CEHE 126011873 Problem -Solving Case: MBO Clarifies Objectives at Edward Don & C
ID: 2546105 • Letter: C
Question
CEHE 126011873 Problem -Solving Case: MBO Clarifies Objectives at Edward Don & Company At Edward Don& Company, a distributor of supplies and equipment for the food service industry, employees in the credit department know what they are supposed to achieve. The reason that the company's corporate credit manager, Jeff Ingalls, set up a management by objectives (MBO) progranm seven objectives for the year. They may change the next year's goals based on past performance or new technology that will affect performance. Every thee to six moeths, Ingals mocts agan reminds the department that the objectives are important relative to total loans made, approving at least a minimum number of new accounts, and learning computer skills For collectors, objectives might inc Ingalls meets with each staff member once a year to evaluate bow well be or she met the previous years objectives and set objectives for the comine year He and the employer set five to with employees to discuss whether they are making progress toward their goals. Even when employees can meet their objectives without Ingalls's help, mecting widh thees Objectives for credit department emp ency, and development. For example, the objectives for a credit analyst might involve keeping bad debt low percentage of accounts that are current (payments up-to-date), r having trouble with a goal that involved the accuracy with which the educing the percentage for which payments are 90 days past doe, and leaning a nen hude achieving a gives increase n the to meet an objective, Ingalls and the employee discuss the problem and look for a way to resolve it For example, as accounts receivable supervzsor was a transaction known as cash applications. The supervisor's objective called for a much lower eror rate sor's employees recorded infoenmation. In an average moath, the supervisor's employees made 40 to 50 errors for recorded Ingalls and the supervisor set up a form on which the supervisor would record every cash application error. The supervisor recorded errors and idennified the cause of each error Most g it incorrectly. To fix these basic problems, the supervisor met with ocess demonstrated to the employees that their emors mattered s correcting etors, errors involved the employee receiving incorrect information or the ee receiving correct information but recording each employee who made an error, discussed the source of the problem, and asked the employee to be more careful. This pr productivity improved, helping Ingalls meet his own objectives them focus on how to reach those objectives while he focuses on broader issues facing the credat department to the range of 7 to 10 a month. As the department spent less time Ingals says he prefers working for organizations that use MBO He says MBO makes mansging cmaployees caset Employes kow shat they ar suppound to achire so legals can Ant 1. Without MBO, would it have been harder for Ingalls to detect and correct the problem the supervsor was having with cash application esrors? Why or wthy no? fat all, might they help ngalls achieve his obiectives for the aedit department or contribute to the company seerall per on a ceo 3. Write a personal development objective for yourself Make sure it meets the eriteria for effective objectives shown in Figure 6 I Show your objective to a friend or classmate, and discuss with that person how you plan to achieve your objective 169Explanation / Answer
1. Yes, without MBO it would have been harder for Ingalls to detect and correct the problem the supervisor was having with cash application errors. Use of the MBO method not only enabled him to see the problem first hand but also to get valuable feedback from the employees. MBO led to a process whereby whenever an employee failed to meet objectives the problem was discussed at length and proper solutions were determined that will most appropriately resolve the problem. With MBO the crux or the root cause of each problem was identified and then eliminated to ensure that they do not occur again in future.
2. Ingalls included this category of goals as professional development entails learning of new skills. When employees learn new skills and then apply them in the business process then the level of efficiency and productivity increases. This will help Ingalls to focus on and improve quality as well as efficiency of the credit department. Professional growth and development leads to improvement in performance of employees and this ensures that objectives are achieved optimally.
3. A personal development objective for me would be to manage workplace stress in a more appropriate manner. Of late the workplace stress has not only been negatively impacting my physical health but also leading to lower levels of efficiency and productivity. I plan to achieve my objective of reducing the level of workplace stress by better organizing my work and ensuring that my time management skills are perfected.