Enterprise management by goals. "Management by goals and KPIs" System of MBO management based on goals

Each employee must understand their place in the business. Without this, it is impossible to work with full dedication, which is especially important in the difficult conditions of economic development. Meanwhile, it is difficult to achieve “consciousness” from people. Neither job descriptions nor the chaotic organization of work groups give the required result...

The famous management guru Peter F. Drucker proposed “Management by Objectives” (MBO) as an effective method for allowing employees to realize their involvement in a common cause. In 1992, this method was updated by R. Kaplan and D. Norton and received the form of the Balance Score Card concept.

Anna Kovaleva, Olga Gashenko, Kaliningrad Mobile Networks company, Kaliningrad

The management by objectives method (in a broad sense) is the study and identification of the organization's key objectives and their distribution among employees on a top-down basis. It is not an additional decoration of management practice, but contributes to the transition of the entire company to a qualitatively new level of management: it allows you to identify goals and performance criteria for all or individual positions and divisions of the organization and coordinate efforts to achieve them. In addition, this technology is also used as a basis for determining remuneration (bonuses) based on performance results.

Let us list the basic principles of MBO.

1. All control objects must be described before the start of the control process.

Only by setting activity goals before the start of the management process and constantly checking the “plan” with the “fact” can you learn how to set them correctly.

2. An employee’s correct understanding of his goals creates the opportunity to achieve them.

With the correct setting of goals, the employee realizes that he is fully responsible for completing the task assigned to him, even if external objective reasons prevent this. His task is to overcome obstacles that are on the way to achieving the goal. Determination of goals and objectives becomes a powerful motivating factor.

3. Those control objects whose goals cannot be described are uncontrollable.

Studies of managerial thinking show that an effective manager thinks in terms of criteria, measuring and “digitizing” each of the goals (tasks) facing him and his subordinates. It is advisable to use objective criteria, although there is always room for subjective ones.

4. Proactive management is better than reactive management.

Forecasting risks and including measures to minimize them in the work plan significantly increases the efficiency of business processes. By excluding losses associated with correcting errors, searching for ways out of an unforeseen situation and various kinds of “finishing” work, the manager retains the strength to achieve the goal. Acting “proactively” does not mean immediately, without preliminary calculations, starting to implement steps to achieve a goal (in 80% of cases, thoughtless speed only gets in the way).

5. Goals can be adjusted; In this case, notification of the control object is mandatory.

With a radical change in the external or internal environment, goals may change. The reasons for the change must be conscious and significant enough. If the goal changes, all participants in the process must be notified of this. Keep in mind that by using this principle, managers can “cover up” their inability to plan properly. If the organization's goals change quarterly or more often, it is necessary to think about the correctness of the planning process and try to improve its quality.

6. Goals should be described using SMART technology. This is a goal setting standard that sets the requirements for an effectively formulated goal.

Did you know…

…that SMART means “smart” in English.

S – Specific – specificity

The goal should be formulated as specifically as possible, without using general phrases and abstract concepts.

M – Measurable – measurability

“Everything that is measurable can be achieved.”

A – Achievable – achievability

The goal must be achievable (feasible) and at the same time not automatically achievable. Another aspect of this criterion is the agreement between the manager and the subordinate regarding the possibility of achieving a given goal (the goal must be “accepted” by the subordinate).

R - Relevant

The goal must be consistent with the company's strategy (goals of other levels) and at the same time be in the “zone of influence” of the employee to whom it is assigned (its implementation depends on his efforts).

T – Time-bound – time certainty

The goal statement must indicate the exact time frame for its completion (the task must be “monitored” during its implementation).

7. The control object is best described in terms of three to five objectives.

The goals of the MBO are not additional, but key, and performance measurement should be based on them.

8. The best way to test the MBO is to compare the existing results with the planned ones and approve the assessment with the employee and manager.

This principle allows us to determine the correctness of planning. If the result obtained differs from the planned one by more than 20%, the manager should ask himself a number of questions: “What did I miss during planning?”, “What is the reason for this gap?”, “How can I improve the planning process in the future?”, “ What else should I do to improve the quality of my planning?

9. A necessary element of building an MBO system is a feedback mechanism.

Dialogue with subordinates is mandatory both at the stage of agreeing on goals and at the stage of monitoring (fulfilling) tasks. Feedback is needed for:

• understanding the actual state (“What has been achieved so far?”);
• comparing what was planned with what was achieved (“To what extent has the goal been achieved?”);

Basic concepts of MBO:

A goal is an anticipation in thinking of the desired result of human activity.

Organizational goals are ideal blueprints for the future state of the organization.

MART is a goal setting standard that sets the requirements for an effectively formulated goal

adjustments based on identified deviations (“What needs to be changed in professional behavior, work methods, communication with employees in order to achieve better results?”).

Purpose Description Standard

The essence of MBO as a management approach is that for a management object (division, manager, employee) a list of key tasks (criteria) is formed in a single standard. For example: “Before 12/31/2009, improve your letter writing skills so that amendments require no more than 10% of their total number” or “Before 12/31/2009, double the resume database.”

PETER F. DRUCKER (1909–2005) – American scientist of Austrian origin; economist, publicist, teacher, one of the most influential management theorists of the 20th century. He has worked with many of the world's largest corporations, non-profit organizations, and government agencies in the United States, Japan, and Mexico. Author of dozens of books, including fiction. From 1971 until his death, he taught social science and management at Claremont University (USA). Since the mid-40s of the twentieth century, many of the world's leading concerns have been living “according to Drucker,” striving to combine economic progress and social harmony.

The task description standard typically includes:

• task name;
• description of the task (the degree of detail of the description is not important. The main thing is that the manager and subordinate understand what is being discussed in this description);
• criteria and units of measurement of the goal (achieved/not achieved; units of measurement can be any - pieces, percentages, kilograms, times, tons, etc.). For example, increase the indicator by so many percent, so many times, modernize five workshops, etc.;
• indicators of the relationship between “plan” and “fact”;
• the weight of this task (in percentage or in units) in the general list of tasks of the control object. For example, for a HR director, the task “recruitment” may have a weight of 30% out of 100, compliance with labor laws 30%, compliance with the personnel budget 20%, maintaining a favorable psychological climate 20%.

The key point is that the implementation of each task can be measured, and taking into account the weight of the tasks, the overall effectiveness of management objects can be measured (for example, the percentage of completion of assigned tasks is calculated).

How to implement MBO correctly?

Let's consider the basic rules that should be followed when implementing an MBO system in a company.

1. It is necessary to divide the personnel into two categories. The former are required to set goals (employees who influence cost reduction and efficiency improvement). The latter set goals only if the direct manager sees the need for this (personnel who do not have a significant impact on reducing costs or increasing efficiency).

2. A strict hierarchy of goal setting should be ensured: subgoals of the lower level are determined only after the goals of the upper level are determined.

3. The goals of lower-level workers should be the result of cascading goals of upper-level workers. The completeness of cascaded subgoals is required in terms of sufficiency to achieve the top-level goal.

There are two main options for the sequence of goal setting in a company (division): “top-down” and “bottom-up” (Scheme 1).

1. When setting top-down goals for all employees and especially for the management team of the organization (from the general director to line managers), a set of performance criteria must be defined in a unified MBO format, permeating the organization from the upper levels of the hierarchy to each workplace. The definition of goals and objectives begins with the company as a whole, then extends to divisions and, finally, to the company's employees.

2. When setting goals “from the bottom up,” employees are asked to initially formulate indicative goals (as the employee sees them) for their activities and the department as a whole. They will then be discussed with the manager and approved by him. This “bottom-up” path is possible during the pilot stage of mastering the MBO technology.

Goals “permeate” companies from top to bottom and, as a rule, are set “top-down” (although a “bottom-up” mechanism is also possible). The employee’s goals are set by his immediate supervisor (in dialogue and using the principle of feedback).

4. To achieve top-level strategic goals, it is necessary to check the sufficiency of the “goal tree”.

5. Each employee involved in goal setting must have at least one goal, formulated independently and aimed at increasing the efficiency of the business process of which he is the owner.

The MVO system can act both as an additional and as a necessary factor in measures of monetary motivation of personnel

Business owners often associate the introduction of MBO with the development of a monetary incentive system. However, this positioning does not allow managers to use this method as a tool of non-monetary motivation, to identify training needs and create a real reserve of high-potential employees.

"Traps" of MVO

Without competently implemented changes and a clear understanding of the mechanisms and bottlenecks of using MBO in a particular business, the innovation may be perceived negatively by employees. If the system is implemented incorrectly, the damage to the company consists of the cost of working time spent by managers on writing goals, drawing up assessment reports by employees, and training specialists at various levels in this technique.

Did you know…

...what, according to Drucker, should be the goals of a manager?

• First, they must be related to the overall goals of the enterprise. Secondly, clearly define its contribution to achieving goals
• companies in all key business areas. Thirdly, it should be determined by its contribution to the activities of the higher division and the enterprise as a whole.
• The goals of all managers at all levels must be considered in both short-term and long-term planning.

Based on practical experience, we highlight the following circumstances that hinder the competent implementation of MBO.

1. Using MVO for MVO's sake.

Management by objectives is a way to improve the efficiency of business processes within an enterprise to increase consumer (client) satisfaction. If employees do not understand how achieving the goal will affect the quality of the product, what will change in it for the customer, then the motivation to achieve the goal will consist of expectations of the achieved indicators, and not of real positive changes for the customer (client). In this case, MBO risks becoming another additional burden, rather than an assistant in increasing the efficiency of business processes.

Every employee must know how his goal relates to the company's strategy

Solution: each employee should be informed about how the goals he has achieved affect the specific product (product, service) produced by the company.

If, when setting goals, employees do not see the true capabilities of the business, they tend to fix indicators without understanding how to achieve them. Without analyzing the methods and resources required to achieve the goal, it is difficult to guess the actually achievable value of the indicator.

“Senior management must, of course, reserve the right to approve or, conversely, reject these goals. Nevertheless, their development is the responsibility of the manager (in fact, this is his primary responsibility). And only if lower-level managers take part in developing the goals of the unit will the higher-level manager know exactly what to expect from these managers...”

P. Drucker

In the process of agreeing on goals, the boss, in the opinion of the subordinate, tends to complicate everything and create difficulties, and the subordinate, in the opinion of the boss, tends to increase the margin of safety, which will allow achieving 100% of the given value of the indicator.

So, the first reason for the inadequacy of the indicator: the manager needs to report, and he has no idea how the subordinate will achieve the intended goal. The second reason is the employee’s fear of not achieving the goal. An employee “just in case” will set aside more time than is necessary to achieve a goal, or plan a greater expenditure of resources than is actually required.

Solution: in the process of agreeing on goals, the boss and subordinate need to discuss the plan for achieving goals and predict risks in order to determine the adequate value of the indicator and the deadlines for completion.

3. Shift in tactics.

Sometimes when formulating goals, the importance of understanding the strategic objectives of the company is missed, and the emphasis shifts towards what can be shown at the moment. After all, what can actually be seen or expressed in numbers attracts the attention of management and receives high priority. However, it also happens that at a certain moment it is impossible to quantify some goal that is important for increasing business efficiency, and over time it becomes clear that it was this goal that should have been given preference.

Solution: when formulating goals, you need to ask yourself two questions: “What strategic objective does achieving this goal serve” and “How much closer will achieving this goal bring us to the strategic goal.” Every employee of an enterprise must know what the company's strategic goals are and how his personal goal is related to the company's strategy.

4. Individual development of goals.

In the process of developing goals, each manager thinks about how his department will be able to receive bonuses. Strategically, this is a losing business approach. The indicators of a unit cannot be autonomous, and it is necessary to take into account the potential of all units involved in achieving a given indicator, so that later you do not have to look for the “extreme”.

Solution: Each employee must first agree on his specific tasks with those who influence the implementation of the common goal.

The right goals

The total number of goals per employee should not exceed seven

Many managers are mistaken in thinking that the greatest desire of employees is not to make any additional efforts to achieve results. This position of management, which determines the principles of work of the management team and the personnel development system, contributes to the displacement from the company of employees aimed at self-realization and development; Only those who work according to the principle “they pay and that’s okay” remain in the organization.

In order for an employee to be motivated to achieve a goal, the level of its complexity must be slightly higher than the level of qualifications of this employee. When determining the level of complexity, it is important to observe moderation, since an overly complex task can cause fear and self-doubt in a person, after which one can hardly expect high results from him even with successful mastery of new knowledge.

Achieving any goal is possible only if you have the necessary resources. In accordance with this, a zone of achievable goals and a zone of unattainable goals are formed (Diagram 2). It is obvious that unattainable goals discourage employees: if the goal still cannot be achieved, then there is no point in trying. In such cases, in order to prove the unattainability of the goal, the employee will in every possible way demonstrate the meaninglessness of the work. Achievable goals are conventionally divided into two types: a goal at the limit of one’s capabilities and a goal that is easily achievable. A goal that is achieved without effort, sometimes automatically, is unlikely to require the performer to strive for new knowledge and skills; in the end, it will not have any impact on improving business efficiency. Therefore, to develop a business, it is necessary to strive to set ambitious goals for all business participants.

Specific Application

How can an employee find his goals? The answer to this question reveals the essence of MBO.

First, the employee must ask himself: “Why does the business need me?” In his answer, he needs to record everything that is useful for business that he does at his workplace. It sometimes takes several days to compile this list.

Secondly, the employee should refer to the performance indicators set by his manager. Having found out what the manager wants to change in his work, an ordinary employee can easily identify those indicators that he personally influences and will be able to correctly set priorities. The total number of goals per employee should not exceed seven, otherwise it will be difficult to keep them in sight.

When setting their own goals, an employee is very tempted to limit himself to copying the goals of the manager. However, this will be random, ineffective planning, which will subsequently become a powerful demotivator for the employee.

To set goals as effectively as possible, an employee should:

1. Formulate your performance indicators.

2. Select indicators that are relevant to the goals of the senior manager.

3. Record the actual (that is, currently existing) value for each of the selected indicators.

4. Draw up a plan to improve these indicators and coordinate it with management.

5. Predict the value of indicators that should be obtained as a result of the implementation of the plan, taking into account the most likely risks.

6. Formulate goals. The description of each should begin with a verb with the meaning of a goal, reflecting the direction of change in the performance indicator (“reduce”, “increase”, “reduce”, “increase”, etc.).

With clear performance numbers, an employee can see what has already been done and what still needs to be done to improve their results.

Management by objectives assumes that leading an organization is the function of a group of managers and not the exclusive privilege of one person. Because management by objectives requires broad participation from subordinates, managers must collaborate with them and support their participation in decision making. Taking into account the interests of the business, it is important to set ambitious goals that encourage staff to look for ways to improve efficiency and create a demand for the necessary development, breaking the company’s stereotypes about the uselessness of spending on training.

The introduction of MBO increases the efficiency of the company (according to expert estimates, the economic effect is 5–6 rubles per 1 ruble invested). In addition, there are hidden effects of implementing MBO: establishing order in the organization, delineating the functionality, powers and responsibilities of personnel, increasing the managerial competence of managers, improving the socio-psychological climate in departments (despite strong internal resistance in the first stages of implementation) and even increasing personal employee performance in non-work related areas of life.

on practice

Setting goals for an employee of a separate department

Let's consider how an employee of a particular enterprise working in a department responsible for the serviceability of equipment set goals for himself according to the MBO system.

The head of the department set the following goal for himself: “Reduce the number of emergency shutdowns of equipment throughout the enterprise by 10% until December 15, 2009.” That is, the manager considered “the number of emergency shutdowns at the enterprise” to be one of the indicators of his effectiveness. It is known that over the past year, 2008, the enterprise recorded 200 emergency shutdowns, therefore, this year it plans to reduce this figure to 180.

The employee’s area of ​​responsibility is workshop No. 1, where 40 emergency equipment shutdowns were recorded. Thus, one of the employee performance indicators is “the number of emergency shutdowns of equipment in workshop No. 1”; the actual figure for 2008 is 40.

To set goals correctly, the employee needs to find out how much this indicator can be reduced. To do this, he must analyze the tools of his influence on shutdowns. First, you need to determine the reasons for the 40 outages that occurred. Having identified them, the employee will be able to understand how much it is realistic to reduce the number of emergency shutdowns and what resources are needed for this.

Thus, the employee finds the value that can be achieved in workshop No. 1 only after a detailed analysis and agreement with his manager on the tools to influence the performance indicator.

Management By Objectives (MBO)- one of the effective management tools that combines the functions of planning, control and motivation of employees.

It involves setting goals for the company as a whole, individual divisions, employees and company projects, monitoring the results obtained and determining the extent of employee motivation.

As a result of developing goals in accordance with the technology of management by goals, a “tree of goals” is formed, which displays the relationship of the goals set from the highest level to lower hierarchical levels.

When setting goals and objectives using management by objectives approaches, developers should use the principle SMART:

S (Specific)- for each of the goals, a clear, clearly formulated result must be described.

M (Measurable)- any of the goals must comply with the principle of measurability (you can only manage what can be measured - specific indicators and standard measurement procedures).

A (Agreed)- all goals must be consistent with each other.

R (Realistic)- realism when choosing a goal, practical achievability of the goal.

T (Time related)- for each goal there are clear deadlines for when it must be achieved.

An example of a “Goal Tree” for an industrial company

For development strategic objectives use the company’s mission and consider ways to achieve strategic objectives. This is the level of the entire enterprise. The planning horizon is usually from 3 to 10 years.

Strategic goals can be formed for areas that are strategically important for the enterprise, for example, finance (profit, sales volumes, etc.), marketing (market share, key customers, etc.), personnel, production infrastructure, new products, etc. .P.

The level of tactical planning, and, accordingly, tactical objectives- structural departments and other business units of the company. Their task is to show how tasks aimed at achieving strategic level tasks will be solved at their level. The planning horizon is usually 0.5-3 years.

A level operational objectives, Using management by goals technology, the company concentrates on solving current problems. The planning horizon can be from one week to one year.

The number of goals for each planning level should not be excessive; for example, there can be about five key goals. Of course, each of these goals can have a different “weight” when considering its contribution to the overall result of the company.

The technology of “Management by Objectives” - MBO (Management by objective) was proposed by Peter Drucker in the 50s of the twentieth century. According to his formula, the effective operation of an enterprise requires that each work be subordinated to common goals. In particular, the efforts of managers should be aimed at ensuring the success of the enterprise as a whole.

The essence of the concept of management by objectives, also called management by results, is to focus on the final result. The goal and the result are inseparable in this approach. When managing work to achieve a goal, you should constantly take into account the results achieved.

Goals are a specification of the organization's mission in a form accessible to manage the process of their implementation.

The main task that the Management By Objectives system was supposed to solve was increasing the agility of a business organization.

There are many definitions of management by objectives:

Management by objectives is an organization management system (or a system of management methods) that simultaneously connects both goals and planning objectives, as well as all activities of the organization.

Management by Objectives is a systematic and organized approach that allows management to focus on achieving goals and achieve the best results with available resources.

Management by objectives is the work of management to formulate the goals of the organization, communicate them to employees, provide them with the necessary resources, as well as distribute roles and responsibilities for achieving the goals.

Target management methods assume that the manager is obliged to determine in advance the final results of his actions and develop work programs to achieve them. This approach to management is characterized by the presence of a plan for solving problems, even if these are such unexpected events as machine breakdowns, changes in product designs, interruptions in the supply of necessary materials, etc. The style that dominates in this zone of the management spectrum does not require the constant presence of a manager in his office. workplace. No matter what problem arises, there is always a plan in place to determine the course of action and methods that will best solve a particular problem.

The use of management by objectives (results) systematizes the management process, increases the performance of the enterprise, is an effective tool for establishing and maintaining a quality management system in the enterprise, maintaining quality at all levels of the enterprise.

Management by objectives (results) places high demands on personnel. The better an employee understands the goals set for him and the more accurately the latter correspond to his internal aspirations, the more likely such goals will be achieved.

The functioning of the management system based on goals (results) is based on three basic principles: decomposition of tasks “top-down”, feedback “bottom-up” and “intra-company labor market”.

The principle of decomposition of tasks "from top to bottom". The work of the MBO system is based on the decomposition of the tasks facing the organization according to the existing management hierarchy in the company. The company's objectives - they are set to the general manager by the business owners or the general manager formulates them himself - the general manager breaks them down into subtasks, which he then distributes among his subordinates (top managers). In this case, subtasks are identified in such a way that their solution provides a solution to the initial task that was posed to the general manager and, accordingly, to the company as a whole. Exactly the same procedure for decomposing tasks into subtasks is repeated at lower levels of the management hierarchy: top managers form subtasks for their direct subordinates based on their tasks, etc. .

The principle of bottom-up feedback. In the process of agreeing on a task between the manager who formulated it and his subordinates, to whom the task is assigned, adjustments may occur to the content of the task, its level of priority or deadlines. On the one hand, during a joint discussion and exchange of argumentation, an equal understanding of the wording of the tasks is achieved, and the task itself can be transformed into a more accurate and correct one in content. On the other hand, the approval process ensures the necessary balance between the desired results and the resources available in the company. How “objective” is this kind of resource assessment? Is there a danger here that subordinates will underestimate their “real” capabilities? Here it is necessary to keep in mind: the main resource in this case may not be money, not production capacity, not the number of working people, but, first of all, the subordinate himself. Together with the money, capacity, and employees at his disposal. And together with your ability or inability, desire or unwillingness to achieve the desired result using the available means. This is even more true the higher the subordinate's position. A manager's main resource is his skill in managing other resources. It follows: the higher the hierarchical level at which the task is agreed upon, the greater the importance of the discussion and voluntary, responsible acceptance of the task based on a realistic self-assessment of the performer’s capabilities.

During the coordination, the manager can and should suggest solutions to the subordinate manager that he could not see. He can and should convince and inspire him. It is important, however, to stay on the edge, beyond which the pressure on the subordinate becomes tantamount to orders issued from above that are “not discussed.” Once you cross this line, the consent of the performers will turn into a formal ritual. In such situations, the likelihood of obtaining results, especially if it requires non-standard moves and exceptional efforts, will sharply decrease: without internal acceptance of tasks, neither initiative nor a breakthrough beyond what is being done and has been done in the company until now is possible.

The principle of the “intra-company labor market”. Unlike functional responsibilities, tasks (planned tasks) in a results-based management system are unique each time and cannot be provided for in advance in standard contracts concluded when hiring. In a sense, planned tasks are additional labor costs not provided for in the original terms of employment. It is precisely because of this circumstance that the relationship of voluntariness and equality of the parties in the process of agreeing on tasks are so important. In fact, agreement is a kind of “bargaining” between the parties, and the agreement reached is a kind of “microcontract”. The terms of such a local contract include the task itself, the timing of its completion, additional resources provided to the performer, as well as the form and amount of remuneration/bonus depending on the achievement of the final result.

Despite many advantages, the management system by objectives also has a number of disadvantages (Table 1.1).

Table 1.1 - Advantages and disadvantages of the concept of management by objectives (results)

Advantages	Flaws
Increasing work efficiency due to the fact that each manager has a clear understanding of both his goals and the goals of the organization as a whole	Not applicable to the management of an organization, where it is customary to determine goals only by top management, without involving managers at all levels in this process
Increased motivation to work, since in these conditions everyone feels a personal interest in achieving goals	Difficult to use without personal motivation
Visibility of achieving the final result, because the time frame for its achievement is clearly formulated	Managers' attention is focused on achieving current and short-term goals (results), i.e. to the detriment of strategic long-term goals
Improved relationships between managers and subordinates due to transparency and alignment of goals	A labor-intensive, complex and lengthy process that produces results only when and where the manager himself chooses a model of action (behavior)
Improving the system of monitoring and evaluating the work of each member of the organization (in accordance with the results achieved)	The presence of a weak information management system (its availability) results in unsatisfactory organization of control

The value of the results of management by objectives increases when management methods allow you to program actions taking into account real time and cost constraints. Obviously, value is diminished when work is started before programming has been completed - this inevitably leads to costly adjustments.

I would like to raise the topic of methods of motivation and personnel management. No one will argue that “human resource” is one of the main components of an organization that influences success. How it will be used depends primarily on the management of this resource. One of the methods of managing and motivating personnel is “Management by Objectives” (hereinafter referred to as MBO) or “management by goals” (“management by setting goals”, “management by setting goals”). There are quite a lot of formulations now, since this technique came to the Russian-speaking environment not so long ago (although there are those who see an analogy with the methods of program-target management in the USSR).

Problems

First, a little about the standard problems that are typical for many organizations.

1. The employee lacks any motivation to improve the efficiency of his own work and the work of the company as a whole. Actually, a fixed salary is not a good means of motivation. If a person, working a little more or a little less, receives the same money, then he will work less. Elements of subjective bonuses (once a quarter/year as assessed by the immediate supervisor) do not work as well as we would like. Penalty systems present in some organizations rather demotivate the employee by asking him to formally satisfy certain criteria. If it is known in advance that the criteria are difficult to achieve, then you can forget about the effective work of the team.
2. The employee’s lack of knowledge of the tasks that he needs to solve. As a rule, this happens in a situation where the goals of the organization itself are not transparent to all employees. If there are problems in top management, this will affect the work of the entire company. Think about whether you know the goals of your company, your department, and your personal ones. For a quarter, for a year. How are they connected? The presence of job descriptions is only a formal part; it describes the general range of responsibilities, but cannot include support for the development of the organization.
3. Inertia towards change. If the goals of the organization change, the average employee may not understand it. Continue moving in the old direction. Continue to move the department forward. Sometimes, this movement is in the completely opposite direction.
4. Closed communications between departments. The organization must work as a single organism. Everyone must perform their own functions and help perform the functions of other departments. Ideally, the system should be self-coordinating at all levels. This will ensure a quick response to problems and effective search for solutions.
5. Difficulty in analyzing the results. If there is a general plan and it is not being implemented, then finding the bottleneck can be difficult. When there is more than one person to blame, there is no one to blame. But this is only one side of the coin. When the plan is being implemented, it is even more difficult to find bottlenecks and improve efficiency.

I won’t say that these problems can be solved all at once and quickly. Generally, people don't like change (especially if everything is going "normal"). And the changes required by MBO will not be painless. At the beginning of this method of motivation, people may be suspicious of it. But this will pass immediately after the first period. Some people may not like it, but everyone will understand the new requirements.

Conditions

There are some conditions for implementing MBO. The first is the desire of senior management to use this method. Secondly, the understanding that results will not appear “today or tomorrow.” Thirdly, it is necessary to understand the objectives and goals of the organization. If this is not feasible, then there is no point in starting. Support must come from above. Employees at other levels will understand the usefulness a little later, but at the first stage they can act as opponents. It is desirable that the entire organization be subject to change. This will give the greatest effect. An organization is an organism, and all organs must work in the same rhythm. If a gradual introduction is planned, then it is better to allocate a part with minimal dependence on units operating in the old regime.

What it is?

“Management by objectives is a systematic and organized approach that allows management to focus on achieving goals and achieve the best results with available resources.” This method is based on the fact that at the beginning of the period (month, quarter), the organization, divisions, departments, and employees are assigned clear tasks on which their bonus depends. Goals and objectives are set according to the SMART principle:

• Specific - specific to the organization/division/employee;
• Measurable - measurable (define metrics for calculating performance);
• Achievable - achievable, realistic;
• Result-oriented - results-oriented, not effort-oriented;
• Time-based - set time requirements for goals.

There should not be many goals at each level. The optimal number is 3-5 main goals. At the end of the period, a calculation is made to what extent the goals have been achieved. And the bonus part depends on this.

Salary and bonus

Salary is one of the components that allows an employee to feel stability. As written above, attempts to reduce it using a system of fines will be perceived negatively. Constant bonuses, determined subjectively, can begin to be perceived as a salary and are not a motivating factor.

The most difficult stage is the change in the policy of paying wages and bonuses. But this is necessary to implement the method. Moreover, the higher the bonus/salary ratio, the greater the effect you can get. For example, for the sales department, on which the organization’s revenue directly depends, this ratio can actually be 1:1.

How it works

In order not to indulge in theoretical explanations, I will try to explain with an example. Let there be a certain company that produces software. This is not the first version of the product being produced and sold; a certain niche in the market has been occupied. Company structure: general director, departments (heads of departments), employees. The following plans were agreed with investors for the first quarter of 2004. Increase in market share by 5%. Budget - $500,000. Gross revenue - $1,000,000.

In accordance with this plan, the director sets the following goals.

Each goal is assigned a weight and criterion. If the company's expenses are $500,000, then this goal will be achieved 100%. If $600,000 - by 80%. If for $400,000 - by 120%.

In addition to the fact that this table contains the company’s goals, it is personal for the CEO. His personal bonuses will depend on achieving these goals.

The following goals were defined for the software development department (together with the heads of all departments).

As we can see, the number of tasks for the department has increased, and specific ones have appeared. The weights were set according to priorities (a new version in the middle of the quarter will help address overall goals). A link to the marketing department has appeared - to achieve this goal, you need to obtain additional information. Accordingly, the marketing department should also have a goal - to collect this information by a certain date.

Similar to goals for the company, these goals are personal for the head of the department. Based on these goals, he sets goals for department employees. Let's assume that in the software development department there is an employee P.P. Petrov. and the following goals were set for him. Again, specific goals for a given person. I’ll touch on a little bit about the “Required support” column. It means that someone will provide the material to accomplish a given goal by a certain date. If the date of provision was missed, then this should not affect the result of this employee. As I said, the bonus part depends on the achievement of set goals. The goals are known in advance, and everyone will strive to achieve them. But for better interaction, it is not enough for the bonus to depend directly on personal goals. To do this, dependence on higher-level goals is introduced.

Dependence of bonus on goals

That is, an employee’s bonus depends 60% on personal goals + 30% on department goals + 10% on company goals. The results for the quarter were as follows.

• Company goals
• Department goals
• Employee goals

Then the bonus percentage will be:

Analysis

Based on the results of each reporting period, it is necessary to conduct an analysis. One of the parameters is screening based on the minimum level of fulfillment of individual goals. For example, why does an organization need an employee who achieves his or her goals by less than 50%? Of course, you should not lay off employees after the first period. It may be necessary to change the weight of the goal if the result is achieved (for example, employees will quickly get used to daily reporting). Perhaps some shortcomings in communications will be revealed and new local goals will appear.

Conclusion

Let's go through the problems that were described at the beginning.

1. "Poor staff motivation." Employees will be focused on the results required by the company. And they will try to achieve and exceed it.
2. “Ignorance of goals and objectives.” Goals are set clearly at the very beginning of work. General tasks and personal responsibilities are known.
3. "Inertia to change." When the company's goals change (of course, not in the middle of the period), the tasks of each department and each employee change accordingly.
4. "Closed departments." Now everyone is tied to a common task and it is clear on whom the implementation of this part depends and how this will affect the result.
5. "Complexity of analysis." All goals are based on the SMART principle and the analysis is quite simple.

Of course, everything won't be so perfect right away. Some tasks will be missed in the first periods. But everyone will be results-oriented and motivated to report problems in a timely manner.

Vadim Nareiko

Management by objectives is the key to efficiency. BSC, MBO, KPI and others...

The technology of “Management by Objectives” - MBO (Management by objective) was proposed by Peter Drucker in the 50s of the twentieth century. At that time, the West clearly began to understand that Western methods required change and correction. Today, management uses many techniques to evaluate the effectiveness of both companies and individual employees. These are, for example, the balanced scorecard BSC (Balanced Scorecard), management by objectives MBO, business performance management BPM (Business Performance Management), management based on key performance indicators - KPI (Key Performance Indicators). In the Soviet Union in the 60-70s of the 20th century, the concept of program-target planning (PTP) became widespread; the ideas of this concept largely overlap with the ideas of MBO.

Most American companies use MBO ideas in planning and management. This technology is taught in almost all American business schools. And some authors attribute the economic success achieved by America precisely to this approach.

Management by objectives as a management technology

There are many definitions of management by objectives, here are some of them:

The first is a systematic and organized approach that allows management to focus on achieving goals and achieve the best results with the available resources.

The second is the work of management to formulate the goals of the organization, communicate them to employees, provide them with the necessary resources, as well as distribute roles and responsibilities for achieving the goals.

The use of MBO systematizes the management process, increases the performance of the enterprise, and is an effective tool for establishing and maintaining a quality management system in the enterprise, maintaining quality at all levels of the enterprise.

This approach places high demands on staff. The better an employee understands the goals set for him and the more accurately the latter correspond to his internal aspirations, the more likely such goals will be achieved.

The relationship between strategy and target management

One of the main features of management by objectives is the existence of a hierarchy of goals within the organization. Even P. Drucker, who was the first to formulate the most important principles of MBO, said that every leader in an organization, from the highest to the lowest level, must have clear tasks that provide support for the goals of higher managers.

The development of performance indicators should be carried out in connection with strategic guidelines. On the one hand, by understanding the connection between performance indicators and strategy, employees will be more involved in the organization’s activities. On the other hand, performance indicators should reflect the connection between current activities and the achievement of the organization’s strategic goals.

For strategic planning and measuring the achievement of strategic goals, the Balanced Scorecard System (BSC) methodology is increasingly being used Balanced Scorecard– from English Balanced Scorecard). The BSC is a management tool that allows you to formalize strategic planning and goal setting, communicate the company’s strategic goals to staff, and also monitor the achievement of these goals by employees through KPIs.

KPI – (key performance indicators) is translated in the literature differently: “key performance indicators”, “key performance indicators”. “Efficiency” and “effectiveness” are fundamentally different things. The most successful translation is “key performance indicators (KPIs)” (performance).

This technique can be used in the company along with BSC technology. In this situation, MBO will be the mechanism by which goals will be distributed throughout the company's hierarchy and staff involvement in achieving them will be ensured.

In this situation, KPIs are control points in the process of achieving goals, characteristics of the effectiveness or efficiency of an employee’s work and business processes as a whole.

An employee's monthly work plan (MBO matrix) is a list of indicators established in accordance with the areas of responsibility of this position. A weight coefficient is determined for the indicator, reflecting the importance of the indicator for the employee. The sum of the weighting coefficients is equal to 100%. Planned values ​​of indicators are established based on an analysis of trends in previous periods, taking into account the company's development forecasts and the company's plans for the period being assessed.

An example of an MBO matrix for a sales manager:

Personnel assessment and financial reward.

MVO also has many supporters because this method makes it possible to significantly increase the objectivity (as far as possible) of personnel assessment. Objectivity is a relative concept, especially in areas directly related to human activity. From the point of view of MBO, the assessment is made not on the basis of the personal qualities and potential of the employee, but on the basis of assessing the results of his activities according to pre-established parameters and using quantitative techniques. A formalized approach to evaluating performance results allows you to create an algorithm that clearly and accurately determines the amount of material remuneration, depending on the results of work. Moreover, the introduction of quantitative assessment methods and the establishment of direct interdependence with the remuneration system in themselves can bring practical benefits to the organization.

Effects of implementationMBO:

1. Establishment of transparent and understandable rules for determining the result of labor and calculating material remuneration.

2. Distribution of responsibility among employees for achieving the goals of the entire organization, ensuring the involvement of personnel in activities.

3. Increased job satisfaction among staff, improved manager-executive relationships.

4. Performing discipline and the speed of communicating goals and objectives to performers increases.

5. The initiative and independence of employees in solving operational problems increases. A system of incentives is being created for personal professional development and improvement.

6. Conditions are created for the professional and career growth of employees. Determining the most effective employees creates conditions for the formation of a personnel reserve to fill vacant leadership positions.

7. Increases the efficiency of resource use, identifying and eliminating ineffective business processes.

Management by objectives and other management technologies.

To effectively use the technology, it is necessary to implement and automate several management technologies: budgeting, CRM, quality management system (ISO 9001), etc.

The introduction of these technologies brings an independent effect; in addition, the collection of data for calculating target indicators is greatly simplified. The use of these technologies makes it possible to collect data for system indicators.

In addition, in order to correctly plan values ​​for indicators, it is necessary to collect statistical information on previous periods of activity. In this case, setting targets will be reasonable and visible not only for managers, but also for employees. The existing management accounting system should allow us to regularly monitor the business indicators that interest us.

AutomationMBO

A condition for the effective use of MBO is the automation of the management process by objectives. This will achieve the following results:

• ensuring uniform standards for setting goals and objectives for employees;
• calculation and storage of data on performance indicators (KPI), collection of statistical data for analysis;
• automated data collection from the management accounting system for KPI calculations;
• automatic calculation of the bonus part of wages;
• ensuring that employees are informed using notifications;
• differentiation of access to information based on planned and actual data in accordance with the job hierarchy;
• rapid implementation of a management system by objectives.

Automation of MBO allows us to ensure that this management tool becomes convenient and easy to use.