Motivation Theories: Goal setting theory and MBO


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Motivation Theories: Goal setting theory and MBO

  1. 1. Motivation I Goal-Setting Theory and Management by Objectives (MBO) Chris Wan Irina Antonescu
  2. 2. Goal Setting and Related Theories Goal Setting Theory Participation in goal setting MBO Employee evaluation  SMART Goals  Ambitious goals  higher performance  Feedback and praise improve intrinsic motivation  Participative decision making  Performance feedback Hoshin Kanri  Used to allign goals from top to bottom  Heavily influenced and evolved from MBOs  Focus on quality  Empowering workers OKR (Objectives and Key Results)  Simplified version of MBO and Hoshin Kanri  Focus on goals and not employee performance  Removes fear
  3. 3. Applying Management by Objectives (MBO) Set Step specific, moderately 1 difficult goals Step 2 Secure employee participation Step 3 Provide support & feedback Useful for: • Companies with managers in multiple locations • Knowledge-based enterprises • Self-leadership Works best when: • Monetary bonus formulas are abolished • The individual’s performance is assessed during a 1:1 performance evaluation. • MBO is not used on its own as a direct bonus kicker but to qualify the employee for the bonus.
  4. 4. MBO Opportunities and Challenges PROS • • • • • • • • • Facilitates team communication Reduces conflict Clear setting of goals with input from the team Develops a result-oriented philosophy Facilitates objective appraisal Raises employee morale Facilitates effective planning & control Acts as motivational force Facilitates personal leadership CONS • • • • • • Time-consuming Reward-punishment approach Develops conflicting objectives Problems related to goal setting: Goals must be mutually agreeable. That can all fall apart when the goals are considered to be too rigid or difficult to set. Can fail if the executives do not clearly communicate the company objectives to management Can fail if the management doesn’t delegate properly or motivate accordingly
  5. 5. MBO and the Financial Crisis • System of misaligned incentives, short-termism and a lack of transparency instead of sustainable financial development • Inability to implement adequate controls • Compensation systems encourage the greatest amount of irresponsible risk taking • Obsession with achieving an MBO deadline that ends up costing the company a lot more than the expected bonus, therefore creating a conflict of interest. • Inflexibility: once goals are set down, the superior may not like to modify ´MBO is about doing your job, and about how managers can manage the common goals that a company has
  6. 6. Hoshin Kanri and OKRs Hoshin Kanri • • More detailed version of an MBO Improves on it by breaking down power-distance heirarchy and eliminating fear OKRs • About contribution to company goals, not employee performance evaluations Benefits • Disciplines thinking • Communicates accurately • Establishes Indicators • Focuses effort (Keeps organisation on the same path)
  7. 7. Hoshin Kanri
  8. 8. Objectives and Key Results (OKR) How Google sets goals:
  9. 9. References • • • • • • • • • • • • • • • • • • Allison, Scott. (2012, February 28). OKRs – objectives and key results. Retrieved from Bauer, Talya; Erdogan, Berrin. (2012). An Introduction to Organizational Behavior v.1.0. Retrieved from Dynos, Lukasz. (2007). MBO in Makro (Metro Group): Company's Objective Identified With The One Of Its' Employees. BCC. Retrieved from GoogleVentures. (2013, October 15). Startup Lab workshop: How Google sets goals: OKRs (Video File). Retrieved from Hindle, Tim. (October 2009). Management by Objectives. The Economist. Retrieved from Kaizen Consulting Group. Origins of Hoshin Kanri. Retrieved from Klau, Rick. (May 2013). How Google sets goals: OKRs. Google Ventures. Retrieved from Liker, Jeff. (August 2013). What Management By Objectives Does Wrong & Hoshin Kanri Does Right. Gray. Retrieved from Mougayar, William. (2000, October 2013). Don't Abolish MBOs. Startup Mangagement. Retrieved from Pugh, Derek S. (1971) Organization Theory. Penguin Books Raj, Ritu. (October 2012). Limitations of Management By Objectives. Management By Objectives. Retrieved from Robbins, Stephen P.; Judge, Timothy A. (2013): Organizational Behavior. 15. ed., global ed. Boston: Pearson. Schermerhorn, John R.; Hunt, James G; Osborn, Richard N. (2011) Organizational Behavior 10/E. Wiley. SoccerFootball Fail. (2013, October 15). Soccer/Football Fail!: Beautiful own goal (nice shot!) (Video File). Retrieved from Steers, Richard M.; Black, Steward J. (1994) Organizational Behaviour 5ed. Prentice Hall The W. Edwards Deming Institute. (2013). The Fourteen Points For The Transformation of Management. Retrieved from Zammit-Lucia, J. (2013, August 29). Misaligned incentives will lead us right back into another financial crisis. The Guardian. Retrieved from Witcher, B.; Butterworth, R. (2000, September). Hoshin Kanri at Hewlett-Packard, Journal of General Management, Vol. 25 No. 4, 70-85. Retrieved from