CASE: 1 DEVELOPING VERIFIABLE GOALS (MANAGEMENT BY OBJECTIVE)

The division manager had recently heard a lecture on management by objectives. His enthusiasm, kindled at that time, tended to grow the more he thought about it. He finally decided to introduce the concept and see what headway he could make at his next staff meeting.

He recounted the theoretical developments in this technique, cited the advantages to the division of its application, and asked his subordinates to think about adopting it.

It was not as easy as everyone had thought. At the next meeting, several questions were raised. "Do you have division goals assigned by the president to you for next year?" the finance manager wanted to know.

"No, I do not", the division manager replied. "I have been waiting for the president's office to tell me what is expected, but they act as if they will do nothing about the matter."

"What is the division to do, then?" the manager of the production asked, rather hoping that no action would be indicated.

"I intend to list my expectations for the division", the division manager said. "There is not much mystery about them. I expect $30 million in sales; a profit on sales before taxes of 8 percent; a return on investment of 15 percent; an ongoing program in effect by June 30, with specific characteristics I will list later, to develop our own future managers; the completion of development work on our XZ model by the end of the year; and stabilization of employee turnover at 5 percent."

The staff was somewhat stunned that their superior had thought through to these verifiable objectives and stated them with such clarity and assurance. They were also surprised about his sincerity in wanting to achieve them.

"During the next month, I want each of you to translate these objectives into verifiable goals for your own functions. Naturally, they will be different for finance, marketing, production, engineering, and administration. However you state them, I will expect them to add up to the realization of the division goals."

Questions

1. Can a division manager develop verifiable goals, or objectives, when they have not been assigned to him or her by the president? How? What kind of information or help do you believe is important for the division manager to have from headquarters.

2. Was the division manager setting goals in the best way? What would you have done?