Management by objectives E-Book

Vicente Falconi Campos

• Herausgeber: Falconi Editora
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 182

Veröffentlichungsjahr: 2016

Beschreibung

Management by Objectives is the motivating, dynamic and revolutionary side to Total Quality Management (TQM), in the Japanese style. It is a TQM subsystem, focused on competition, and it encompasses not only the improvement of existing products and processes, but also the innovation represented by new technology. Human knowledge is the fuel it runs on, and it is here that senior management will perceive the need for a new human resources policy for the third millennium.

Leseprobe

Cataloguing Reference

C198m   CAMPOS, Vicente Falconi

Management by objectives (Hoshin Kanri): what every member of senior management needs to know in order to overcome the challenges of the new millennium / Vicente Falconi Campos; translated by T. K. Gatehouse – Nova Lima: FALCONI Editora, 2015.

Translation: Gerenciamento pelas diretrizes (Hoshin Kanri): o que todo membro da alta administração precisa saber para vencer os desafios do novo milênio.

ISBN: 978-85-5556-014-9

1. Management – Quality control. 2. Management development. I. T. K. Gatehouse. II. Title.

CDU – 658.562

Cover: África São Paulo Publicidade Ltda.

Illustrations and artwork: Heloisa Godoy Rousseff

Electronic publishing: Jeferson Teixeira Soares

English translation: T. K. Gatehouse

Translation revision: Frederico Gama Gondim / John Garriock Firth

ePub Production: Cumbuca Studio

Copyrigth © 2015 by Vicente Falconi Campos

Commercial rights to this edition: FALCONI Editora

“The traditional factors of production – land, labor and even money, because it is so mobile – no longer assure a particular nation competitive advantage. Rather, management has become the decisive factor of production.” *

Peter F. Drucker

(*)

Managing for the Future - The 1990’s and Beyond.

Truman Talley Books/Dutton

New York, 1992

Summary

1. Managerial arts and martial arts

2. The meaning of management by objectives

2.1 The concept of management by objectives

2.2 The concept of strategic planning

2.3 The management method

2.4 The relationship between management by objectives and routine management

2.5 The management by objectives system

2.6 The philosophy of management by objectives

3 Introduction to planning

3.1 The concept of goals

3.2 The concept of a problem

3.3 The concept of an objective

3.4 The planning method

3.5 Methods of deploying objectives

3.5.1 How to establish an objective

3.5.2 Characteristics of objective measures

3.5.3 Deployment methods

3.5.3.1 Method A

3.5.3.2 Method B

3.6 Deploying objectives and organizational structure

3.6.1 Types of organizational structure

3.6.2 The deployment process

3.7 Management by objectives and QCCs

3.8 Factors for good planning

3.8.1 Personal knowledge

3.8.2 Associate´s enthusiasm

3.8.3 Senior management time

3.8.4 Intuition and obstacle analysis

3.8.5 Problem solving ability

3.8.6 Negotiating ability

3.8.7 Making management concrete

3.9 Contingency plans

4. Stage 1The practice of white belt techniques

4.1 Step 1 – Preparation of management by objectives

4.2 Step 2 – How to establish the first annual goal

4.3 Step 3 – How to establish the president’s first objective

4.4 Step 4 – How to conduct the first objective deployment

4.4.1 How to establish goals at lower levels of the organization

4.4.2 How to establish objectives at lower levels of the organization

4.4.3 How to establish action plans

4.4.4 How to establish control indicators and verification indicators

4.5 Step 5 – How to execute measures

4.6 Step 6 – How to check if goals are achieved

4.6.1 Why check if goals are achieved?

4.6.2 How to identify departures from the goal

4.6.3 How to address anomalies

4.6.4 How to document the check process

4.6.5 How to conduct monitoring meetings

4.7 Step 7 – How to conduct objective diagnosis

4.7.1 Concept of diagnosis

4.7.2 Objectives and consequences of the president’s diagnosis

4.7.3 Organization of management by objectives diagnosis

4.7.3.1 Annual program of diagnosis

4.7.3.2 Choosing an issue

4.7.3.3 Making an agenda

4.7.3.4 Preparatory diagnosis report

4.7.3.5 Diagnosis meeting

4.7.3.6 Diagnosis record

4.7.3.7 Diagnosis management

4.7.4 Observations on diagnosis (5, 10, 24)

4.7.5 Recommendations for diagnosticians

4.7.6 Recommendations for those undergoing diagnosis

4.8 Step 8 – How to conduct reflection

4.9 Step 9 – How to incorporate management by objectives results into daily work routine management

4.10 Step 10 – How to standardize the management by objectives system

4.11 Final recommendations to the TQM coordinator

5. Stage 2 The practice of brown belt techniques

5.1 Brown belt introduction

5.1.1 Prerequisites for brown belt practice

5.1.2 How to advance in belt color

5.2 Management by objectives flowchart

5.3 Step 1 – How to establish the company’s annual goals

5.4 Step 2 – How to establish president’s objectives project

5.5 Step 3 – How to deploy objectives

5.5.1 Establishment of goals for each branch

5.5.2 Deploying branch goals

5.5.2.1 Pareto analysis method or flag method

5.5.2.2 Tree diagram method

5.5.4 Establishment of priority execution items

5.5.5 Adjustment (“Catch Ball”)

5.5.6 Establishment of action plan

5.5.7 Objective organization

5.5.8 Confirmation of organization’s annual objectives

5.6 Step 4 – How to execute objectives

5.6.1 Conduct ongoing reflection

5.6.2 Count on the cooperation of everyone

5.6.3 Plan in order to respond quickly to external changes

5.7 Step 5 – How to monitor management by objectives

5.8 Step 6 – How to conduct diagnosis

5.9 Step 7 – How to conduct reflection

5.10 Step 8 – Final recommendations to the TQM coordinator

6. Stage 3 The practice of black belt techniques

6.1 Characteristics of the advanced stage of management by objectives

6.2 Management by objectives through interfunctional management

6.2.1 Characteristics of interfunctional management

6.2.2 Organization of interfunctional management

6.2.3 Responsibilities of interfunctional organization teams

6.2.3.1 Interfunctional committee

6.2.3.2 Workgroup

6.2.3.3 Support unit

6.2.3.4 Line department

6.2.4 Operation of interfunctional management

6.2.4.1 How to conduct planning

6.2.4.2 How to conduct execution and checking

6.3 Management by objectives throughout the business

6.4 Management by objectives through project management

6.4.1 Project management organization

6.4.2 Implementation of project management

Appendix A

A.1 The meaning of method

A.2 Where to establish goals

A.3 The method of achieving goals

A.4 The PDCA method and management system

Appendix B

B.1 Profit guarantee system

B.2 Establishment of goals

B.3 Cost management activities

Appendix C

Appendix D

References

Index

Preface to the english edition

In the early 2000s, the CEO of one of Brazil’s largest infrastructure companies asked me to meet with him in his office. He had a serious problem on his hands. No matter what he said or did, he could not get his employees to do what he wanted them to do. He spoke about the inspirational goals he had written and shared at every companywide meeting. So then I asked if he had told his employees exactly what actions and results he expected from them. He shook his head and said no. That is precisely what management by objectives is all about.

There was a time when leaders believed that setting goals was the key to organizational productivity and individual performance. If you wanted your company to succeed, you simply set goals and hoped your employees would achieve them. That was then. Today, setting goals is like steering a rowboat with one oar. It’s not enough to move your business forward.

Without a proven system for defining, cascading and measuring goals, companies are doomed to spin in circles. We all need a second oar. The Management by Objectives (MBO) process is that second oar – a common language that unites all employees behind clear expectations.

At The Kraft Heinz Company, our MBO program is the link between goals and results, between performance and recognition, between ownership and meritocracy.

Professor Falconi’s system taught us to define our expectations, so that all employees could understand what is relevant and what is not. Using specific examples, he explained how to cascade goals and expectations throughout our organization, ensuring total alignment and integration. Most importantly, he helped us strengthen the employee appraisal process with consistent and measurable Key Performance Indicators (KPIs).

As a student of Professor Falconi, I am convinced that his program is the best way for results-driven organizations to win in today’s competitive business environment. Through MBO Methodology, leaders will acquire the discipline to drive results, the courage to inspire ownership and the knowledge to improve decision-making at every level of the organization.

Since 2013, the Management by Objectives program has united our Company, defined the language of our organization and set all of our employees on a clear and singular path toward achieving our vision, To Be The Best Food Company, Growing A Better World.

Bernardo HeesChief Executive OfficerThe Kraft Heinz Company

Author’s preface

I am a great admirer of the work of Professor Peter Drucker, and I have included as an epigraph to this work a quotation of his, to emphasize the need for all of us to improve our managerial ability. This must start with the senior management of organizations, and then extend to everyone. The more I look into these issues, the more I am convinced that managerial ability is at the heart of human survival. We are living in exciting times. There are companies which have made wholesale changes, adapting confidently to circumstances previously unthinkable; state schools which have gone from a state of inertia and decline to set new performance records, despite the contempt in which they are held by some of our politicians; hospitals which struggle bravely on, despite the lack of resources; smallholders who have managed to double their revenue in the space of a year, etc. Professor Drucker’s observations have never seemed so apt.

The final years of this millennium have shown that human knowledge - especially managerial knowledge – is by far the most important resource for the competitiveness of organizations. Mineral and energy resources, land, sun and water do not necessarily guarantee the wealth of nations. Japan is a good example of a country which has obtained vast wealth despite a lack of natural resources.

The era in which companies could be managed merely by “men of good sense” seems to have come to an end. Management is becoming increasingly “scientific”, rather than “political”. The survival of organizations will only be guaranteed by achieving the goals set by the market, using method and expertise. If senior management fails to comprehend this, it is only a question of time until the company disappears.

This book is the fruit of many years’ work. It was like trying to decipher a hieroglyph, about which even its authors remain confused. We took various courses in hoshin kanri, we observed our Japanese friends in various companies, and we practiced, practiced and then practiced some more. We consulted the entire bibliography that currently exists on the subject. With the help of friends, we obtained unpublished reports and studies. We discussed our text with various skilled friends from around the world. I am quite open about my objective: I wanted to write the world’s best book on the subject.(2) But you can be the judge of that.

In writing this book, I had one other serious problem. It had to be simple enough for everyone to understand and apply.

At the same time, it had to be profound enough to provide readers with the stepping-stones to success. In this sense, I was inspired by a film about the life of an extraordinary individual: Bruce Lee, a man for whom there were no limits. Management by objectives should also be like this: a search, without limits, for new results. As in martial arts, it is necessary to acquire the requisite skills over time. So, with the help of Heloisa, I decided to present management by objectives as if it were a discipline in martial arts.

I was also heavily influenced by the book The Machine That Changed the World, (45) which highlights the difference in total quality management in Japan compared to western countries. The authors suggest that western companies were slow to implement these methods, despite them being widely known. This must not happen anymore. This is your responsibility, reader. Follow the instructions in this book and within a few years you will be contributing more efficiently not only to the survival of your company, but also to the wellbeing of our people and humanity as a whole. There is nothing more honorable than that.

The book I present you contains revolutionary methods and techniques, which will enable your company to enter a positive and permanent cycle of improvement. You, your company and our country need the advice contained in this book. Don’t waste time, and may God help you on your journey.

Belo Horizonte, August 2015.

Vicente Falconi Campos

Instructions for the use of this book

(This is a book written for practical purposes – it is not merely conceptual).

1) a) The first three chapters are preparatory.

b) Chapters 4, 5 and 6 are operational.

2) a) Chapter 4 is fundamental. The information contained in the others cannot be put into practice unless Chapter 4 has been fully mastered beforehand.

b) Chapter 5 does not exclude Chapter 4, but incorporates it.

c) Chapter 6 does not exclude Chapters 4 and 5, but incorporates them.

3) The appearance of the dragon before certain phrases serves to highlight their great importance.

4) Do not try to implement Chapters 5 and 6 without having first mastered Chapter 4. Do not forget: you may have understood everything, but that understanding alone does not suffice. Everyone must learn the management method. The only criterion by which this can be measured is the correct functioning of the method in practice.

Managerial arts and martial arts

Some similarities

1) Do not think dishonestly.

2) The Way is in training.

3) Become acquainted with every art.

4) Know the Ways of all professions.

5) Distinguish between gain and loss in worldly matters.

6) Develop intuitive judgement and understanding for everything.

7) Perceive those things which cannot be seen.

8) Pay attention even to trifles.

9) Do nothing which is of no use.

Miyamoto Musashi (1645)(1)

The evolution of an individual in the art of management has much in common with evolution in martial arts.

In martial arts, to become a good fighter, one must cultivate wisdom and spirit, acquiring knowledge and skills and mastering the different ways of the arts, one at a time.

In one-on-one combat, one most purify body and mind so that perception and movement are pure and quick.

In group combat, upon assuming a position of authority, one must become acquainted with the human character of one’s army, their skills and spiritual necessities, and know how to bring out their true will to fight.

The process is represented by degrees of knowledge and fighting skills. In some types of individual martial arts, this progress is represented by “belt order”. In Japanese judo, for example, there are white, brown and black belts.

In martial arts, the individual must master strategy, learn the techniques, one by one, and practice them in order to be able to reproduce the right skill at the right time. It is only possible to learn the techniques of one belt after having applied, in practice, the techniques associated with the previous belt.

In this manner, developing their spirit and their equilibrium, learning and practicing the techniques, the individual may ascend in the martial arts hierarchy until they become a black belt.

In martial arts, with a lot of dedication and hard work, one can become a black belt in around five years.

It is not enough just to know the techniques: one has to know how to apply them, using knowledge of oneself, one’s adversary and the external conditions.

In management, it is the same.

This text adopts the same approach as the martial arts, so that the reader becomes a skillfull fighter. Techniques are presented gradually, so they may be consolidated with day-to-day practice.

Your associates will progress in the order of the belts, as they acquire the ability to utilize an increasing amount of information to achieve their goals.

Information is not power. True power resides in the ability to collect, process and disseminate information in such a way that it becomes expertise, which can be utilized to achieve goals.

It is not enough just to acquire these abilities. Everyone must become adept at planning if the company is to achieve the goals necessary for its survival.

The competition between companies in the global market is a life and death struggle. The company that emerges victorious will have associates who, with their preparation and enthusiasm, are able to achieve goals that their adversaries cannot.

To be competitive is to prepare an army with this ability.

I guarantee that if you follow the “order of the belts”, within a few years your company will be ready to do battle on the world stage.

The meaning of management by objectives

2.1 The concept of management by objectives

a) When the demands of the market and the performance of competitors develop more rapidly than your organization’s ability to improve through routine management,(2) it is necessary to introduce management by objectives to respond to these challenges.

b) Management by objectives is an activity aimed at solving problems related to the organization’s priority issues, as shown in FIG. 2.1.

c) In other words, “Management by objectives is a mechanism which concentrates the intellectual strength of the entire workforce, directing it towards the organization’s survival goals.” (3)

d) Management by objectives is thus a system designed to achieve goals which cannot be achieved by daily work routine management. It aims to solve difficult and chronic problems in the organization, which persist in spite of much effort to resolve them. It also addresses important and challenging problems which arise as a consequence of the organization’s need for survival. (4)

e) For management by objectives to be effective, the following conditions are vital:

• Leadership (commitment, faith and intense participation) of senior management.

• Focus of the emotion, enthusiasm and expertise of all employees on the problems to be solved.

f) Management by objectives is a management system which drives the establishment and execution of the annual plan.

g) The organization’s annual goals are the concrete point of departure for management by objectives.

h) One of the basic sources of reference for the establishment of annual goals is the long-term plan (five to ten year plan).

i) If there is no long-term plan, one may be officially established after the adoption of management by objectives.

j) The annual plan consists of concrete annual goals, their respective action plans (5W 1H) and a budget to provide support to these actions and to the sufficient and priority projects required to achieve these goals.

k) Strategic administration is composed of management by objectives and daily work routine management. (2)

2.2 The concept of strategic planning

a) Strategic planning consists of:

• The long-term plan (five to ten years) – Defines strategies (means) to realize a certain vision of the company’s future (ends). These strategies propose to produce structural changes in the business (they should consider radical measures aimed at reforming the structure of the organization, in order to ensure competitiveness in the coming years);

• The medium-term plan (three years) – Sets goals for the long-term plan strategies and makes financial projections which support the measures, so goals can be reached;

• Theannual plan – Consists of the details of the first year of the long and medium-term plans, with concrete goals, including the creation of action plans and the annual budget.

b) The strategies will be implemented over the years, and are the foundation for the long-term plan. The long-term plan is what provides the annual plan with direction and focus.

c) Both the long and medium-term plans are revised annually and updated with new information.

d) At a time like the present, when organizations are forced to make significant structural changes in order to satisfy the demands of the market, the following are very important:

• medium and long-term planning regarding innovation in the company structure, taking into account new technological developments in manufacturing and administration;

• medium and long-term planning regarding innovation in the product line, taking into account new technology and materials.

e) The establishment of a strategic plan thus becomes the most important task of senior management.

f) The objective of management by objectives is to convert strategy into reality.

g) This text does not cover the methods and techniques necessary to establish a long-term plan.

2.3 The management method

a) When we talk about implementing management by objectives, we are not introducing anything new as such. The most important thing to consider is that it will be governed by the PDCA method (See Appendix A).

b) All organizations have their objectives – if it were otherwise, their survival would be in jeopardy. PDCA operationalizes these guidelines.

c) In brief, PDCA stands for the following:

P – Plan: establish objectives for all managerial levels.

D – Do: execute sufficient and priority measures.

C – Check: check the results and degree of progress.

A – Act: analyze the difference between the desired results and those obtained, determine the reasons for deviations, and recommend any corrective actions to be taken (countermeasures).

d) There are organizations that devote much time and effort to planning. They use a wide range of resources, such as matrices, diagrams, colored graphs, etc. However, if the desired results are not obtained and no corrective actions are taken, then this is not management.

e) When a director or a manager checks the results and they realize that a goal has been missed, the person responsible for that goal should present an analysis, as will be seen in item 4.8.

f) This analysis should not be a mere apology or explanation. Explanations do not guarantee the survival of an organization.

g) An appropriate analysis should, using facts and data, assess the difference between the desired result and that obtained, identify the causes for the deviation and suggest specific measures to address it.

h) The greatest error a director or manager can commit is to allow failure to achieve goals to pass without the necessary reflection and analysis.

i) If a bad result is not analyzed, it is best not to manage by objectives. The strength of this type of management lies in positive reflection.

2.4 The relationship between management by objectives and routine management

a) The foundation of a company’s work is daily work routine management.(2)The organization’s entire revenue depends on the work undertaken through this type of management.