APPLICATION OF MANAGEMENT BY OBJECTIVE IN AN ORGANISATION
(A CASE STUDY OF STANDARD TRUST BANK ENUGU)
During the early period of Industrial revolution traditional management concept was more pronounced when the entrepreneurs regarded their employees as part of their “tools” to accomplish their objectives. This attitude led to employee’s resentment of factory conditions, dismissals and other forms of punishment.
However, the growth in the size and the complex attitude nature of present day organization as well as the separation of ownership from management have together with other environmental pressure for change, necessities a shift of emphasis form traditional to a modern concept (Personnel – minded concept) which takes the employees and their individual needs into considerations. This development led to the introduction of MBO.
This concept though widely written and spoken about, is yet to find its full place in Nigeria Business Management in terms of Applications.
This work therefore is aimed at researching into the feasibility or applicability of the concept in our business management with a focus on commercialized bank.
The work took a look into MBO and shows that is a process by which managers and their subordinates participates jointly in setting goals, activities and target dates as well as evaluation of performance as it relates to establishment objects.
In conducting research, A sample of 138, respondents (managers of Standard Trust Bank) were interviewed using questionnaires and oral interviews. These respondent were selected using random sample techniques. Data obtained were analyzed using sample percentage methods, tables and charts.
Standard Trust Bank Ltd, a commercial Bank was used as case study, it was found that the organization embraces the ideals of MBO, by observing and applying to a substantial extent, most of the essential elements of the concept which include, management support of the concept, favourable structure, joint goal determination.
Goals made actionable, periodic joint review of accomplishment continued guide of subordinates, effective education and communication of the concept, reward based on contribution etc.
These therefore, prove the applicability of the concept in service organization.
The work also found out that the organization still has room for improvement as it was found wanting in certain areas of applicability of the concept, example, proper education of the lower level managers on the ideals and process of MBO, making goals verifiable etc. Recommendations on full and successful application were also put forward emphasizing proper planning, education, communications, setting of verifiable goals, performance appraisal and reward based on accomplishment.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Significance of the Study
1.5 Scope and Limitations of the Study
CHAPTER TWO: LITERATURE REVIEW
2.1 Review of Related Literature
2.2 Origin of the Study
2.3 The Process of (MBO)
2.4 Benefits of (MBO)
2.5 Weakness of MBO and Possible Solutions
CHAPTER THREE: CONCLUSION AND RECOMMENDATION
3.1 Summary of Findings
1.1 BACKGROUND OF THE STUDY:
Depending on the stand point from which it is viewed, management by objective (MBO) can be termed a technique a system, a style and a philosophy of management.
This concept of MBO which integrates management functions of planning and controlling is designed to overcome the limitations of traditional concept of management.
The traditional concept can be compared to Doughlas Mc Gregor’s “theory X” assumptions which he contrasted form “theory Y” assumptions. McGregor, in stating the various assumptions of theory X and theory Y, saw the former as based on the traditional view or back group of direction and control which according to McGregor’s explanation presupposes that.
(i) Management is to organize the elements of productive enterprise, money, machines, men, materials etc for economic ends.
(ii) Management is to direct the workforce, controlling their actions and modifying their behaviour to fit the need of the firm.
(iii) Without the active intervention by management, people would be passive or resistant to organization’s needs. They most therefore be persuaded, punished and controlled.
(iv) The average person works as little as possible.
(v) The average person lacks ambition, dislikes, responsibility prefers to be led.
(vi) He is inherently self centered, indifferent to organizational needs.
(vii) He is by nature resistant to change.
(viii) He is gullible not bright, the ready dupe of the chalaton and the demagogue.
McGregor argues that such behaviour is often the consequence of management philosophies, practice and policies: workers are encouraged to be dull, lazy and apathetic and to shun responsibility because the organization policies, procedure and supervisory methods bring about this kind of behaviour, close supervision encourages workers to avoid responsibility. Tight controls encourages them to play games to beat the system, coercive management breads resistance.
The traditional concept gained its ground before and during the boom years when demand outpaced supply when surplus manpower and less militant union activities exist, and when paid employment was more feudal in nature with emphasis on detailed control of the servant by the master.
But changing conditions due to increased union activities shortages of skilled manpower, more government intervention, more literate workforce and other environmental pressure for change have made authority and direct control farless effective than it used to be in the earlier days.
McGregor suggest that the situation is no longer one of dependence by the worker or manager on the firm for his survival only, but of inter-dependence between the firm and the worker.
He further suggest the development of a new theory on which to base actions which are of appropriate to modern conditions: to use his metaphor we must stop trying to make water run uptill. He identified this needed new “theory Y”. With this leadership then becomes a process of dealing with the people in their complexity, creating opportunities, releasing potentials, removing obstacles encouraging growth and providing guidance.
These were the ideals Peter F. Drucker tried to promote when he came up with the concept of MBO which in line with “theory Y” is a personal minded concept of management.
Drucker introduced the concept as a principle of management that will give full scope to individual strength and responsibility and at the same time give common direction of vision and effort, establish team work and harmonize the goals of individuals with the common goal of the organization. It is based therefore on the elementary premise that unless you know what results you want to achieved, you will not achieve them. The concept is also meant to motivate workers to accomplish the set goals willingly. According to Nwachukwu (1988:192) “employees are also motivated where management integrates their goals into the organizational goals through MBO”.
Management by objective (MBO) like many other management approaches and techniques to considered a revolutionary concept, it has received rapid and wide acceptance by theorists and practitioners alike.
Misshauck (1986:348) state that “perhaps the most widely utilized programme concept designed to involve employees more actively in the goal-getting process is management by objectives (MBO).
The concept which originates in the early 1950’s was first discussed by Peter Drucker, credited with being the father of MBO in his book titled practice of management.
Research has shown that organizational MBO programmes indicate that he adoption of this approach improves managerial performance, managerial attitude and organizational planning and control.
It is widely practiced especially in developed countries. Ordiome popularized the concepts in America and Humble carried it to Britain.
However, since the introduction of the concept in Nigeria, its wide application by organization has always been in question. Although the concept has been widely written on and mangers who are aware of the concept are yearning for its application to effect full changes in organizations, the concept is yet to find its footing in Nigeria business organizations as well as other third world countries.
It is in a bid to satisfy this yearning that this work will research into the applicability of the concept in an organization using standard Trust Bank as a case study.
N.B ABOUT THE CASE STUDY ORGANIZATION:
The case study organization, standard Trust Bank limited was incorporated as a private limited company on 3rd April, 1999 (Enugu Branch). It obtained license to carry on banking business on 7th May, 1999. Full banking operations commenced on 1st July, 1999 with princess Ngozi Nnadozie as an Area Manager.
With its head office located at Victoria Island, Lagos, the bank has presently eighty-eight branches scattered all over the country with Eastern, Western and Northern regional offices under regional managers. The branches are specifically located at Victoria Island, Oyin Tolayemi sheet, Idumota, Ikeja; Apap all in Lagos. Other branches are located at Onitsha, Enugu Port-Harcourt in River state, Aba, Cameroun Road, Aba, Ariara, Warri, Calaba, Abuja, Kano, Eket in Akwa-Ibom State etc.
The bank has in its hierarchy, Board of Directors headed by Chief Ferdinand Alurubu as chairman, Alhaji Garba Ruma, Sir Annie Okonkwo, Senator Rasheed Ladoja, Tony O. Elemelu (MD/CEO) Admin Jibunoh (Executive) Charles Nwodo Jnr. (Executive) Chika Mordi (Executive), Victor Osadolor (Executive), Others include unit Heads at branch levels such as head of operations, head of marketing, etc.
The company’s organizational chart is shown below:
Standard Trust Bank Ltd is a service organization providing full range commercial banking services. It has its numerous customers.
These services include:
- Current Account
- Savings Account through account and premium reserve accounts.
- Fixed Deposit Account as: Standard Trust pioneer Accounts and standard Trust Anchor Accounts.
- Financial Advice, etc.
With its modern and sophisticated technology as well as high quality staff, the bank renders these services efficiently. For instance, with its “globes system” that is, centralized communication system, a current account holder with the bank enjoys the ability to operate and assess his account from any branch of the bank.
The bank right from the early days of its establishment ahs exhibited high ideals, innovativeness, responsiveness and excellence.
In the area of human resources, the bank has the following policies, among others:
(i) Equal opportunities to all persons in its employment policy
(ii) Getting the best form its human resources.
(iii) Providing equal training empowerment as well as keeping staff, highly motivated through effective reward and compensation packages.
It is based on this qualities that the organization is considered suitable as a point of reference for this work.
1.2 STATEMENT OF PROBLEM
Laudable as the concept management by objective may be, its applicability, especially in Nigeria organization has always been a source of worry and concern to practitioners in the field of management.
In recent times, much has been written discussed and debated in respect of the application of the concept. Rather than resolving the problem, the writings, discussion and debates end up in advancing divergent views leaving practitioners still in dilemma and skepticism as to the applicability and feasibility of the concept.
Practitioners who have unsuccessfully tried the concept usually blame their failures on a number of difficulties and weaknesses associated with the concept. The resultant problem therefore is that some managers and policy makers who, though aware of the importance and advantages of the concept are afraid of giving it a trial, even when they attempt, they do so with great apprehension because of being associated with failure.
It is an attempt to solve this problem that this project seeks to research into the successful applicability of the concept using standard Trust Bank as a point of reference.
1.3 OBJECTIVE OF THE STUDY
Every organization is set up to achieve certain goals using its resources. But the resources alone can achieve nothing without the conscious effort of management. Subscribing to this fact, Agu (1998:5) stated that “Management involves using the available resource Men, Money, Material and Machine to achieve organizational goals”. He went further to state that “No matter how much money or material at the disposal of the entrepreneur or entire organization, it is difficult to achieve goals with out management”. He further explained that it is not just management that is needed to utilize resources to achieve organizational goals but efficient and effective management when he asserts “Proper management is the only organizational factor capable of effectively combining the available resources in such a way that will load to goal optimization.
It therefore follows that in present environment for organization to achieve its goals. Its management has to be efficient and for it to be efficient it has to embrace modern management by objective (MBO) which is modern management philosophy, management should therefore endeavour to explore and reap the advantages of the concept so as to fully utilized the organization’s resources and to survive competition.
The purpose of this work is to research into the feasibility and/or applicability of the concept in an organization, mainly, an organization in the services, industry where the application of the concept is approached more with apprehensive.
The general objective of the study therefore is to determining how the concept can be successfully applied in an organization and the specific objectives are:
(i) To ascertain what management objective (MBO) means.
(ii) To ascertain the process involved in the application of the concept.
(iii) To find whose concern the concept is, in an organization.
(iv) To identify the difficulties involved in the application of the concept.
(v) To determine how to overcome these difficulties.
(vi) To identify the benefits derivable form the successful application of the concept.
1.4 SIGNIFICANCE OF THE STUDY
Apart from the fact that the study is important for the partial fulfillment of the requirement for the award of the National Diploma in Business Administration and management, it is important to organizations that may want to explore the benefits of the concept by promoting its ideals.
Specifically, this work will be of significance to the following categories of people.
(i) Management practitioners who may want it as a guide to the introduction who may want it as a guide to the introduction of the concept in their organization or for more successful application.
(ii) Organizers of management training and development programme who may find it very important in implementing the programme.
(iii) Management consultants who may use it as a guide in introducing the concept to their client organization.
(iv) Future researchers on writers on the topic who may sue it as a reference materials.
(v) Management and staff of standard Trust Bank Ltd for more successful application of the concept.
1.5 SCOPE OF THE STUDY
Considering that MBO as a concept is meant to be applied in organization of any type, be it manufacturing or service organization. Public or private sector organization, profit or not for profit oriented organization, etc. A research work on its application would have been better conducted if the whole categories of organization are covered. But doing so may render the coverage wider than what the researcher may consider feasible to cover especially when such a researcher is working like I am doing under certain constraints such as time constraints, financial constraint, etc.
For this purpose, this work shall focus on one service organization as a point of reference.
However, data will also be obtained form secondary sources such as text books, articles and other publications. Information will also be gotten through discussion with lectures and other learned friends.
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