THE EFFECTIVE APPLICATION OF MANAGEMENT BY OBJECTIVES IN ORGANIZATIONS

(A STUDY OF FIRST BANK NIGERIA PLC, BENIN-AGBOR ROAD, BENIN CITY)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Management 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 action. Management by objectives can be described as a managerial method, where by the superior and the subordinate managers in an organization identify major areas of responsibility, in which they will work, set some standards for good or bad performance and the measurement of results against those standards Derek (2005:156).

Management by objective 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 given impetus to its development as a system. Management by objectives refers to a structured management technique of setting goals for any organizational unit.

George S. Odiorne (1981: 1), in his book management by objectives defined this concept 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 member. Besides, Odiorne points out that management by objectives is a “system of management”, an overall frame work used to guide the organizational unit and outline its direction. He went further to point out that “the superior and subordinate jointly identify 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 is a strategy, whereby the management sets specific goals for the employees to accomplish within a fixed time period. Management by objective is a dynamic system which seeks to integrate the company with the need to clarify and achieve its profit and growth goals with the managers need to contribute and develop himself. It is a demanding and rewarding style of managing a business.

Management by objectives can work in any size of organization if the procedures are understood and managers are patient in letting the system set in first. Management by objective is an effective planning, control and development system.

Management by objective was defined by Koontz and O’ Donnell (1968:485), as a technique or system or method of management where by the superior and subordinate managers of an organization agree on its broad goals, translate these goals into a chain of specific short term goals, define each individual’s major areas of responsibility in terms of result expected, 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, the limits within these limits. It assumes that the employee has been properly selected and trained, and is informed that the employee will be responsible for achieving the desired results in the organization.

Organizations are ubiquitous. According to Mullins (2005:256), organizations are designed by people to overcome individual limitations and achieve individually. Hence, organization become a means of survival for the people and exerts an important daily influence on the life of the people and the way they live. The major decider for the survival of any organization is the presence of capable men and women with the right technique to combine the organization resources (man, machine, materials and money) to achieve organization goals.

It is appropriate to note that management of companies in Nigeria lack sufficient techniques to make them manage effectively. Some of these tools are not used; and when used, they are not properly utilized. Management by objective is not only a managerial strategy to achieve a well co-ordinated managerial goal, but it is also a popular management technique, that cut across or pervade all human activities namely; business areas, educational, government, health care and non profit organization.

Most of the techniques, system, tools of management are hardly understood, resulting in losses and damages to the organization. Besides, it is the wrong use of technique and unwillingness of top management to utilize the right tool to solve the management problems.

It is on these trends that the researcher intends to find out the prospect and problems of effective application of management by objectives, by companies in Nigeria. In order to investigate some of the above problems, one of the leading financial institutions in the country, First Bank of Nigeria Plc Benin—Agbor Road, Benin City has been chosen.

1.2 STATEMENT OF THE PROBLEM

It is pertinent to note that management of companies in Nigeria, lack sufficient technique to make them manage well. Some of these tools are not used and when used they are not properly utilized. Management by objective is not only a managerial strategy to achieve a well co-ordinated managerial goals, but it is also a popular management technique that cut across or pervade all human activities namely; business areas, educational, government, health care and non-profit organization.

Most of these objectives are hardly understood resulting in losses, breakage’s and so on. The worse are business in the medium range where most banks fail. Most companies hand down objectives to subordinates without adequate explanation, hence failure of management by objectives in such cases. Management by objectives will remove all of these problems mentioned above and subordinates will now formulate objectives, set targets according to their strength and weaknesses, no stoppages, no delays, no losses to the companies. This will help subordinates to formulate realizable goals.

1.3 OBJECTIVES OF THE STUDY

The broad objectives of the study are to find out the prospects and problems of effective application of management by objectives in companies in Nigeria.

The specific objectives of the study includes: -

(1)     To determine problems affecting the effective application of management by objectives in an organization.

(2)     To determine the level of managers commitment to achieving organizational objectives.

(3)     To find out the level of participation of both managers and employees in the setting of goals to be achieved in the organization.

(4)     To determine whether employees are given appropriate authority and responsibility for achieving the set objective.

(5)     To recommend strategies for effective utilization of management by objectives.

1.4 RESEARCH QUESTIONS

In pursuit of the research objective of the study, the following research questions have been formulated.

(1)     What are the problems militating against effective application of management by objective in an organization?

(2)     To what extent do both managers and employees participate in the setting of goals to be achieved in the organization?

(3)     To what extent are employees given appropriate authority and responsibilities for effective management by objective?

(4)     To what extent do motivation determines employee’s performance towards achieving the objectives of the

1.5 SIGNIFICANCE OF THE STUDY

Practicing management by objective will make the management of First Bank of Nigeria to be more assertive in their decision making. It will assist the subordinate in First Bank of Nigeria, Benin-Agbor Road, to be able to identify themselves with the objectives of the company and the role they will play.

It will assist subordinates to be able to formulate their individual or group objectives, which are reliable. This will result in total commitment to objective; and efficiency and effectiveness will result.

1.6 SCOPE OF THE STUDY

This research work is limited to First Bank of Nigeria Plc Benin-Agbor Road, Benin City, and how different organizations can be managed better, by the managers setting the goals and all the company members working towards achieving the goals.

1.7   LIMITATION OF THE STUDY

There are many factors that act as constraint to the effort of the researcher in the course of writing this project. Most prominent of the factors are:

(a)     TIME: The research work is a big task and as such requires time and energy, which was not on the researcher’s side.

(b)     FINANCE: This is another limiting factor. Due to limited financial resources available, the researcher cannot procure all the needed material is for this project. For instance, to get books from the library, the researcher has to pay library, which the researcher does not have all the time.

(c)      COST: The cost of transportation to and from First Bank of Nigeria Plc Benin-Agbor Road is very high for the researcher.

(d)     SECRECY: Nigerians dislike activities that tend to probe them. They tend to avoid researcher because they feel their activities that are not meant for public consumption would be exposed through research work.

1.8 DEFINITION OF TERMS

Management By objectives (MBO): Management by objectives refers to a formal set of procedures, that begins with goal setting and continues through performance review. Managers and those they supervise act together to set common goals.

MANAGEMENT: This is used to describe the selected group of people at the helm of affairs in any organization. They work with and through others in realizing the objective of the organization.

ORGANIZATION: This means an establishment/entity with an explicit or implicit objective.

WORKER: Worker can be defined as a person with effort of any kind, physical of mental skilled or unskilled, artistic or scientific usually for a reward.

PERFORMANCE: Performance is an action or achievement considered in relation to how successful or non-successful a worker contributed in organization productivity.

DEVELOPMENT: The gradual growth of something so that it becomes more advances, stronger a new event or stage that is likely to effect what happens in a continuing situation. It could be in political and economical.

PLC: Public Limited Company

FBN: First Bank of Nigeria

EFFECTIVENESS:  This is the ability or strength of the employee to bring the result intended to achieve the organizational goals.

EFFICIENCY: The quality of being capable of utilizing the material recourses to achieve the desired goal.

EMPLOYEE: These are workers employed to perform jobs in an organization under an obligation, which they expect income as exchange for effort contribution to the growth of the organization.

EMPLOYERS: They are the employer of labour, who might therefore said to be the controller of the activities of the establishment.

EXPLOITATION: The process of being able to use a company’s natural resources such as adverts, covering of event, publicity of event for the attainment of profit maximization.