formulating objectives and action plans
TRANSCRIPT
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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