The Labyrinth of Objectives

At our weekly “Heads-Of-Department”-Meeting we recently included a session with our HR partner to talk about the objective-setting, -review and -appraisal processes each of us is asked to run in our department. Nothing really new, just a good reminder how things are supposed to work. Aligned with global guidelines of course and all based upon the concept of “Management By Objectives” (MBO). As usual, we didn´t have enough time to discuss in greater detail, so we only briefly touched the issues of how to best make objectives individually measurable. And potential bonus allocations fair and transparent. As most of our objectives are change oriented and project related, the simple MBO definition leaves me with a sense of unsatisfaction and the desire to reflect more about the subject, that impacts our wallets, motivation and careers.

Since 1954 Divisions, Departments, Teams and Individuals are managed by objectives. The term “Management By Objective” was defined by Peter Ferdinant Drucker´s books “The Practice of Management” and “The Effective Executive”. No doubt, his thinking transformed corporate management in the latter half of the 20th century as well as the professional life of millions. (any studies on this, facts? Shure not everybody did) since then. In over 66 years, Drucker wrote more than three dozen books which got translated into 30 languages.  He is often called the founding father of the study of Management as well as the world’s most influential business guru. His work influenced Winston Churchill, Bill Gates, Jack Welch and the Japanese business establishment.

Peter Ferdinand Drucker (November 19, 1909 – November 11, 2005)  – writer, management consultant and university professor – was born in Vienna, Austria in November 1909.  After receiving his doctorate in Public and International Law from Frankfurt University in Frankfurt, Germany, he worked as an economist and journalist in London before moving to the United States in 1937.
In 1939, Peter F. Drucker published his first book, “The End of Economic Man”.  In 1950 he then joined the faculty of New York University’s Graduate Business School as Professor of Management.  He was Clarke Professor of Social Science and Management since 1971 at the Claremont Graduate University in Claremont, California.  The University named its management school after him in 1987.

Mr. Drucker pioneered the idea of privatization and the corporation as a social institution. He coined the terms “knowledge workers” and “management by objectives”. His seminal study of General Motors in 1945 introduced the concept of decentralization as a principle of organization, in contrast to the practice of command and control in business.

A Business Week´s article honoured his work when he died at the age of 95 stating that Druckers ideas still matter. I think it is true, at least as far as my experience goes. In all the organizations I worked so far, yearly objectives were agreed with the next level manager based upon the companies strategy and plans. Not as often as we wanted to, they were reviewed and adjusted regularly during the year. Came the end of the year, the individual performance against the individual objectives were formally assessed and the bonus participation calculated based upon the outcome of the assessment.

Good objectives are supposed to be smart (specific, measurable, achivable, relevant, timebound). For the sophisticated of us, ranges of achivement ( e.g. 50%,75%, 100%) are documented as part of the agreement in the beginning. With this, it would allow to determin at the end of the year how much of each objective has been met and how much bonus is payed out in a transparent way.

An example for a retail car salesmen in a decent location with attrachive cars and good marketing activities would be: Have 2000 sales orders signed and registered in the sales system for new cars between 1.Jan and 31Dec. With this, a percentage can be easily calculated: e.g. 1000 sold cars make 50%.

I would call this a one dimentional objective. Of course, in real life s.a.r.t. objectives are much more complicated, even the simple example given one could be understood differently by different people and therefore laterone the bonus determination been seen as “unfair”. An interesting study about The unintended consequences of management by objectives: the volume growth target at Volvo Cars shows more.

The problem gets much more complex with multidimentional objective, that you typically find in projects. The project-objective is 100% met if it is completed on time, with agreed quality and budget. But what would 75% exactly mean? What do I have to tell a project manager about the conditions in relation to time, quality and cost that need to be met in order to receive a e.g.75% bonus? Does MBO make sense for projects, or would a balanced scorecard approach be more relevant as it considers mutiple dimensions?

Good questions I think. But I got a far more trivial problem with objectives in my firm, where we have to use the corporate template that feeds the corporate I-do-not-know-which system. I can only define 5 objectives, which all need to fit on one page. The way the template is constructed, I can maybe use 20% of an A4 page. Which leaves me with the dilema that I cannot be specific enough and therefore not really objective when it comes to the bonus. And if I formulate them “on a higher level” they start looking like job descriptions, which would make them utimatively redundant – we hate doubble work.

Ahhhh, and as we might not have any bonus this year, maybe we should then drop the form completly and manage our people according what works best – not using the corporate template and maybe even not using the MBO concept at all.  The  Agile Management blog explains, why Individual Measurement is Bad.

Well, I am not suggesting to abondon corporate rules just like this, but feel at least we should reflect about the difference between management by objectives (or conformance to plan commitments) versus management of process variation. The management scientists will recognize this as the Peter Drucker versus Edwards Deming debate [Drucker and Deming actually roomed together at one point in the early 50’s where this argument started. Drucker is said by Deming to have capitulated eventually.] Yet others may see this as a Crosby versus Deming debate. And in many ways the Crosby idea of measuring quality by conformance to spec, isn’t so far removed from the Drucker idea of set a target, get a commitment from an accountable person and then hold their feet to the fire until they deliver (taken from here ).

More research to be done …

Further links:

• Scorecard
• http://www.managepro.com/mbotopm.html
• The Leader’s Challenge: Changing the Mind-Set http://www.pfdf.org/knowledgecenter/journal.aspx?ArticleID=757
• Beyond the information age http://www.theatlantic.com/doc/print/199910/information-revolution

Using material from

• http://www.washingtonpost.com/wp-dyn/content/article/2005/11/11/AR2005111101938.html
• http://www.druckerinstitute.com/
  

What A Good Manager REALLY Does

It is not that obvious, what a manager does. Often my two daughters are asking me about details of what I do. Sometimes it comes down to the question, wheater I am the boss, and I answer with “yes” and “no”. Yes, because I am the boss of a team, and no, because I also have a boss. Even if I would the THE boss, I am not Mr. Big Boss, as of then I have customers and banks telling me what to do, to say the least.

Understanding the job in terms of the hierarchical level with an organization seems like a simple one that even kids understand. Family, school and their circle of friends already have an organizational setup.

But my kids are not alone in asking what a manager is. That questions has been ansered more than 200 Million times. I am not sure if the seach results of the automatic search enginee really answer the question, as within the first hundret links Mr. Drucker was never mentioned.  Asking for “what a manager does” , 200 Million results are indicated with similar results. So what a manager DOES versa what a manager IS might not be relevant. Doing versa Being is an interesting subject. For a better understanding of what a manager is, let’s look at the Doing side of things. 

 

 

 

Drucker attributes the below structure to Effective Executives. But I think it goes for all Managers. If they manage and not just administer.

I promotes some of my team members recenctly into a management role. Based upon their potentential, competencies and aspirations. They could have stayed in their professional role, but the way the salary-bands are defined would put them against a ceiling quickly. Also, as CBS Interactive says, middle managers matter, despite the run for lean organizations.

But becomming a manager requires coaching to get into this. From expert into a manager. How long does this take? And would I be a good role-model? (Let´s assume yes, at least to some degree, otherwise it would not make sense I guess).

I had the same in my life, years ago, and to be honest, it was not easy. I had to let go my expert knowledge and get into the unknown. Leaving the comfort zone big time. Not that I ever want to go back, but it takes a while to adopt to the fluidum of management. But I had some good mentors and people I could learn from. So now it is my turn. I need to help them to understand what managers are, and what they do. The above is a good illustration – but what does this really mean in terms of “things a manager does”.

Answers to Non-Asked Questions

Presentation: heart my eyes and kill my brain

We all, really all, have to do it. And get it wrong many times. You cannot believe in how many meetings I am sitting waisting time watching overdosed powerpoint presentations, that after minutes heart my eyes and kill my brain. Don´t expect anything other from me, than to be polite to not leave the room. Which I eventually will do, as I got other, more important things to do. Really!

We should not allow this to happen, it is waisting time and resources. We should better strategically invest helping our people to overcome the death by powerpoint and give good presentations. After all, who says that we should not have fun?

Here at least is some basic advice on how to give a killer presentation.

Management like Obama (MLO)

I am sure that it will not take long until the first management books are published, that refer to the new American leader. I would write one myself, if I would be close enough to him and had enough time. After “Management by Objectives (MBO)” the business world will talk about MLO. At least the western one. I mean real life management dealing with the real world. He has demonstrated throughout his election campagne that he can mobilies voters, but as the mightiest man on the planet, there will to be more than excellent markting strategies.

Obama

Mr. Obama certainly is a great talent. The Turks nearly blew the NATO away this week-end with their non-support for Anders Fogh Rasmussen as the new head of NATO. Creating a major crisis in the one of the worlds import organization. A phonecall later from Mr. President, this was fixed. We do not know, what exactly happened there, but I am impressed by Obamas later words to comment the situation. The German Magazin “Spiegel” reports that Obama said nothing about his role in the ultimate success of the conference. He modestly thanked Turkey for expressing its “important” concerns.

Audience

I think I need to get my head arround if would want my team, my collegues, my boss, potentially the whole company to read this, or if I want to remain anonymous. Our company, a leading global player, does not have any policy about employees (Managers) blogging about there professional life. Need to explore this more. Until then, I remain x.

Ahhhh, one thing: I want to remain subjective, not censored corporate communcation filtered. I guess I shall think about the “rules” I need and want to apply. I do have access to some restricted information and participate in confidential conversations, which I definitly need to and will respect.  I am sure that other fellow bloggers and comanies have similar threads going on. More research needed.

Start

Sunday morning the idea cristalized to create yet another blog. The “I am Manager” one. Since many years I belong to this species but never really write upon this part of my being – even I spend more time with my collegues than with friends, more time in the office than at home (at least during the week and while not sleeping). So here we go … and find out what this will all be about as we go along.

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