Capstone 5 #Goals

Regarding the unanticipated savings, Linden thinks that since the “homework is done, that costs in the
regions should be fallen between 10%-15%” (case, p8), stating that not only the business target should
be adjusted according to the unexpected savings from the raw material, but also the bonus for the
managers should be decreased as well. He also gives the justification of his course, that since the bonus
is already very generous, the bar of the bonus should be set higher in order to encourage creativity and
diligence (case, p8).

To resolve the problem occurring in the company, we can turn to the Goal-setting Theory. This theory
claims that providing specific, challenging and interesting goals, while giving constant feedback, results
in better outcome. Acceptance of a goal, however hard it can be to achieve, results in higher effort to
achieve it (Organizational Behavior, p157). There are several factors that will affect the outcome of goal
setting. First is feedback, which is a vital part of implementing the theory. It serves as guidance, check
list of things that are done and need to be done and helps determine discrepancies between our desired
and actual behavior, simultaneously, positive feedback also helps staff who successfully achieve the goal
erect confidence and self efficacy. The second factor is goal commitment, entailing when someone is
believes he will and is willing to achieve a goal, the performance will improve. The third is task
characteristics, simply indicating the essence, type and traits of the job. And last is national culture that
may influence the working ethics of people.

Under the light of goal setting theory, we can conclude that setting the bar higher is helpful at improving
the company’s overall merit and performance, thus the GEC should support Linden’s opinion.
Considering the GEC where peers can give instructional suggestions and positive comments can serve
the function as feedback, it can help to adjust the target and the bonus bar higher. Also, looking back at
the past merit of regional directors (case p9), due to their success in previous years, they surely have the
self-confidence of achieving better outcome, and their goal commitment can be strengthened,
supporting the adjustment of target setting. Therefore, bearing goal-setting theory in mind, adjusting
the bar higher is advantageous and feasible for FWD.

Apart from the perspective of goal setting theory, the theory of organizational goals is also essential to
look at. Goals are a part of the concept strategic intentions, in which goals, objectives, visions and
missions are put into a hierarchy that will be discussed as followed. First we have vision, which relates to
the future orientation of the organization and describes the kind of organization it ought to be. Then
comes mission, a statement of the key values, which define the purpose of the organization and,
perhaps, its distinctive competitiveness. Next we have goals, which are more specific statements of
intent than mission statement, but are still broad and generalized. Last we have objectives that are the
operationalization of the goals (Introduction to Business, p194). Regarding the goals stated in the case, it
is mainly about the target of KPI and how should managers’ bonuses be changed accordingly. Since it
does not involve the value and purpose of the corporation, and it fits the definition ‘the desires and
reactions of an individual, organization or group in an achievement context’ given by Porter (2008),
therefore we can define it as an objective.

When we come to how organizational goals are developed, we can examine the goal formation process.
First is bargaining, which is when interest groups aim to form coalitions, and general terms of coalition
are fixed. Then is the internal organization process of control. In this phase, goals are stabilized and
elaborated and different coalitions agree with a goal. Last is the stage of adjustment to experience. In
this stage, coalition agreements are altered (Introduction to business, p100, p111).

Looking back at the case, we can discover that the change of the business targets are, in a way, fostered
and obstructed by interest groups, because of the fact that the managers are in the proximity of being
an economic man who are fully self-interested and their self-interest can collide with one another’s. The
top managers’ economic interests are based on the overall performance of the whole company, which
can be benefited from the change of business targets and bonuses, so they have formed a coalition to
push the enforcement of the desired change; while the regional managers mainly focus on the
performance of their regional department, which can be potentially impaired due to the change of the
business targets, and their personal bonus can be diminished once the targets are shifted, thus they
have formed a coalition to attempt to blockade the occurrence of the change. Having these facts in
mind, in order to increase the performance on a global scale in a feasible and realistic way, the change
should take place, but it is better not to harm either side’s interest as radical as is proposed by Linden,
instead, it is suggested that a gradual-in-time and a compromise-in-amount approach should be taken,
so that in the long term, beneficial changes can still happen and coalitions’ interests will not be
desperately damaged.