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

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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 parentsin-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...........................................................................................................35 Chapter 4: Findings ..............................................................................................................................37 4.1.1 Education level of the participants..............................................................................37 4.1.2. Knowledge of Management .......................................................................................38 4.1.3. Knowledge of MBO target setting before LZ Ltd.s introduction.............................39 4.1.4. Conclusion and comments for the general situation: ................................................41 4.2.1. Strategic vision and mission.......................................................................................43 4.2.2. Integration of the strategic decision-making with the vision and mission.................44 4.2.3. Integration of targets ..................................................................................................45 4.2.3.1. The accordance of the companys targets with vision and mission................45 4.2.3.2. The integration of departmental targets with the company ones....................46 4.2.3.3. The accordance of individual targets with the departmental ones..................48 4.2.4. Goal review and action plan match............................................................................51 4.2.4.1. Action plan to carry out company targets........................................................51 4.2.4.2. Action plan to carry out department targets....................................................52 4.2.4.3. Personal action plan to carry out individual targets. ......................................53 4.2.5 Conclusion and comments for objective one ..............................................................53 Chapter 5: Conclusions and recommendations.....................................................................................58 Appendices............................................................................................................................................65 Appendix One: The ground rules and checking list for setting effective targets.........65 Reference:..............................................................................................................................................72

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 staffs 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.

List of Tables
Names of Tables Page No. 5 16

Table 1. The Management By Objectives Process Table 2.4. Six Mistakes in Objectives Setting That Kill MBO Program

Table 3.3.2a. Staff Selection Allocation of LZ Company for Questionnaires 26 Table 3.3.2b. List of advantages and disadvantages of questionnaires Table 3.3.3. Staff Selection Allocation of LZ Company for Interview Table 3.3.4. List of advantages and disadvantages of Secondary data Table 3.6. Cross Mapping Matrix of the research 35 62 28 29 32

Table 5.3. Implementation Plan for Improving the Target Setting in LZ

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List of Figures

Name of Figures

Page No. 8 22 25 37 37 39

Fig. 2.3.2. Example of an objective-setting cascade Fig. 3.2. Time Line for Implementation of Research for the Project Fig. 3.3.2a. The Organisational Structure of LZ (XXXX) Company Fig. 4.1.1. Employees education level Fig. 4.1.2. Knowledge of Management Fig. 4.1.3. Knowledge of MBO

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 interview49 Fig. 4.2.4.1. Action plan to carry out company targets Fig. 4.2.4.2. Any action plan to carry out department targets Fig. 4.2.4.3. Any action plan to carry out individual targets Fig. 4.3. Barriers in targets setting in MBO approach 54 51 52 50

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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 its 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 1990s. 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,
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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 ChinaXXXX 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 Ouchu 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. 1.2. Management by Objectives: Drucker (1954) popularized the conception of MBO, which became a popular
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management tool for the past 60 years. The importance of setting clear longterm 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 companys 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 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
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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.

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 Raias 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:
Table 1 The management by objectives process Essential elements Goal-setting Key stages 1 Establish long -range strategic objectives 2 Formulate specific overall organizational goals 3 Agree departmental objectives 4 Set individual performance targets Action planning Self-control Periodic reviews 5 Draw up action plans 6 Implement and take conrrective action 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)

Although

Price

(2004)

highlights the four stages as the main elements of the MBO process, he did not
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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 of performance requirements throughout
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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 mission as they are sometimes called. These overall goals should then be shared
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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 organisations 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 persons 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 satisfaction be achieved. In addition, Locke (1978) argues the process of goal
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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 companys success are strategic decisions. They rely on the vision of the management team to match the companys strengths with the opportunities in the market (Gillespie and Harrison, 2000:7). Such point of view is close to Druckers (1999) who also declares there is a link
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between the companys 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 processes to ensure short-term and immediate goals are aligned with
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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 (Peoples Congress, 2001) that an organization should hear the Labour Unions 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!
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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 shortterm target setting is consistent with the longterm 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 departments goal in the context of the companys? 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.
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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.

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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 persons 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 macromanagerial decisions (Yu, 2003).

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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:

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Table 2.4: Six Mistakes in Objectives Setting That Kill MBO Program

Wea kness Quantify everything

Performance Examples

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 notest to the plan for realism is a beautiful way to murder an MBO program.

Dramatize -term objectives short Blending all objectives O -man show in ne setting objectives

Operate on the ungrounded premise that if you take care of the present, the future will take care of itself. Another way to emasculate MBO is to fail to coordinate all objective from different department managers. Not taking time and effort to discuss the objectives with them is the real key to killing MBO.

(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
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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.

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Figure 2.5: Conceptual Framework

Strategic Vision and Mission

Identify Intermediate Goal From long-range Goal

Strategic Decision-making

Barriers of goals integration

Organisa -tional Goal Setting

Department Goal Setting

Barriers of goals integration

Individual GoalSetting

Barriers of goals

integration

Fit from goals integration

Goal review and action plan match

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
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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.

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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
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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.
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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
Ti m Li ne for I m em e pl entati on of R esearch for the P ect roj St age O ne St age Tw o St age Three St age Four O ober ct N ovem eber D ecem ber J anuary Com et e pl 1 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 21 8O . ct 5N ov. 30 N ov. 3D ec. 10 D ec. 10 D ec. 24 D ec. 24 D ec. 24 D ec. 14 J an.

St age O ne

Sel ect t opi cs Q uest i on draf t Pi l ot Q nai rs .

St age Pi l ot i nt ervi ew Tw o Revi ew Pi l ot s Adj ust m ent I ssue Q nai rs . St age Three St age Four I nt ervi ew Secondary D a at Anal ysi s

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 companys annual report, company files and staffs 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.
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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)
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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 (EasterbySmith 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
GM of LZ(GZ) (232) HR (18) Marketing and Sales (36)
Finance (12) Logistics (13)

R&D (8)

Operation (128)

Legal (4)

QC & SHE (9)

Public Relationship (3)

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
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:
Table 3.3.2a. Staff Selection Allocation of LZ Company for Questionnaires Department Total Staff Ratio of Select. Selected Staff GM 1 1.00 1 HR 18 0.80 14 Mkt &Sal. 36 0.80 29 Fin. 12 0.80 10 Logistic 13 0.80 10 R&D 8 0.80 6 Oper. 128 0.30 38 Leg-al 4 0.00 0 QC&SH E 9 0.80 7 P.R. 3 0.00 0

Total Selection: 116 Average Ratio of Selection: 0.50

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
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 authors 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:

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Table 3.3.2b.: List of advantages and disadvantages of questionnaires

Advantages Wide Coverage. Cheap. Disadvantages Poor responses rate. Incomplete answers. or poorly completed

Eliminate effect of personal interaction Limit and shape nature of answers. with researcher. 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 authors 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:
Table 3.3.3. Staff Selection Allocation of LZ Company for Interview
Department Total Staff Ratio of Select. Selected Staff GM 1 1.00 1 HR 18 0.17 3 Mkt &Sal. 36 0.06 2 Fin. 12 0.17 2 Logistic 13 0.15 2 R&D 8 0.25 2 Oper. 128 0.02 3 Leg-al 4 0.00 0 QC&SH E 9 0.22 2 P.R. 3 0.00 0

Total Selection: Average Ratio of Selection:

17 0.07

Interviews (See Appendix Three for detail.) were conducted after they had the
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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 authors, thus to reduce the limitation of semistructure 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.

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Table 3.3.4.: List of advantages and disadvantages of secondary data Advantages Disadvantages

Access to data. Most researchers will They are secondary source generally find access to the sources relatively reply on something which has been easy and inexpensive. produced for other purposes and not for the specific aims of the investigation. Cost-effective. Permanence of data. Credibility of the source. 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
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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 Denzins (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.
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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 Denscombes (2003:274) suggestions to checks on the validity as followed: H a v e r e a s o H a t h e c a u s e t h e a b l e r e o f i n s t a g r o u n n c e s d s a s s l e f a r e c t e a s e n n g u d t h r e l a f o e c o t e a g d r i m n

s e a r c h e r s b- s i i a d s e e d d r e np do a

s e l f b e r ot i n eg ?

H a v e t h e f i n d i n g s b e e n t r i a c o n f i d e n c e i n t h e i r v a l i d i t y ? D o t h s e i o nc so n cd l o u i n v e s t i g a t e d a c o n s i s t e n c y ? j u n d s t i c e a v o t o i d

t h e o v e

c o m r s i m

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.

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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:

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R.M. C.F.

Questionaire

Semi-structure Interview

Secondary Data

Objective 1: Evaluation of target setting procedures in LZ Strategic Vision and Mission Management Decision
Org. Goal

1 2 3.4 5.6 7.8.9 10 11 12

1.2 3 4 5.6 7.8 11 12 13

Company Constitute, Annual Report, Company Newsletter, Same as above Staff Manual, Annual Report, Staff Manual, Department Plan and work report, Staff Manual, Job Description, Work Record Staff Manual, Annual Report, Staff Manual, Department Plan and work report, Staff Manual, Job Description, Work Record

Integrated Team Goal Goal

Individua l Goal Org. Goal

Matched Team Action Plan Goal to the Goal

Individua l Goal

Objective 2: Identify the barriers for MBO approach in LZ R.M. C.F. Barriers of target setting Questionaire 13.14 Semi-structure Interview 9. 10 Secondary Data Staff Manual, Job Description, Work Record

Source: the author, 2006

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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.

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Fig.4.1.1.Employees education level

70. 00% 60. 00% 50. 00% 40. 00% 30. 00% 20. 00% 10. 00% 0. 00% 64. 66%

17. 24%

14. 66% 3. 45%

Of or below High school

College graduate

Graduate

Post graduate

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.

Experience d as manager for more than one year 13%

Fig. 4.1.2. Knowledge of Management Experience d as manager for less than one year 2% Never experience d managing but know its concepts 21%

Know little of manageme nt concepts 64%

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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.

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Fig. 4.1.3. Knowledge of MBO

Have experience d such program 3% Never heard of it 86% Know about it, but not experience d 11%

The situation shown above reflects that not many employees really knew about such a programme before the companys 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 companys training feed back reports, training records were found which demonstrated that the HR departments attempt to make prevalent the theories and operation of the MBO programme. The training records were kept as: Time Training Contents Attendances Managers of all departments Key staffs of LZ Ltd. All staff of LZ Ltd.

15th December, 1999 3rd March, 2000 18th July, 2000

Introduction of MBO Introduction of MBO

Introduction of MBO

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:
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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 years 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.

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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 companys final targets.
Fig.4.2.2.The integration of the managerial decision with the vision and mission
Not strong at all 5% Merely strong 14% Very strong 24%

Strong 57%

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 companys 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 companys targets with vision and mission This is to examine whether the companys target setting is in accordance with its vision and mission, which are the premier for an MBO target setting.

Fig. 4.2.3.1.Company targets and its vision and mission

No, they are not in accodance. 12%

Yes, they are in accordance . 88%

While being questioned if they know the companys 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 companys target setting is in accordance with the companys vision and mission. There are still 12% of them who considered it inconsistent with the companys 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. Fig.4.2.3.2. The accordance of departmental targets with company ones
No, nonaccodance. 24%

Yes, in accordance. 76%

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 nonmanagerial 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.
Fig. 4.2.3.3a. The percentage of individual knowing the personal targets

120 100 80 60 40 20 0 84.48% Yes, I do. 15.52% No, I don't.

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 nonmanagerial level, can not specify his/her individual target. This is because some workers of the operation department dont 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.

Fig. 4.2.3.3b.The accordance of individual targets with the departmental ones.

No, nonaccodance. 28% Yes, in accordance. 72%

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 departments 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

Fig. 4.2.3.3c. The invigoration of individual targets to employee 60 50 40 30 20 10 0 42.24% 31.03% 14.66% 12.07%

Very strong

Strong

Not motivated

De-motivated

This item demonstrated that targets set for the individuals dont 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.

Fig.4.2.3.3d. The invigoration of individual targets to employee by interview

8 6 4 2 0 Very strong Strong Not motivated De-motivated 2 2 1 7

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 140 120 100 80 60 40 20 0 100.00% Yes, I think so. 0.00% 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
Fig. 4.2.4.2. Any action plan to carry out department targets

120 100 80 60 40 20 0 87.07% Yes, I think so. 12.93% No, I don't think so.

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 companys, 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 dont.

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4.2.4.3. Personal action plan to carry out individual targets.

Fig. 4.2.4.3. Any action plan to carry out individual targets? 80 60 40 20 0 41.38% Yes, I have. 58.62% No, I don't have.

In the answer of this question from questionnaires, 58.62% admit they dont 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 dont 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 dont 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 dont. 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

Fig. 4.3. Barriers in targets setting in MBO approach

70 60 50 40 30 20 10 0 62

54

22

18 5

Lack of skill Insufficient Not enough in target managerial awareness setting skills

Fear of failure

Others

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 departments 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 companys 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 managements 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 A. Re-introduce Action Steps 1. Detail training of MBO program to all staff, from theories to skill. 2. Introduce in various ways, including select one section for pilot. 3. Expand the experiences from the pilot and learn from the models. 4. Employ other methods to introduce tools of MBO, such as samples, listening materials, practice kit and group discussion. 5. Improve communication skills for the managers, by training and case study. as 6. Training (coaching) key staffs basic management skill, such as communication, target writing, and time management. 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. 8. Print out explanation of Target Dialogues and their using method 800 500 1000 Est.Cost 50 0 0 Timeline (check by months) M A M J J A O S

MBO Program B. Check if staff master operation C. Improve actual

50

2000

management skills, such

communication, target listening writing, and

motivation. D. Re-introduce

63

the tools of MBO

in brochures. Publish the correct samples. Exercises and correction for staff that needs. 9. Place a Suggestion Box in the public for feed back collection. 10. HR staff goes into the working group for investigation. 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.

E. Chances

for

5 0 0

staff complains F. Unified the understanding of MBO programme

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Appendices
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)

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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 companys 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 9. How much does your target motivate you? A. Very motivated B. Motivated C. Not motivated D. De-motivated D. Against

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.)

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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: General Manager (or deputy) Your present Department Manager (or deputy) position Section Officer (or deputy) Staff Of or below high school Your Education Qualification Knowledge of managemen t concepts Knowledge of targets College graduate Graduate Post gradute Experienced as manager for more than one year Experienced as manager for less than one year experienced managing but know its Never concepts of management concepts Know little experienced targeting in MBO program before, but know

MBO before experienced Not

something about itit until I came to this never heard of company

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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 companys objective(s) for 2006?

4. Was your department objective integrated with your companys? 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?

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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?

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