Originally published: 05.01.09 by
Using management-by-objectives principles will help assure that employees have a clear understanding of the vision and direction of the company, as well as their individual performance goals.
HVACR contractors can learn from the many other entrepreneurial businesses in this country that fail to grow and eventually close in times of economic stress. These are tough times and a primary cause of failure in an economic downturn is not understanding a company’s performance objectives or not having set clear goals for your employees.
Specifically, owners and managers of many small and medium size businesses have limited experience in effectively communicating and implementing performance objectives that support company growth and longevity. Here are some tips for avoiding these common pitfalls and setting clear objectives for sustaining your organization through difficult times.
Many organizations are helping their employees prioritize performance objectives in an effort to achieve organizational objectives. One way of doing this is through a process called management-by-objectives (MBO), a participative system in which specific performance objectives are determined by subordinates and their superiors. Using management-by-objectives reduces mediocre performance and offers employees a clear road map to performance improvement. Unlike goals, which can be stated in ambiguous terms, the process of setting objectives must:
- Be consistent.
- Be specific.
- Be measurable.
- Be related to time.
- Be attainable.
In high-performing companies, effective communication starts at the top and works its way through the entire company. The best performing companies have:
- A clear written vision with a three to five year time frame that succinctly communicates what the company is striving to accomplish.
- Clear and written objectives set by top management
- Action plans for all objectives that have a “to be performed by” and a date of completion.
- Monthly meetings tracking all objectives and action plans.
Sharing The Vision
Along with a vision of what the company is striving to accomplish, effective leaders instill in their employees a clear understanding of their performance objectives. As a leader, you can better facilitate this process by following these guidelines:
Identify an employee’s essential job tasks: Setting objectives begins by defining what you want your employee to accomplish; the best source for this information is each employee’s job description.
Establish specific and challenging objectives for each key task: Identify level of performance expectation for each employee. Specify the target for the employee to hit. Establish specific, realistic deadlines for each goal to reduce ambiguity.
Allow the employee to participate: Employees that participate in setting objectives for their performance must perceive that you are truly seeking their input, not just going through the motions. Managers can gain the employee’s participation by jointly choosing specific objectives and agreeing on how they will be achieved.
Prioritize objectives: It is important to rank the objective in order of importance. Prioritizing encourages the employee to take action and expend effort on each goal in proportion to its importance.
Build in feedback mechanisms to assess goal progress: Feedback lets employees know whether their level of effort is adequate to attain objectives. Feedback should also be given frequently and regularly. Providing ongoing feedback in the form of performance appraisal induces an employee to set challenging objectives after attaining a previous objective and provides clear ways to improve performance.
Link rewards to objective attainment: Linking rewards to objective achievement will answer the question, “What’s in it for me?” Employees tailor their reward program to their personal need from a menu of benefit options.
Leadership committed to management-by-objective guidelines helps assure the company’s survival and profitability by increasing employee performance and productivity.
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