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application of management by objective (MBO) on organizational efficiency

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Abstract

The study examine the application of management by objective (MBO) on organizational efficiency: a study of Ebonyi State Ministry of Works and Transport Abakaliki. The objectives of the study are to determine the influence of goal setting on organizational performance, to examine how employee participation in decision making enhance employee productivity and to examine the influence of objective feedback on organizational efficiency. Three research questions were formulated in line with the research objectives. Survey design was adopted. The population of study consisted of 280 staff of Ebonyi State Ministry of Works and Transport Abakaliki. The sample size is 164 selected through the application of Taro Yamane technique for sample size determination. The research instrument used was a structured questionnaire. The statistical method adopted for data analysis was the Chi Square. The result of the study shows that goal setting has significant influence on organizational performance, employee participation in decision making enhance employee productivity, objective feedback enhance organizational efficiency. From the findings, it was recommended that top management of organizations should make the organizational goal clear to each employee and as well set targets for each employee. The employee targets should be geared towards achieving the collective goal of the organization, employee participation in decision making should be paramount and that objective feedbacks should be taken seriously, as it is the means of assessing performance against the set goals.

CHAPTER ONE

 

INTRODUCTION

  • Background to the Study

Management of organizations in today business environment needs a lot of tools to be able to administer effectively in the day to day running of the business. Management by objectives is one of such tools. It is a way of getting improved results in managerial method whereby the superior and the subordinate managers in an organization identifies major areas of responsibility, and set some standards for performance and the measurement of results against those standards (Derek 2005). Nwosu (2008) described management by objective (MBO) as a technique of management that attempts to relate organizational goals to individual performances and development through the involvement of all levels of management. MBO is thus a management technique that involves the application of collective objectives, action, vision, insight, and inspiration in organizations in such a way that fundamental changes in direction, development, productivity, perceptions or beliefs occur in both the employees and the organization.

Management by Objectives (MBO) is a theory of management proposed by Drucker (1956). It relies on the defining of objectives for each employee and then comparing and directing employee performance against the objectives that have been set. Greenwood (2001) defined MBO as a broader term that encompasses managerial decisions and actions that help to ensure that an organization formulates and maintains a beneficial fit with its’ environment and consistent with its objectives and goals. Tahir (2008) described MBO as involving the establishment and communication of organizational goals, the setting of individual goals in line with the organizational goals, the periodic and final review of performance in relation to the organizational goals.

Management by objectives is also called managing by objectives. However, there have been certain individuals who have long placed emphasis on management by objectives and by so doing have management by objectives refers to as a structured management technique of setting goals for any organizational unit. Odiorne (2011) defines MBO as a system of management whereby the superior and subordinate jointly identify objectives, define individual major areas of responsibility in terms of results expected, and use these objectives and expected results as guides for operating the unit and assessing the contribution of each of its members.

Besides, Odiorne points out that management by objectives is a “system of management,” an overall framework used to guide the organizational unit and outline its direction. He went further to point out that “the superior and subordinate jointly identify the objectives”. In other words, it is a participative management procedure that requires commitment and co-operation. The definition deals with identifying the “results” that are expected. Thus management by objectives concentrates on the output of the organization evaluating people by assessing their contribution to this output.

Management by objectives was define by Koontz and O’Donnell (2008) as a technique of system or method of management whereby the superior and subordinate managers of an organization agree on its broad goal, translate these goal into a chain of specific short term goals, define each individuals major areas of responsibility in terms of result expected and continually review the accomplishment as the sole basis of assessing and rewarding them. Management by objectives gives the employee the opportunity to participate in decision making. It assumes that the employees has been properly selected and trained, and is informed that the employees will be responsible for achieving the desired results in the organization.

MBO involves the employee in participative goal setting. The goals become a form of feedback or knowledge of results. Latham and Yukl (2005) indicate the components in the process of goal setting as: (a) goal setting itself, (b) participation in goal setting, and (c) objective feedback or knowledge of results. Goal setting itself is positively related to performance. Consistent and significant improvements in organizational performance as a result of goal setting have been found in studies by (Bell & Mitchell, 2006; Bryan and Locke, 2007; Locke, Cartledge and Knerr, 2010 and Ivancevich, 2015).

Setting goals improves performance and the more difficult it is to reach the goals the better the performance, up to the point where goals are perceived as impossible. Participation has mixed effects on performance. Effectiveness seems to depend on the amount and type of participation (Latham & Saari, 2009. Increased level of participation lead to satisfaction improvements, although this relationship appears to depend on the needs of the employees (Steers, 2006).

Objective feedback or Knowledge of results tends to increase performance levels, but the results are more apparent when it is tied to goal setting (Locke and Bryan, 2009 and Conlon, 2010) and the individual values (Braunstein, Klein, and Pachla, 2013). Knowledge of results also improves satisfaction (Cook, 2008 and Hackman & Lawler, 2011) although this relationship seems to be moderated by attributes of the individual.

Organizational efficiency is an organization’s ability to implement its plans using the smallest possible expenditure of resources. It is an important factor in the firm’s organizational effectiveness, this being the ease and degree of success with which the organization is able to accomplish its aims.

Ebonyi State Ministry of works & Transport was established to deliver the highest standard of excellence, quality and safe service to Ebonyians. The ministry strive to not only build projects, but to also build strong infrastructural development in the State, with commitment towards exceeding expectations. Engr. Fidelis Kings Nweze (MNSE) is the political Head of the Ministry. He is an Engineer by profession.

The Ministry of Works and Transport is subdivided into five functional Departments. The divisions are for administrative convenience and for the delivery of policy thrust of the Ministry. The Departments includes, Civil Engineering, Mechanical Engineering, Planning Research and Statistics, Finance and Accounts and finally Administrative Department. These Departments are manned by highly trained and professionally competent personnel employed and posted to the Ministry by the Civil Service Commission of Ebonyi State.

The broad objectives of the Ministry are to construct, reconstruct and rehabilitate urban and rural road networks in Ebonyi State. To achieve the above objective, the Ministry collects and maintains a scientific inventory on terrain, soil type and distance of all roads in the State. Designs and estimate cost of construction of selected roads.

 

  • Statement of the problem

Civil service job in Nigeria is widely regarded and misconceived as nobody’s job. A notable proverb says that “a goat that belong to everybody sleeps outside a tent”. This proverb goes a long way in explaining the situation of things in many government establishments in Nigeria. Many public organizations in Nigeria suffer from poor management and almost zero productivity. This can be traced to several causative factors that ranges from poor remuneration to poor management and its resultant zero commitment from the employees. This problem of zero commitment consequently results in low employee productivity, poor organizational performance and inefficiency on the part of the organization.

Management by objective (MBO) was expected to help put an end to these man made problems confronting public sector organizations in Nigeria. Management by objectives gives the employee the opportunity to participate in decision making and return feedbacks based on the organizational set and streamlined goals. It assumes that the employees has been properly selected and trained, and is informed that the employee will be responsible for achieving the desired goals in the organization. It is based on the aforementioned problems in public sector organizations and the roles management by objective plays in restructuring for optimum efficiency in organizations that the present study seek to examine the application of management by objective on organizational efficiency with a particular reference to Ebonyi State Ministry of Works and Transport Abakaliki.

  • Objective of the Study

The major objective of the study is to examine the application of management by objective (MBO) on organizational efficiency: a study of Ebonyi State Ministry of Works and Transport Abakaliki.

The specific objectives are:

  1. To determine the influence of goal setting on organizational performance.
  2. To examine how employee participation in decision making enhance employee productivity.
  3. To examine the influence of objective feedback on organizational efficiency.
    • Research Question

The following research questions were formulated to guide the study:

  1. How does goal setting influence organizational performance?
  2. How does employee participation in decision making enhance employee productivity?
  • How does objective feedback enhance organizational efficiency?
    • Research Hypothesis

The following research hypotheses were formulated to guide the study:

  1. Ho: goal setting has no significant influence on organizational performance.

H1: goal setting has significant influence on organizational performance.

  1. Ho employee participation in decision making does not enhance employee productivity.

H1: employee participation in decision making enhance employee productivity.

  1. Ho: objective feedback does not enhance organizational efficiency.

H1: objective feedback enhances organizational efficiency.

  • Significance of the study

The findings of the study will be of immense benefit to:

  • Top management of organizations: the results of this study will be of great benefit to the top management of organizations, be it private or public, because it will guide them in setting organizational goals and ensuring that the sub-ordinates are directed and properly supervised towards achieving the organizational goals.

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