formulating objectives and action plans

8/11/2019 Formulating Objectives and Action Plans

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Fundamentals ofManagement-by-Objectives


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Issue #1

Objectives do not address the realneeds and priorities of the

company


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Lower-level objectives donot support higher-level

objectives

Issue #2


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Even though each of the managers

is managing a part of an integrated

operation, their objectives do not

supporteach other

Issue #3


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Objectives addressed to subjects

ranging from the highest of

priorities to theunnecessary

routine

Issue #4


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Objective-Setting Process1. Inputs from Higher Levels

2. Inputs from Other Managers

3. Identifying Key Results Areas

4. Prioritizing

5. Formulation of Assumptions

6. Writing objectives

OutlineOutline

1. Overall Corporate Objectives

2. Establishing Multiple-Level Objectives

3. Objective Setting Process

4. Planning the Objectives


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Link-Pin Approach

Level A

Level B

Level C

Level D

President

General Manager

Department Manager

Section ManagerSection Manager Section Manager

Department ManagerDepartment Manager

Establishing Multiple-Level Objectives

The objectives of a manager are made up of objectives of all the

managers below him.

The objectives of all the managers at all levels throughout the

company equal the overall corporate objectives.


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Overall Corporate Objectives

The Starting Point


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Set the framework

It is with them that all subordinate objectives,

all functional activities, and all individual and

group effort must be in harmony

Corporate Objectives


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Inputs from Higher Levels

1. Higher level objectives2. Priorities

3. Assumptions/ Environmental Factors

4. Ground rules


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Major guides under which managers are to

prepare their objectives and plans

Ground Rules


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Inputs from Other Managers

A manager must

interact with other managers in the

organization

must know what other departments

will require of him, and what he

requires of them

must do something for other

departments and they must do

something for him


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Coordination Network

YOU

Up the Line

Horizontal

Down the Line

An objective must be compatible with all other objectives on both avertical and horizontal basis


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What are Key Result Areas?

Areas of a job inwhich highperformance is

required Critical subjects

Areas in which amanager mustachieve results to besuccessful

Highest priority

matters for success


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Quality

Cost/ Efficiency

Delivery

Working Capital

Typical Key Result Areas


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SWOT analysis is completed on each key result area.

Internal Environment External Environment

Strengths Weaknesses Opportunities Threats

SWOT Analysis


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Which are the more important subjects?

Which should be done first?

Prioritizing


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Criteria for Prioritizing

Cost consideration Employee morale

Mandate from above

Payback and return

Income requirements

Time required

Customer demand

Available resources

Legal requirements

Occupational safety/ health


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Best estimates of impact of external factors over

which the manager has little if any control but may

exert an impact on his performance or ability to

achieve results.

What is an Assumption?


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Permits planning process to begin and progress

Checks validity of plans

Serves as continuing checkpoints with respect

to possible required revisions to plans

Purpose of Assumptions


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Assumptions must be made about

those major factors that will exert an

impact on the operation during fiscal

period

Formulation of Assumptions


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RESULTS, not activities

OUTPUT, not input

ENDS, not means

WHAT, not how

What is an objective?


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1. Specific and Realistic

2. Should Permit Checking and Evaluation

3. Unmistakable Meaning

4. Should Contain Stretch

Criteria for Effective

Objectives


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Poor: Increase sales during 2002

Better: Increase cartridge sales by 8 percentduring 3rd quarter of 2002

Activity: Conduct five one-day long trainingsessions for quality inspectors.

Result: By December 1, have three qualityinspectors with 98% competency rate toinspect module components.

Specific and Realistic


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Poor: Build and equip a new plant by

January 1.

Better: Complete specifications for approval on

March 1; Complete construction bySeptember 1; Install all equipment and

have in operation by January 1.

Should Permit Interim

Checking & Evaluation


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Poor: Achieve highest possible machine-

utilization rate consistent with best

interest of service to company.

Better: Achieve a machine-utilization rate of 85

percent by April 1, 2002, and maintain itat that rate for the 1st half of fiscal year

2002.

Unmistakable Meaning


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At a level of difficulty that requires

managers to exert more than

normal effort

Should Contain Stretch


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1. Producexnumber of units of product yat z cost.

2. Install, and have operational, approvedXYZ

packaging line.

SampleObjectives

Production


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1. Reduce quality control labor costs by 15% bycentralized rather than decentralized inspection.

2. Reduce inspection time on x items by 35% by

installation of electronic measuring devices.

SampleObjectives

Quality Assurance


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SampleObjectives

Accounting & Finance

1. Reduce clerical accounting labor by $100,000.

2. Reduce by 25 percent the working cash required

in bank deposits.


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SampleObjectives

Building/ Facility Maintenance

1. Complete construction of Boiler No. 2 and place it

on line by end of September 2004.

2. Complete renovation of warehouse annex by end

of October 2004.


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Priorities

Objectives concern priority matters and are self-liquidating Objectives usually end when the target period is reached

Objectives

Routine

Standard of performance cover routine matters and may

continue from one target period to the next without being

changed.

Standards ofPerformance


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Does not describe how objective will

be achieved.

What is not an objective?

CPFORM-006B

OMRON 2002 ACTION PLAN


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Planning

theObjectives

(Programming)

4 5 6 7 8 9 10 11 12 1 2 3

Pre pa re d Approve d

Position

Serial No.

Responsibility Center Manage r (Last Name, First Name)

Theme of the Action Plan

Objective

April 2002 - March 2003No. Sub-obje ctive s/ Ma jor Pla ns of Action Re sponsibili ty

Omron Mechatronics of the

Philippines Corporation SHEET 1 of 1

LEVEL A B C D EOMRON

04/24/2002 04/24/2002

2002 ACTION PLAN

Assumptions

Responsibility Center Code

Submitted


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Unit Objectives

Vs.Position Objectives


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The End

formulating objectives and action plans

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