The aim of this Case study is to substantiate the theory stated early with apt examples form the real world scenarios like government, military and a service industry. In the 60’s, 70’s and 80’s it seemed like a good thing to manage work efforts by goals, hence the term “management by objectives.” The idea was to improve management and work productivity in general by being more defined about the intended outcomes. However, after the 80’s the concept of managing by objectives almost slipped into the past and left the management fore front, because their assumptions did not take into effect certain aspects in the workplace reality. The current work reality, with sharply increasing demands for managing information, is changing constantly and is very dynamic , than it is a mechanical, predictable view of the world.
The MBO principles seem practical, but then why didn’t the MBO theory survive very actively in the work arena. One drawback was its assumption that becoming more defined about the traditionally broad or vague state of goals-objectives would lead to performance improvement. Goals or Objectives were accurately noted to regularly get broadly stated and stored in a bound annual volume somewhere, and only occasionally used as a measurement or reference device. An effort was made to overcome this weakness by focusing upon the goal definition process, which became popularly known as the acronym SMART, already sufficiently explained by my colleague.
MBO is a versatile tool which is applicable to any industrial organisations both big and small. The Case Study by the Western Pacific Regional Fishery Management Council in U.S.A reveals the application of Management by Objectives in developing appropriate fishery management measures and associated regulations for the proposed NWHI National Marine Sanctuary. Under the National Marine Sanctuaries Act, and the Manuson-Stevens Fishery Conservation and Management Act. Another case study was commissioned as background research for the NRTEE’s Conserving Canada’s Natural Capital: The Boreal Forest program.
The goal of the present document is to highlight a range of management objectives that would promote the conservation of natural capital in the Al-Pac FMA.(Alberta-Pacific Forest Industries Forest Management Area in northeastern Alberta). These two examples prove the sophistaced nature of MBO, owing to its applicaton in varied fields.
An article published in Scandinavian Journal of Management in 1998 reveals that over the past few decades a wide range of reforms and management techniques have been introduced in public administration to improve productivity and efficiency and management by objectives was one of the most widely used. MBO has been used in government for more than 28 years, and Poister & Streib of Norway(1995) concluded from a survey MBO is still widely used in municipal management . 47 percent of those responding indicated that they currently used MBO. The figure was significantly higher in large cities, and slightly higher in jurisdictions with the city managers as opposed to the mayor/ council form of local government. In Norway all state agencies were instructed to introduce management by objectives in 1990 and today MBO id probably the most widespread short-term planning system in the Norwegian Public administration.
MBO is often described as a tool that has fallen into disuse because its requirements for predictable planning do not fit the current entrepreneurial culture of many agencies (FOWLER, 1990). However, Rodger and Hunter (1992), after conducting a meta-analysis of MBO, found convincing evidence hat MBO is effective in public agencies .In all studies examined, productivity or performance gain was reported after the introduction of MBO. Another finding was the impact of MBO was substantially greater where top-management commitment was high. Participation and top-management support were also stressed as important conditions for the success of MBO programmes.
MBO is used in several multinational companies all over the world, it is either implemented alone or in conjunction wit project management and I worked with a company called "XX"Technologies, a BPO based in India, which also employed MBO. I was a part of this company for few months and I have used XX Technologies as an example, to explain the real-time implementation of MBO in a service sector company. And first and foremost I would like to give a brief introduction about XX Technologies.
All about XX Technologies
XX Technologies Limited (NSE - XX), India, is a pure play, third-party BPO Company offering both voice and non-voice services on a blended delivery platform.Starting out in 1998, XX has now emerged as a truly global corporation, servicing a veritable who's who of corporate majors across the world on a 24/7/365 basis.Balancing rapid growth with an expansion in service offering, XX is now acknowledged for its expertise in the domains of BFSI, Tech Support, Quality Assurance and HR Processing.
XX commenced operations as a voice BPO Company with its first overseas Client - an Information services provider based out of the United States - and has not looked back ever since.
Immediately thereafter, a US sub-prime credit card issuer started utilizing XX's offshore services for customer acquisition. This relationship has now assumed strategic proportions with XX now handling the complete life cycle management suite for the client, starting with acquisitions, moving on to customer retention and support and looping back with collection and recovery. XX has since replicated this successful Client Account Plan across a list of other global outsourcers, a list that includes, among others, a Student Loan Consolidator, a 'Fortune 50' PC manufacturer, a leading mortgage & debt consolidation lender, a mid-sized ISP, and a world-renowned automobile company. XX's offshore delivery strength - built on a robust, flexible and scalable IT-enabled platform and well-honed processes - stems from its ability to understand clients' service delivery requirements and provide customized solutions through a rapid and smooth transition to outsourced delivery.
Backed up with client-servicing offices across continents, in US, UK and Australasia, XX is well poised to deliver offshore outsourcing solutions of truly global standards.
XX’s Business Philosophy
XX’s MISSION:
To deliver focused response management solutions using:
Cutting-edge Technology Platforms
Innovative, Structured and Secure Business Processes
Skilled, Trained and Dedicated Manpower
To bring about customer delight, reward employees and improve shareholders’ wealth.
GOALS:
Build a robust, India-centric BPO Company with global reach and diversified service offerings that will stand the test of time and varying business challenges.
Continuously enhance shareholder wealth by achieving improved earnings and sustained growth.
Maintain high standards of corporate governance, management and workplace practices.
QUALITY POLICY:
“We will continuously benchmark and deliver quality customer centric solutions which exceed client expectations resulting in end customer delight”.
Different Service Domains Of XX
XX believes in a focused approach to building its expertise. Therefore, solutions are developed to suit specific business and technical requirements of each industry vertical being serviced. Over the years, XX has gained experience and brought best practices to various processes in the domains it services:
Banking, Financial Services and Insurance
XX's in-depth knowledge of Federal and State laws and the stringent compliance processes have given it an edge over competitors in this vertical. Focusing on the speed of execution, XX has provided clients with revolutionary benefits of outsourcing. Offerings in this industry vertical encompass - Acquisition, Retention and Collection.
Technical Support
XX provides effective technical support to a growing ISP, which includes sign-up & troubleshooting services. XX launched a successful pilot for the program, which was followed by subsequent ramp-up in size & scale without compromising on project metrics.
XX has built in maximum flexibility in its working strategies to manage higher call volume and spikes.
Student Loan Consolidation
XX renders its services in the Student Loan consolidation industry with the highest return rate percentage amongst the clients' vendors. An internally developed & deployed e-CRM tool is used for effective business functioning. XX takes responsibility for all end-to-end processes, successfully managing the complete product life cycle and delivering a consistent performance record with near zero quality reject ratio.
Payroll processing & Claims Management
XX's system design is based on a wide knowledge of hardware and software. Process-oriented staff with domain expertise supports this. Service capabilities include efficient data capture, high accuracy levels and on-schedule delivery. The program highlights include total rewards communication, expense-reporting system, full & final settlement automation, document tracker and online employee self-service. XX's employees work towards constant improvement in performance. The current record is an impressive maintenance of 15000 compensation letters & processing of 100 reports across 4 clients.
Collections
XX has a successful track record in the vertical of account payables & receivables. XX has ventured into both commercial and consumer fields of account receivables. The highlights of XX's performance include maximized recoveries, reduced cost of delinquency management, lower roll rates and faster debt processing. XX provides seamless Mainframe connectivity to Client data and can handle a three-fold increase in collection inventory & headcount within a short span of 3 months.
Quality Assurance
XX provides quality assurance of voice and email service across multiple business segments viz- telesales, customer service, collections, leasing & finance & technical support. The process & delivery model followed by XX is certified for scalability & reliability. This has been enabled through successful scientific sampling, objective evaluation, consistent rating mechanisms, dynamic feedback cycle & real time reporting tools. XX ensures rapid scalability of processes.
Objectives set for the Financial Year
The application of MBO in XX starts by identifying and defining its primary objectives which they want to achieve at various levels of the management, this is the stereotypical method for most of the company’s which comply to use MBO, and then the objectives thus set and defined is conveyed to the rest of the team, set to achieve the defined objectives. The definitions are reviewed , and then accordingly the individual employee objectives are set and the task to be done in order to reach these goals are also determined, this can be called also as delegation of objective or job.
MBO Structure of XX TECHNOLOGIES.
Each year the Annual Review meeting is held at the beginning of every financial year, where the objectives for that Financial Year (June -May) is set, and the meeting is attended by all the Board members, and the Leadership team which includes the President, the Vice President, the CEO and the various Managers from all the different department and service domains from the various offices and branches. The strategic goals for the company are determined jointly and then are given away by the President of XX technologies on the behalf of the Board of Directors and himself. Here efforts are made so that every one in the discussion understands the main objective and strategies agreed upon, cause one of the prerequisites of the proper performance of MBO is to that first all the members in the company should understand the objectives and strategies agreed upon, cause we see in literature that at various situations in reality that the lack of understanding of the objectives, is one of the primary reasons which had lead to the failure of MBO program when application.
As part of the Managing for Excellence initiative, all business groups and individual employees used a renewed Management by Objectives process. This planning process helped improve individual and business results. It also sets priorities to be reviewed and tracked during the year.
Here we will focus only some important objectives, due to the restriction in literature available. But it is made sure that in each of these objectives are clearly defined so that the main objectives or goals are not lost out of sight.
Objectives of XX for FY 2005
The Objectives set are for the FY 2005 and the objectives includes goals like profit, business development, sales units, quality management, human resources management and also technology.
The responsibility is delegated to proper person in the company and the delegated responsibility is clearly defined or explained with the objective underlying it. The above table also shows also fields like indicators, targets, achievement, action taken, person responsible. The targets are the ones which were set in the beginning of the financial year 2004, and then what was achieved for the year is also given. The field “action taken“ describes in brief the action take in order to achieve the objectives, and then of course the final field which says “who is responsible for that goal?”. These figures are taken from internal survey and documents and also previous performance.
The managers in XX will get their objectives from the CEO and their top level managers and all the objectives thus delegated will help the managers to define their own strategy in achieving them. The mangers must understand the specific objectives agreed upon for their job and see to it that their specific objective satisfies the overall objective of the company. A manager's job should be based on a task to be performed in order to attain the company's objectives. Finally the manager should be directed and controlled by the objectives of performance rather than by his boss.
Objectives Set for the Employees
Objective setting for the employees is the next phase in the application of MBO. Objective setting for the employees might be a little more comprehensive and time consuming, because this process involves a lot of groundwork and analysis, and at every fact found a decision is also to be made. Not only that but also the objectives thus defined after these extensive studies must also be made to be understood by the employees, while the clear understanding of the objectives and understanding of the responsibilities underlying these objectives is one the fundamentals of MBO.
Depending on the established objective the mangers of XX will formulate their own maneuvre, and he endeavour to come up with a crisp way to achieve these objectives, and thus the manager is bound to “job description” as one of his primary duties. And it is also important to prepare a responsibility chart which declares “who is responsible for what in the company” and this responsibility chart is properly communicated to every member in the company right from the President of XX to the individual employee.
The manager, during the process of job description, should conspicuously and accurately characterize the individual objectives and with performance indicators, targets and actions to be taken etc, and when doing so he should also make sure that all these individual objectives assists the objective of the service domain. The domain manager will do the job description for all the employees working under one particular service domain. The main action is the necessary items and should be defined through mutual discussion and agreement between
the manager and the employees.
Since in XX there are six different service domains, and each service domain is unique in operation, because all domains consist of different projects from different clients, so I have taken examples only from the project in which I worked, “Student Loan Consolidation” a project for the Client from Delaware (U.S.A).
Once the objectives for the employees are set, a meeting is called on by the team manager, and every one involved in the project domain attends the meeting, this includes all employees who call and all the members in the Chase-app department. A similar method is followed by other managers of other domains as well. In this meeting the project manager will take terms to define every member’s objective in detail and if the member has any doubts he or she can raise a question until they get the idea clear. And an agreement is aimed to be reached between the manager and the employee, say at times when employees have a doubt if there targets are sensible or rather achievable then the manager should use is motivation raising abilities to convince the employee for achieving the desired results, cause in XX there is no negotiating with the employees at this level, because the objectives set are always SMART and thus definitely achievable, thus there is no question of negotiating of the goals with the employees. The manager thus explains the objectives substantially by explaining it various indicators, with the given time frame to achieve it. The employee in a sense gets guided by the manager by these activities, and gets a clear idea of what his goals are, within what time frame he should achieve them with what kind of performance indicators, and also how to get there in the given moment of time.
In my project our objectives, the number of sales that we have to achieve in a month will already be given to us, the objectives depended on how much the current data files in use was exhausted, and also our reject rates and return ratio of every sale that we completed, were suppose to maintained during the month, QCA And accent were other parameters.
Performance of the Employees Monitered –Student Loan Consolidation
In XX Employees are given feedback every week in the form of statistics, and verbal exchange to see if they are going in the right direction, with respect to sales, call rejects, accent, return rates, reworks and other such parameters. These feedbacks help employees to be put on the right track towards achieving the target and some times it even serves as an motivational factor for better performance, to help them to make analysis on there own performance so that employees cab help themselves to improve there required skills towards the attaining of the goal.
Managers in XX keep keen eye on their employees performance, and this is the most critical and extensive work of a project manager in XX, to convince and push people to achieve the objectives, by motivation, training etc depending on what the employee needs. The continuous monitoring of the employees gives the manger a clear picture that the team is moving in the proper path toward the goals, and regular monitoring is done because it precisely tells the manager if the team is getting towards the desired results, or if the results could be better and what could be done for more effective results and then the performance of the employee is compared with his previous performance, for the previous week
Thus in my project targets of 3 months were split into targets for every one month and it is reviewed briefly every week and extensively every month. Team meetings were held every end of the week within our project to discuss the situation with the employees so that they know where they stand in the process of achieving the goal and this also gives the employees information about the performance of the project. If the desired figures were not reached for then the reasons for it is analysed and efforts are made to rectify it as soon as possible.
In our project the callers were given figures of our sales, our return rates, number of fed-ex pick up we fixed, number of complete applications, and we were also given figures of our reworks and return rates if they were any, and the people in the quality monitoring department of our project also got their feedbacks for what they did, if they were efficient enough to monitor the calls etc, and the third team was the chase-app team which also regularly got its feed back in terms of number of applications they have chased successfully, number of fed-ex pick up appointed, their return rates etc. Thus regular monitoring was always an indispensable phase of the application of MBO to ensure that our objectives are met.
Performance Evaluated
In XX performance was evaluated based on the various vital parameters for each of the service domain. However in Student loan Consolidation performance appraisal was done on mainly three parameters number of sales, return rate, rejection rate. Based on these three a calling agent was either termed good or average or poor. Out of the three parameters the number of sales got the highest weight, the return rate was the next but this parameter and then the reject rate, the points accumulated by the individual calling agent is multiplied by the weight factor of the parameters and added up together to get the final score of the employee. And the employee is accordingly rated as good, average and poor. However for the agents from the quality and the Chase-app there the parameters for weigh were slightly different.
Each employee is given a proof of what his performance or achievement during the period as a document. The manager after reviewing the performance of the agent goes his suggestion and opinion about the employee, this discussion lasts for 25 to 30 minutes or more and thus the final performance for the period is evaluated.
Performance evaluation, done not only for the employees in XX but a 360 degree evaluation is done for every project manager, manager and the CEO, is done by their respective higher authorities. The managers and project managers are evaluated every 6 months based on their performance by the CEO, and the CEO is evaluated annually on his performance. And suggestion and results of evaluation are given to them as well also in the form of printed document.
These documents are submitted for upper level approval and to HR filing as confidential. A copy is also given to the employee on request as a reference for next year’s objective setting o for self assessment. The performance result is linked to the current year’s bonus/incentive scheme of the project. Not only that, the performance appraisal result will also effect the employee’s career development, such as internal transfer, promotion or training opportunities. Thus performance evaluation is also an important phase of MBO.
Achievers Rewarded
Achievements were always embraced wit rewards in XX, it wouldn’t be an exaggeration to say that to some people incentive was not only a token of thanks giving but also a motivation factor on its own. Rewards are a way of recognising ones hard work and talent and give an employee an immense sense of satisfaction and an urge to achieve more. Thus reward is an essential management tool also an essential part of MBO philosophy. MBO program without an incentive program is a system without sound foundation thus does not survive long, infact both of compliment each other, and thus reward is an integral part of MBO itself.
In XX rewards are given to the employees who excel in achieving there targets. For example, In Student loan Consolidation domain every agent got an incentive for every sale he made after the number of sales for the month crosses 28 in number; he received 50 Indian Rupees for every sale thereafter. In another domain employees received incentive for every sale they made. So the incentive scheme varied from domain to domain.
Not only that but there was also a journal for XX and every month the top seller for the month was given away in the journal as the employee of the month. Besides all these acknowledgements there was also quality awards called
Call Quality Monitoring Awards:
1. Golden Voice of the Month: An award exclusively to honour the efforts put up by the agents using the best ‘accent, tone and speech’ and the efficient manner in which they
converse with customers.
2. Best Team of the Month: The award given to the team that has displayed the best overall performance on allfronts. Team Work, works, is something we advocate. And
follow it up with handsome reward.
Quality Control & Analysis Awards:
1. Consistent 90% QCA: Customer service agents who have consistently scored more than 90% on the quality assurance level.
2. Team with highest QCA score: The team that has scored consistently on the QCA aspect. It’s the team effort that is being applauded. XX has been also awarding the customer service agents who have consistently scored 100%, QCA scores with a Quality Medallion.
Every employee in XX got his bonus at the end of working year. All the incentive and bonus depend mainly on the appraisal grade obtained during the evaluation phase and usually based on the individual's present salary, job title in the organization, productivity, and the company's profit picture.
Conclusions:
Thus the purpose of the case study in analysing the application of Management by objectives in an atmosphere as modern as a BPO was studied sufficiently in detail so as to explain how MBO works in any corporate set up. The five stages of the MBO cycle in an industrie was studied in detail and thus the gradual study of the process was made with the help of the case study.
