1. Management by objective (MBO)
Context of the Good practice
This practice is used by FiaTest ltd. FiaTest is a Continuous VET provider in the following fields: management systems (quality/environment/occupational safety/food safety/information safety/social responsibility), testing /calibration laboratories, Human Resources, TQM management, foreign languages, computers. It is authorized by the National Adult Training Board for the following training courses: quality manager, environmental manager, quality auditor, environmental auditor, human resources manager, project management, leadership.
The clients of FiaTest are companies and individuals who are employees of companies and who seek recognition of their competences. All of the trainings provided are “improvement of competence trainings”.
The MBO practice is presented in Appendix 4.2, together with the tools used.
Yearly FiaTest sets up quality objectives starting from the Quality Policy and the development aims of the organization and linked to the Vision, Mission and Values of the organization. These elements were set up in 2004 and each year they are reviewed and updated.
Based on these objectives individual objectives are drawn up during discussions with each of the employees of FiaTest. These individual objectives derived from the overall organizational objectives are established during the yearly appraisal conducted by the direct manager with the employee involved. In order to achieve each objective, measures are planned during these appraisals. The measures can be related to individual trainings, resources assigned, etc. The time frame for the achievement of the objectives is 1 year.
Each individual ensures the implementation of his/her own action plan, based on the planning developed during the appraisals. Each action implemented is recorded, so that each employee knows whether the actions have been implemented according to the timeframe established.
The implementation phase of MBO involves the following actions
- Training (performed according to the training procedure of the organization)
- Resource assignment and use: the resources established in the planning phase are used according to the plan of measure implementation. The resources are both material and human, the organization being very much focused on promoting the team work
- Communication – internal and external. There is a communication procedure within the organization which includes the performance of external communication for the performed training activities
- Application of procedures: in performing and implementing the activities, the personnel of FiaTest uses a set of common tools and procedures which are a part of the management system (Organization of trainings, Project design, implementation and monitoring, Consultancy process, Marketing activities). All these procedures have been developed starting with 2002 (as a part of the Quality Management System and they are updated continuously, based on the identified improvement needs)
Evaluation and Assessment
Evaluation and assessment applicable to the Management by Objective practice consist in Self assessment performed by the individuals combined with the assessment performed by the direct manager. Self assessment is performed every 3 months by the individuals and it consists in evaluation of the achievement of objectives established in the beginning of each year. Self assessment focuses both on individual objectives but also on measures which have to be implemented in order to reach the organisational objectives.
The self assessment report is sent to the direct manager. The direct manager also performs his/her assessment or he/she just reviews the self assessment performed by the individuals.
Each year 3 partial self assessments are performed and at the end of the period, during the next appraisal, there is an overall self assessment. This overall self assessment is accompanied by the overall evaluation performed by the direct manager.
During the appraisals the main discussion topic is related to the objectives and points where there is a difference higher than 2 points between the self assessment and the evaluation performed by the direct manager. These topics are discussed during appraisals and agreement has to be reached.
Based on the rating an individual performance can be:
- Under expectation
- Up to the expectation
- Exceeding the expectation
“Outstanding” performance can mean that the individual will be promoted to the next hierarchic level.
Review (Feedback and procedure for change)
Review of Management by Objective is performed either once in 3 months, based on the results of self assessment, or once a year, being included in the yearly appraisal.
When the quarterly self evaluation performed by the individual is sent to the direct manager, there might be needs for change in resources allocated, actions and responsibilities. Also objectives might need updating depending on the status of objective achievement. When this is the case, a meeting between the individual and his/her direct manager takes place and the updating of the action plan is performed. The need for change can be identified by the individual as well as by the direct manager.
During the yearly appraisal a discussion on the achievement of the objectives and performance of the individual takes place, based on the scale used by the QMS procedure. Decisions on the new objectives and the changed objectives are made by the individual and his/her direct manager.
The yearly appraisal functions actually both as a planning tool and a review tool, being split in 2 phases.
Results achieved by the users of the good practice
The application of management by objectives has been very effective within the organization. It led to a better understanding of the implemented Quality Management System as well as regarding the ownership of all personnel of the quality management system implemented. FiaTest has a Quality Manager who coordinates and ensures the implementation of the management system and who reports to the top management during the management reviews, but since the MBO program was implemented, the management system has become more effective. FiaTest obtained a second certification by a Certification body accredited by an international accreditation body (signatory of the EA – MLA) and the achievement of objectives raised at 95% in 2006 (between 2003 – 2005 the rate was 85%). Personnel consider now that the quality management represents “everybody’s job” not only “the job of the quality manager”. Also the transparency of the management system has improved significantly together with the understanding of the promotion practices used by FiaTest.
Tips and tops for implementing the good practice
The organization which implements the management by objective should be aware of the fact that it is a learning process for all the personnel. The method should be used consistently and the organization should be aware of the fact that it consumes resources. At least 7 days a year should be allocated to the implementation of the practice by each individual.
In larger organizations it can be of benefit to have the practice implemented in steps, in the beginning just at the management level, and only afterwards at the personnel level of the organization.
The management by objective procedure is likely to need updating and changes in time, due to the fact that there is no “perfect solution” but just “one solution adapted to the needs of organization”. When implementing the practice everybody has to be trained on using it and also one person has to be appointed as overall MBO coordinator, who correlates all the data and makes the overall reports.
Conclusion of the contributor
Management by objectives represents the best tool we have for the moment for ensuring an effective and efficient implementation of the quality management system and the best tool for improvement. We consider that it can function by itself, without being a part of the management system, but if it belongs to the management system it brings much added value.