Total System Intervention

& Stabilizing change,

Management by Objectives
Facilitator and Course Coordinator
Vinayshil Gautam PhD , FRAS (London)
(Founder director IIM K; Leader consulting team IIM S)
A AI Sager Chair Professor and first head,
Management department, IITD
Chairman DKIF

1
 It is large scale change efforts that increase
the effectiveness of an entire organizational
system

2
It addresses critical issues like:

1. Communication

2. Leadership

3. Job satisfaction

3
105 year old
company

A
construction
material
manufacturer
and supplier
company

4
In 1987, competition changed
Large multinational conglomerates entered the
market.
Granite Rock was at disadvantage in term of profit
and resources

5
The company realized that it had to change
its strategy to survive

Conducted customers survey to analyze its

performance.

6
Results of survey:
Customers were satisfied with
Product Quality
Customer service

Customer were dissatisfied with

Time taken to process special orders

7
 How did Granite Rock Company satisfied
dissatisfied customers?

To meet customers expectations company decided

to empower the employees.

Company created nine corporate objectives to

clarify the goals of change process

cont….

8
Individual Professional Development
Plan( IPDP)

Company encouraged employees to participate

in decision making processes

9
A. Individual Professional Development
Plan( IPDP)
Job performance
Career advancement goals
Identifying training and expertise
necessary to achieve these goals

10
 Final IPDP lists
Development objectives of employees
Actions which are to be taken
Measurement strategy

11
Measurement strategy
clear time frame
demonstration of new knowledge/skills
process for evaluation and feedback

12
B. Involvement of employees in decision
making process such as
1. Recruitment process
2. Plant expansion
3. Design ,ergonomics of new plant

13
 When a company engages in a successful
organization wide OD development
Change occur both in organization’s system
and culture
Organization develops new strategies for utilization of
resources more efficiently, particularly human
resources

14
10 years later…

Market share increase by 88%

Customer satisfaction increased twice the

industry standards

15
1. Survey feed back method
2. System four management
3. Grid management development
4. TQM
5. MBO

16
Developed by Mann and his associates
It is a four phase process
Developing a survey instrument
Administering the survey
Summarizing and analyzing the results
Feeding back the results and creating
actions plan

17
 Cyclical Model Of Survey Feedback

Phase I Phase II
Survey Data
Development Collection

Phase IV Phase III

Feedback Summary
Action Analysis of
planning results
Implement
action plan

Source: Robert Smither, John Houston & Sandra Mclntire, 1996 18

 SYSTEM 4 MANAGEMENT
Rensis Likert and colleagues found that
managers who are concerned primarily with
schedules, close supervision and production
goals are less effective than managers who
use a more participative style as they develop
healthy relationships with employees while
pursuing organizational goals

19
20
In the beginning, the organization’s current
management style is assessed using a survey
instrument called the “Profile of
Organizational Characteristics”.
During the second phase, organizational
members receive feedback on the survey
results and begin action planning activities.

21
Harwood-Weldon Incorporated, a manufacturer
of sleepwear
2 General Motors plant at Doraville and
Lakewood

Note - The system requires time to implement

and even more time before improvement in
productivity and efficiency can be documented.

22
Implementing of Profile of Organizational
Characteristics showed Doraville close to system
4 and Lakewood close to system 2.

GM decided to move Schotters, manager at

Doraville to Lakewood to implement system 4
there.

23
Solidified the Lakewood management team
behind a System 4 approach that encouraged
innovative thinking about management-
employee relationship.

Staff and supervisors received training on

increasing mutual understanding, trust and
teamwork. Supervisors obtained help in
increasing their communication, goal setting
and team building skills.

24
Workers were kept informed on future products, facility changes,
selected cost data. Management provided them with regular data
on how labor costs compared with similar GM plants.

Supervisors job was redefined. Each supervisors received a utility

trainer to assist him in various functions. Supervisors began
focusing on workers and their problems.

Workers were given detailed information about upcoming changes

to prepare for new-model production. Workers participated in
planning changes. Workers even advised engineers on
redesigning their work area.

25
Lakewood made significant progress but the changes were
gradual.

Some bottlenecks –
The effort to retrain management and workers was costly.
It takes time for improved management practices to be
adopted and implemented by managers, and additional
time is needed to build trust and attitude that translate
into improved performance.

26
This method was developed by psychologists
Blake and Mouton

Grid Organizational Development proposes that 2

fundamental dimensions of leadership behavior
are essential for understanding managerial
effectiveness. They are-
1) concern for people
2) concern for results

27
The concern for people refers to the
consideration of the social and interpersonal
concerns of others; concern for results
involves issues such as the quantity, quality
and overall efficiency of work outputs. By using
the Leadership Grid, managers can be rated on
these 2 dimensions along a scale of one (low
emphasis) to nine (high emphasis).

Blake and Mouton identified 5 basic managerial

styles.

28
The single most significant premise on
which Grid Organization Development rests
is that the (9,9) way of doing business is
acknowledged universally by managers as
the soundest way to manage to achieve
excellence.

29
30
Implementing Grid Organization Development
is a six-step process that takes usually
between 5 and 10 years to complete. It is one of
the most comprehensive models and its
implementation consists of a series of smaller
interventions. It affects virtually every member
of the organization. But the complexity of this
intervention process has made evaluating its
effectiveness difficult. Nonetheless, evidence
of productivity gains, decreased costs and
improved managerial performance can be
found.

31
Phase 1 : The Grid Seminar
Phase 2 : Teamwork Development
Phase 3 : Inter-group Development
Phase 4 : Designing an Ideal Strategic Model
Phase 5 : Implementing the Ideal Strategic
Model
Phase 6 : Systematic Critique

32
 “Delighting the customer by fully meeting their
needs and expectations”.*

Quality may include performance, appearance,

availability, delivery, reliability, maintainability, cost
effectiveness and price.

* Department of Trade and Industry, Govt. Of UK

( www.dti.gov.uk/quality/tqm)
33
 Definition of TQM

Total quality management is a systemic

approach to productivity improvement using
qualitative and quantitative methods and
involving all stakeholders to continuously
improve the quality of all products and
services.

34
Participative Management
Continuous Process Improvement
Use of teams to continually improve quality
and productivity.

35
1. The customer makes the ultimate determination
of quality.
2. Top Management must provide leadership and
support for all quality initiatives.
3. Preventing variability is the key to producing high
quality.

36
4. Quality goals are a moving target, thereby
requiring a commitment towards continuous
improvement.
5. Improving quality requires the establishment
of effective metrics..

37
Foundation of TQM

Source: www.dti.gov.uk/quality/tqm
38
Customer – Supplier Interfaces : A series of
customers, suppliers and customer-supplier
interfaces form elements of “the quality chains”

Commitment of senior members towards quality.

Sound Quality policy

Demonstration of commitment in practice.

Highlighting benefits of Quality improvement to

the BOP

39
Communication :Middle managers to ensure communication
of principles, strategies and benefits up to BOP

Managers to train people to understand the customer /

supplier relationships

Adopt modern methods of supervising and training –

eliminate fear

Eliminate communication barriers between departments to

improve cooperation and teamwork

40
Culture :
A culture change, e.g., from one of acceptance of a
certain level of errors or defects to one of right first
time, every time, needs two key elements:
Commitment from the leaders
Involvement of all members of the organization
Major change initiatives will not be successful without a
culture of
good teamwork and
cooperation at all levels in an organization

41
 TQM Methodology
PDCA cycle
Plan

Act
Do
(As Needed)

Check
(Analyze)
42
 PDCA APPROACH
WHAT? HOW? HOW WELL?
PLAN DO CHECK
“Do the Right Things” “Do Things Right”

Strategic

Leadership
Planning
Financial
(Cost, Budget)
Focus

ACT
Continuous Improvement 43
PLAN A plan can be to initiate a new process
or improve an existing one

It should be based upon customer

needs, and

Resolve to more effectively fulfill the

organization’s mission

44
DO Do it in a manner which

Is most effective

Least time consuming

Involving minimum wastage of

resources

Product quality should not be

compromised

45
Check Review the gathered data to
determine if the planned and
implemented change has created the
quality improvement intended.

Act Take action, either to implement the

change or change variables to see if
the process can be made more
effective, or
“Standardize” the new, successful
process 46
Create constancy of purpose toward
improvement of product and service,
Adopt the new philosophy.
Cease dependence on inspection to achieve
quality.
End the practice of awarding business on the
basis of price tag alone. Instead, minimize total
cost often accomplished by working with a
single supplier

47
Improve constantly and forever the system of
production and service
Institute training on the job.
Institute leadership
Drive out fear,
Break down barriers between departments.
Eliminate slogans, exhortations, and numerical
targets
Eliminate work standards (quotas) and
management by objective.

48
Remove barriers that rob workers, engineers
and managers of their right to pride of
workmanship.

Institute a vigorous program of education and

self-improvement.’

Put everybody in the company to work to

accomplish the transformation.

49
 Check sheet
 Pareto Chart
 Matrix Diagram
 Project Task Map
 Systems Framework
 Keep, Start, and Stop
50
 Four phase Approach to organizational
Change:
1. Planning

2. Education

3. Implementation

4. Continuous Improvement

51
A consultant team meets with managers & key
organizational members to
Determine mutual expectations
Identify the clients majors issues and
concern
This avoids need for
Use of surveys
Structured interviews
Saves Time 52
 Planning sessions are used to address
organizational concerns perceived as barriers
to participation

Once consultant team is accepted as change

agent, plans are developed for educational
phase

53
Goal :To transform managers to leaders &
workers into responsible employees who take
pride in quality of products and services they
provide.
Focus : Initiating change by teaching
managers and workers quality improvement
techniques & statistical process control.
Managers learn Deming’s 14 points & receive
special training in building customer
relationships. 54
Consultant team decides on pace and type of
implementation process that best fits orgy's
needs and circumstances
Commitment of senior leadership is vital
Quality mission statement (clarifying purpose
of change) is written.
Information packages on statistical control
technique are prepared.
55
Management teams are formed to establish
strategies to promote cultural change.

Volunteer process improvement terms begin to

form and initial pilot improvement efforts are
conducted to demonstrate how new skills can
be applied.

56
This deals with Integration of Quality Improvement
Principles and Techniques into orgy's culture

This occurs when barriers to change are removed

Reward based quality improvement system is

initiated

Once initiation is done, org. members work

continuously on exploring new ways of improving
quality and refining key work processes.
57
 Rene Brake Linings (RBL) is an ISO 9001 and
ISO 14001 company and is a part of the $ 261
mil Rene Group(an automotive components
company )which has collaborations with global
majors like TRW USA & NISSHINBO Japan, a
global leader in friction material manufacturing

.
58
Becoming more profitable (1999) required
finding new markets, but that required first
managing the company better so that costs
decreased as quality improved
Develop a business model to generate
business for long period through Uniqueness in
products & technology and Uniqueness in
achieving certain excellence
Reduce technological dependence on another
company.

59
Create new market(s) or achieve drastic
expansion of existing market
Unique and enhanced utilization of
manpower/human resources that drives a
company to supply excellent people/manpower

60
 Key Focus was on
Role clarity
Competency development
Management points and check points
Systematic approach to planning

61
 Initiatives Taken
RBL redefined its management of processes
for New Product Development System,
Manufacturing Quality, Supplier Quality and
Customer Quality.
Each manager was required to define his role,
his metrics, his measurement of performance
to date and the steps being taken to improve
performance.

62
(a) Each function to have unique purpose,
(b) Each purpose to have role,
(c) Each role to have managing points to achieve
the purpose,
(d) All managing points to have measure of
performance,
(e) All managing points to have metrics,
(f) All management points to have either graphs
or vital activity monitoring chart,
(g) Development of metrics or indices was
important, specifically for non-manufacturing
areas.

63
Customer line rejections dropped from
16000 ppm in ’99 to 1750 in ’03. Plant in
process rejections decreased from 2.1 % of
total pieces to 0.85 % of total pieces
produced.
Sales per employee went up from $ 22000
to $ 40000 p.a. Number of employee
suggestions went from 280 to 7500 during
the period.
64
Key benefit was the continual improvement
potential unleashed by TQM

RBL today is the No. 1 Friction Material

Manufacturer in India. They supply to Tata
Motors, Maruti Suzuki, General Motors,
Mahindra & Mahindra & also to Indian Railways
& Srilankan Railways

65
What is it ?
Introduced by Drunker
Activity trap
Basic idea
Has many uses
Relevance as an intervention technique

66
How can it be used as a tool to effect change ?
Planning tool : Helps to determine what tasks
are to be done to bring about the desired
change in the organization

Control tool : Objectives become a road map

of how to get to a clearly defined distant target

67
Management by objective occurs when “a manager
defines responsibilities and expectations
collaboratively with subordinates, sets target dates
and interim checkpoints, evaluates and provides
feedback.” (Leonard & Hilbert, 2004)

The essence of MBO is a process of joint goal

setting between a supervisor and a subordinate,
self-direction, and evaluation to effect change in a
participative and collaborative fashion.

68
Goal:
Goals are defined as being relatively few and long-
term in their focus. It must be specific and realistic.
Action plan:
It specifies the methods, activities, and resources
required to accomplish a goal.
Objective:
Objectives are defined as being relatively more
numerous and short term in their focus.
Must be precise and small in number

69
MACDUD criteria:
Goals must be Measurable, Attainable,
Consistent with company goals, Demanding,
and Under the control of the individual, and
Dead lined

70
What is the specific change desired ?
What are the objectives of the
organization ?
What is the timeframe by which these
objectives must be achieved ?
Can you measure or gauge how well you
have achieved your objectives ?

71
 Intelligent choice of objectives
Why a “What not How approach” ?
- no need for imposing directives
- promoting employee motivation, sense of
self- worth, involvement
-encourages participative problem-solving and
decision making
Result: The change is enduring because the
employees “buy-in” to the process

72
In a 2004 study Google India found that though the
company had brilliant engineers working for them,
they tended to be loners, temperamental and work
alone rather than in teams or groups. It was found
many thought it a slight to their pride to ask another
for help or share resources leading to wastage of
time and duplication of effort. The company, seeking
to get people to work more collaboratively than
individually gave its people objectives for a new
project in such a way that they could not achieve it
alone.

73
There was no explicit requirement to work
together, but the people soon found that they
only way to succeed was to collaborate.
This MBO approach had the inherent
advantages of maintaining employee
motivation, promoting a sense of involvement,
creativity while a more authoritarian approach
of imposing guidelines enforcing people to
work in groups to bring about the same change
might have backfired by bruising egos and
encouraging rebellious tendencies

74
Formulate the long-term goals of the organization
Develop specific and measurable organization
objectives
Develop departmental objectives
Set group and individual goals and responsibilities by
mutual agreement and collaboration
Formulate and implement action plans
Performance review and feedback

75
Why does this
happen ?
Many incorrectly
implemented MBO
programs focus on
the demands of the
organizations only
and do not pay
sufficient attention
to the needs of
individuals and their
careers.

76
Result: A low degree of
integration of individual'
needs and
organizational demands
leads to employees
performing at the
minimum acceptable
level.

Learning: For the

change process to be
effective MBO objectives
must be carefully chosen
to ensure organizational
needs are met but not by
totally ignoring employee
needs

77
Proactive support of the senior management and
leadership in implementation of the MBO system

If MBO is to be successful at bringing about permanent

change , it must start at the top of the organization top
managers must communicate why they have adopted
MBO, what they think it will do, and that they are
committed to it. Employees must be educated about
what MBO is and what their role in it will be.

78
MBO requires time in order to work effectively.
If people are given time to get used to using an
MBO system, and use it properly for planning
and controlling change (not for rewards or
comparative evaluations), the system can
serve any size organization well.

The “human” issue: People, and even

companies the world over, set goals every year
but don’t follow them through to completion. It
must be ensured that this does not happen.

79
Firstly, MBO is an effective strategic planning
and control system for effecting change; it is
not an effective performance evaluation or
reward system.

80
Planning tool ?
What tasks are to be done to bring about the change
in the organization

Objectives are set for the coming year or some

specific timeframe and then updated and reviewed
on a quarterly, monthly, and weekly basis. During
analysis and review of a team, the emphasis must be
on a supportive approach

81
Control Tool ?
Ensuring people complete assigned tasks in
the timeframe allotted

Objectives become a road map of how to get to

a clearly defined distant target. By continually
checking progress along the path of
accomplishment at regular intervals, teams and
people can easily get back on the right road
when they see they have wandered.

82
If a manager uses MBO to evaluate a team or a
salesperson’s performance for the purpose of
making salary or compensation decisions, then MBO
completely loses its effectiveness. When teams and
salespeople realize that they are going to be
rewarded on the basis of the objectives they set, they
will tend to negotiate to set them on the low side.

The easiest objectives are chosen not the right

objectives to bring about the intended change.

83
Second, MBO is a bottom-up, process-oriented
and team-oriented planning system, not a top-
down command-and-control system.

84
People in the smallest units, usually teams, initiate
a set of written performance objectives.
The team objectives should be action oriented
("What action do we need to take to improve the
way we do our jobs?")
The objectives are discussed by associates among
themselves in self-managing teams, followed by
agreement on the objectives to which everyone
can then become committed.

85
Periodic review by the team itself to determine
to what extent the objectives have been met or
exceeded.
Communicate results to management. MBO is
best used as a system for helping people in a
department or team plan their objectives to
effect the desired change. Top management
can use the system with department heads,
and department heads can use the system with
their teams and associates.

86
MBO programs continually emphasize what should
be done in an organization to achieve the desired
organizational change.
MBO process secures employee commitment to
attaining organizational goals.
Organizations create a powerful motivational system
for their employees by adopting MBO making the
change more enduring.

87
Through the process of discussion and
collaboration, communication is greatly
enhanced.
MBO focuses attention on appropriate goals
and plans.
MBO facilitates control through the periodic
development and subsequent evaluation of
individual goals and plans

88
An MBO system can have detrimental
effects in implemented badly or
improperly
Individual managers may become too
focused on their own objectives rather
than those of the organization, and the
organization may become inflexible and
unresponsive to change

89
The development of objectives can be time
consuming, leaving both managers and
employees less time in which to do their actual
work.
The elaborate written goals, careful
communication of goals, and detailed
performance evaluation required in an MBO
program increase the volume of paperwork in
an organization.
Lack of top management support after deciding
on using it reduces its effectiveness as a tool
for organizational change
90
Some managers will not or cannot sit down and
work out goals with their subordinates they
“assign” or “suggest” goals and plans to their
people resulting in resentment and lack of
commitment to the MBO program.

91
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Management in Action, Englewood Cliffs, NJ, PTR
Prentice Hall, 1994.
Joel E Ross, Total Quality Management: Text,
Cases, and Readings, Delray Beach, FL, St Lucie
Press, 1993.

92
Houston Smither & Mclntire, Organization
Development - Strategies for Changing
Environments ,Rangon St , NJ, PTR Prentice
Hall, 1996
Heinz Weihrich, Strategic Career Management:
A Missing Link In Management By Objectives ,
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Responsibilities, Practices", New York: Harper
& Row, 1974
Milton D. Rosenau, Successful Project
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93
http://www.bambooweb.com/articles/t/o/Total_Quality
_Management.html,
As on 1st oct2005, 7am-9am
http://www.bambooweb.com/articles/s/t/Statistical_pr
ocess_control.html,
As on 1st oct2005, 7am-9am
iweb.tntech.edu/acamuti/orgbehavior/
As on 27th Sept'05 , 8pm-11:15pm
www.superfactory.com/SEP/Office_TQM_sample.ppt
,
As on 27th Sept'05 , 8pm-11:15pm
www.southaustraliantrails.com/tatatc/
downloads/presentations/Tom_Perrigoview.ppt

94
As on 27th Sept'05 , 8pm-11:15pm
www.businessballs.com/dtiresources/
total_quality_management_TQM.pdf
As on 27th Sept'05 , 8pm-11:15pm
forge.fh-potsdam.de/~IFLA/INSPEL/01-4alan.pdf
As on 21st Sept.'05 8:30pm - 11pm
euij.hit-u.ac.jp/pg/pdf/Workshop-2004-11-26-
Weltgen.pdf
As on 21st Sept.'05 8:30pm - 11pm
www.few.eur.nl/few/research/ pubs/cs/1996/eur-few-
cs-96-05.pdf (formal model)
As on 21st Sept.'05 8:30pm - 11pm

95
www.mgt.uea.ac.uk/research/witcher-b/RTV-
JIBTE.pdf(translating vision to action)
As on 18th Sept'05,9:30pm
www.managementhelp.org/plan_dec/mbo/mbo.htm
(MBO)
As on 16th Sept'05,7:35pm
www.blacksacademy.co.uk/data/BSQCMJ11.pdf
As on 16th Sept'05,7:35pm
www.performancesolutionstech.com/FromMBOtoPM.
pdf, A Management by Objectives history and
evolution
As on 16th Sept'05,8:00pm

96
en.wikipedia.org/wiki/Management_by_objectives/
As on 16th Sept'05,8:15pm
performance-appraisals.org/ appraisal-
library/Management_By_Objectives/
As on 16th Sept'05,8:15pm
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As on 26th Sept'05,5:20pm
www.cif.org/nominations/nom_187.html
As on 26th Sept'05,5:30pm
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As on 26th Sept'05,5:30pm

97
Thank You

98