1; p. 8.

Olsson, D. E. (1968). Management by Objectives. California: Pacific Books.

Oppermann, M. (2000). Triangulation -- a methodological discussion, The

International Journal of Tourism Research. Vol. 2, Iss. 2; p. 141.

People’s Congress. (2001). Labor Union Law of China. Beijin: People’s

Congress.

Price, A. (2004). Human Resource Management: in a Business Context. 2nd ed.

76

London: Thomson Learning.

Raia, A.P. (1974). Managing by objectives. Glenview: Scott and Foresman.

Raimond, P. (1993). Management Projects: Design, research and presentation.

London: Chapman & Hall.

Raymond, Art. (2006). Remembering Peter Drucker's ideas. FDM. Vol.78, Iss. 4;

pg. 24, 3 pgs.

Roberts, P., Priest, H. and Traynor, M. (2006). Reliability And Validity In

Research, Nursing Standard. Vol.20, Iss. 44; p. 41.

Rogers, K. A. (1993) Go for the goals. Incentive;Vol: 167, Iss: 12; pg.67.

Romani, P. N. (1997). MBO by any other name is sill MBO. SuperVision. Vol.58,

Iss. 12; pg. 6, 3 pgs.

Saunders, M., Lewis, P. and Thornhill, A. (1997). Research Methods for

Business Students. London: Financial Times.

Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods for

Business Students, 2nd ed. London: Financial Times Prentice Hall.

Scandura, T. A. and Williams, E. A. (2000). Research Methodology In

Management: Current Practices, Trends, And Implications For Future Research,

Academy of Management Journal. Vol.43, Iss. 6; p. 124.

Scherrer, S. P. (2003). Directors' responsibilities and participation in the

strategic decision making process, Corporate Governance. Vol.3, Iss. 1; pg. 86,

5 pgs.

Sekaran, U. (2000). Research Methods for Business: A Skill-building Approach.

77

3rd ed. New York: John Wiley & Sons, Inc.

Thomas, M. E. (1990). The Means to an End, PEM. Vol.13, Iss. 5; pp 26-29.

Torrington, D. and Hall, L. (1998). Human Resource Management. London: FT

Prentice Hall

Walls, M. R. (1995). Integrating business strategy and capital allocation: An

application of multi-objective decision making, The Engineering Economist.

Vol.40, Iss. 3; pg. 247, 20 pgs.

Wang, Y. (2003). Management by objectives and self-control. World

Management Review, Shanghai, Issue: 2003, 4.

Wang, Zh. F. (2005). The Various Classified Management Alignment in Chinese

Enterprises. Scholarship in China, Iss: 2005, 8a.

Willging, P. (2006). You can't get there without a road map. Nursing Homes.

Vol.55, Iss. 11; pg. 14, 3 pgs.

Yu, S. X. (2003). Winning by Executation. Beijing: Chinese Society and Science

Publishing Company.

Zeng, S. Q. (2003). The Chinese-style Management. Beijing: Chinese Society

and Science Company.

Zhou, Sh. Q. (2006). The Modern Western Management Theories

Easternization, Scholarship in China, Iss: 2006, 12a.

78

79