a

PROGRAMME : AP226 - BACH. OF CONSTRUCTION MANAGEMENT (HONS)

FACULTY: FACULTY ARCHITECTURE, PLANNING & SURVEYING

COURSE : MGT415

INDIVIDUAL ASSIGNMENT TITLE :

[B1] As a General Manager for a construction company, explain the steps that you would take to

successfully implement MBO in your company. How would you convince the employees of your

construction company that the implementation of MBO will not only benefit the company but also

its employees?

PREPARED FOR : EN. MOHD RIZAL BIN AB RAHMAN

PREPARED BY : AZMI BIN CHE LEH

i

TABLE OF CONTENTS

INTRODUCTION 1

WHAT IS MANAGEMENT BY OBJECTIVE (MBO) 1

COMPANY QUALITY POLICY 2

COMPANY QUALITY OBJECTIVES 3

COMPANY ORGANIZATION 4

MANAGEMENT BY OBJECTIVE PRINCIPLE 5

CASCADING OF ORGANIZATIONAL GOALS AND OBJECTIVES 5

SPECIFIC OBJECTIVES FOR EACH MEMBER 5

PARTICIPATIVE DECISION MAKING. 5

EXPLICIT PERIOD. 6

PERFORMANCE EVALUATION AND FEEDBACK. 6

SMART METHOD 6

SPECIFIC 6

MEASURABLE 6

ACHIEVABLE / APPROPRIATE? 6

REALISTIC 6

TIME-RELATED. 6

IMPLEMENTATION 7

MANAGEMENT BY OBJECTIVE PROCESS 8

MANAGEMENT IMPLEMENTATION STEP 9

STEP 1: 9

STEP 2: 9

STEP 3: 9

ii

STEP 4: 9

STEP 5: 9

IMPLEMENT THE SMART METHOD 10

SPECIFIC 10

MEASURABLE 10

ACHIEVABLE / APPROPRIATE? 10

REALISTIC 10

TIME-RELATED. 10

ADVANTAGE 10

THE COMPANY 10

EMPLOYEE 11

CONCLUSION 11

REFERENCE 12

APPENDIX 13

1

INTRODUCTION

‘Alhamdulillah’, thanks to Allah for his prosperity and guidance. A big thank is to the

project supervisor, MOHD RIZAL BIN AB RAHMAN , for his passionate assistance, and concern

with his valuable advices and superb directions. The topic of this assignment is As a General

Manager for a construction company, explain the steps that you would take to successfully

implement MBO in your company. How would you convince the employees of your construction

company that the implementation of MBO will not only benefit the company but also its

employees? In this assignment I address it according to my knowledge about what its Management By

Objective and my strategy and my opinion how to implement it in the company organization. I hope it

will fulfill the topic above.

WHAT IS MANAGEMENT BY OBJECTIVE (MBO)

Planning and managing the strategy to achieve the company target or objective witch it

must have a contribution or cooperation from bottom to top, meaning that junior staff to top

management. The each employee must know their objectives that have been set by top

management and management must do their part to directing employee performance again the

objective. The main reason is we can upgrade or improve the organization performance and also

motivate employee to achieved their target that have been set and it also a strategy of planning

and getting results of the employee performance and achievement.

MBO definition, Structural approach to organization-wide participative goal setting that

aims to serve as a basis for (A) greater efficiency through systematic procedures, (B) greater

employee motivation and commitment through participation in the planning process, and (C)

planning for results instead of planning just for work. In MBO practice, specific objectives are

determined jointly by managers and their subordinates, progress toward agreed-upon objectives

is periodically reviewed, end results are evaluated, and rewards are allocated on the basis of the

progress. The objectives must meet five criteria: they must be (1) arranged in order of their

importance, (2) expressed quantitatively, wherever possible, (3) realistic, (4) consistent with the

organization's policies, and (5) compatible with one another. Suggested by the management guru

2

Peter Drucker (1909-2005) in early 1950s, MBO enjoyed huge popularity for some time but soon

fell out of favor due to its rigidity and administrative burden. Its emphasis on setting clear goals,

however, has been vindicated and remains valid. (management by objectives (MBO) definition)

Management by Objectives was first outlined by Peter Drucker in 1954 in his book 'The

practice of Management'. According to Drucker managers should avoid 'the activity trap', getting

so involved in their day to day activities that they forget their main purpose or objective. One of

the concepts of MBO was that instead of just a few top-managers, all managers of a firm should

participate in the strategic planning process, in order to improve the implementability of the plan.

Another concept of MBO was that managers should implement a range of performance systems,

designed to help the organization stay on the right track. Clearly, Management by Objectives

can thus be seen as a predecessor of Value Based Management! (Management by Objectives -

SMART)

COMPANY QUALITY POLICY

Vision

A successful and firm contractor in Malaysia for civil works and interior design contractor in 5

(Five) years.

Mission

To establish SS Industries Sdn Bhd as a preferred contractor for interior design and civil works

construction in Malaysia. Emphasis on quality services and quality product.

Policy

SS Industries Sdn Bhd is committed to provide quality services and product to meet

client/contractual requirements.

We are also committed to continually implementing our quality management system that meet

the requirements of ISO 9001

1. Continuous improvement to our Business and Operation procedures.

2. Continuous upgrading skill and capabilities of employee through training.

3. Continuous optimization of humans, financial and material resource of the company.

3

COMPANY QUALITY OBJECTIVES

No Quality Objective Department Method Improvement Action

1. To achieve 80%

customer satisfaction

within 1 year

Project /

Trading

Customer Survey Form &

Analysis

1. Maintain good

relationship with

customer and

ensure prompt

reply on all

enquiries.

2. Ensure Reducing non-

conformity works to 1

per month

Project /

Trading

No of NCR 1. Obtain customer

approval before

installation works

begins.

2. To conduct

inspection on the

completed work

before handover.

3. To ensure all

installation

according to

customer agreed

design.

3. 70% of supplier /

subcontractor under

good performance

category.

Purchasing Sub Contractor 1. To ensure quality

service /

products is

provided by

approved

supplier / sub

contractor

4. Provide Training to

employees at least 2

training a year per

employee, related to

quality issue where

necessary.

HR Attendance List 1. To ensure

competency of

employee

through effective

training or

refreshing

session for skilled

employee.

4

COMPANY ORGANIZATION

BOARD OF DIRECTORS

WAN ABDUL HAKIM WAN MOKHTAR

(MANAGING DIRECTOR)

RAJA HALILUDDIN RAJA HALID

(BUSINESS DEVELOPMENT DIRECTOR)

WAN AMAL WAN MOKHTAR

(ACCOUNT DIRECTOR)

SHAMSUL EZAN ZAIRI

(GENERAL MANAGER)

CONSTRUCTION

(PROPERTY)

TRADING DEPATRMENT

(FURNITURE)

PROJECT DEPARTMENT

DESIGN & BUILT

(INTERIOR DESIGN)

JULIANA

(ACCOUNT EXECUTIVE)

RANIDAH MOHD UDIN

(ACCOUNT MANAGER)

MIOR ZAHID ZAWBER

(BUSINESS DEVELOPMENT

MANAGER)

FARIDAH HUSSEN

(HR MANAGER)

AZMI CHE LEH

(OPERATION MANAGER)

ZURIANA ENDUT

(PURCHASING EXECUTIVE)

HASMAWIK

(BUSINESS DEVELOPMENT

EXECUTIVE) SITE MANAGER

(TEE MIN HOE)

WAN MOHAMAD NASRI

(OPERATION MANAGER)

AHMAD HUSZAINI

(INTERIOR DESIGNER)

SITE MANAGER

(TEE MIN HOE)

ROKIAH ABU BAKAR

(PURCHASING CLARK)

5

MANAGEMENT BY OBJECTIVE PRINCIPLE

Cascading of organizational goals and objectives

The top management discusses what the vision of the company, in this case the

company vision is set by top management. The vision was ‘A successful and firm

contractor in Malaysia for civil works and interior design contractor in 5 (Five)

years’. To achieve the goal all the employee must take part and each department have to

set their object and the manager of every department have to discuss among themselves

or make a brainstorming session and find what is the best objective of their department

and staff to fulfill the company vision above. It means that in the organization they have

their own goals, start from top to bottom.

Specific objectives for each member

The manager of the department now have to set objective for each member of

department to fulfill the department objective at the same time can achieve the company

vision. For example, Project Department staff must visit the customer and make a good

relationship with them, they also must solve all the enquires as soon as possible and must

visit customer 3 or 4 days a weeks, also they have to fill the Customer Survey Form &

Analysis so they can put it in record and analyze them.

Staff who involved at site must follow the rules that have been set. Make a report to the

site manager if there have a problem at site. Any changes that happen at site must have approval

or initial from person in charge.

Participative decision making.

The manager or top management must allow all staff to give their idea or create

brainstorming session within all staff to get some idea in problem solving. If we allowed

them to speak or give some ideas they will feel appreciate and also can motivate

themselves. The reason is, normally the deal with customer, they also familiar with work

at and some of them know the real problem and may be they have some idea how to solve

the problem. This is the opportunities for them to give their idea or comments to upgrade

the company organization.

6

Explicit period.

Time to achieve the target, for example 5 years to achieve the goals or vision that

have been set by the management or to achieve the department goals and individual goals.

All the staff must take their responsibility and works hard to fulfill the individual objective at

the same time fulfill the company vision by implement all the system that have been given.

Performance evaluation and feedback.

The managers have to monitor their staffs accordantly to know the staff

performance and to make sure they follow the guide line that have been set. Every 1 year

the company evaluates the staff to know their level of achievement. At this level the Top

Management will give them rewards for those who improve and get the high marks of

achievement.

SMART METHOD

Specific

Does it clearly talk about one thing, and both the staff member and the supervisor know

exactly what output they are talking about?

Measurable

Can the output be quantified?

Achievable / appropriate?

Does the staff member have the power to accomplish the task? Will it work?

Realistic

Based upon experience & data, can the output be achieved in the allotted time with a

given amount of resources?

Time-related.

Is a specific, reasonable amount of time specified to accomplish each objective.

7

IMPLEMENTATION

Department objective and individual objective must fulfill the company Vision.

VISION

GENERAL MANAGER

PROJECT DEPT.

1. Achieve 80% customer satisfaction within 1 year.

2. Reducing non-conformity works to 1 per month

PROPERTY DEPT.

Project finish within date line with not more then 5%

defect.

OPERATION MANAGER

1. Ensure all the document recordable.

2. Supplier payment not more then 30 days.

PROJECT MANAGER

1. On time report.

2. Less Non Conformity Report (NCR) at site.

DESIGN & BUILT DEPT.

Project finish within date line with 0% defect.

OPERATION MANAGER

1. All the documnet recordable.

2. Ensure the quality of the product.

3. Supplier payment not more then 30 days.

INTERIOR DESIGNER

Finish the drawing witin dateline and must have an

approved.

TRADING DEPT.

1. Achieve 80% customer satisfaction within 1 year.

2. Reducing non-conformity works to 1 per month

BUSINESS DEV. MANAGER

Maintain good relationship customer at the same time

sourcing for a new customer.

BUSINESS DEV. EXE.

1 million sale within a year.

8

MANAGEMENT BY OBJECTIVE PROCESS

ORGANIZATIONL OBJECTIVE

REVIEWED

EMPLOYEE OBJECTIVE SET

PROGRESS MONITOR

PERFORMANCE VALUATED

ACHIEVES REWARDED

Step 1:

• Manager set the objective for

department.

• Manager discuss with staff to set the

goal for department to fulfill the

company mission.

Step 2:

• Manager discuss with all staff to set

their goal for each staff ( Individual

objective)

Step 3:

• Manager or Top management monitor

the progress of the staff to ensure they

fulfill the goals and achieve it.

Step 4:

• Top Management and manager will

evaluate the staff performance

according to their goal that has been set.

Step 5:

• Staffs that achieve their goal will get

reward from the company.

9

MANAGEMENT IMPLEMENTATION STEP

Step 1:

To fulfill the vision of the company the manager has to design the plan and discuss among the

staff to set the department objective. In this case one of MBO Principle will be implements,

Participative decision making. Manager lead a brainstorming session among the staff to set the

best objective for department that can fulfill the company vision.

The best idea among the staff will be choose as the department objective, when the idea from the

staff be use for the department objective they feel appreciated and automatically it will motivate

them to achieve the objective.

In this step the fourth MBO principle also get involved, explicit period. To achieve 70%

customer satisfaction within a year for Project and Trading Department, meaning that the

manager have to ensure that the objective have to be fulfill within 1 year.

Step 2:

Specific objective each member, individual objective will set to all staff, each member have

their goals to fulfill. They have to meet the objectives that have been set for them. Their

performance will be valued according to their objective ether they achieve it or not. For example:

If the department target was to achieve 70% customer satisfaction, they have to set the

individual goal that each member must visiting customer 3 day a week to get input or discuss

with the customer if there any problem with the project. We have to ask them if there a problem

in the project not just wait for our client to call us to discuss the problem.

Step 3:

In this step, the staff will be monitor by their manager or leaders. They have to ensure that the

employee do their task that have been set. Example: The top level has to monitor either

employee do their work accordantly or not. The drawing must approve by client before start the

construction, submit the report every week, material check list have been approve before ordered

and others requirement that they have to fulfill.

Step 4:

Their performance will be evaluates, normally once a year. The employee will be evaluates

according to their performance to fulfill the goal that have been set. The performance

evaluation and feedback. In this level the top management will know the staff performance and

the staff that their performance meet the top management level requirement will be reward.

Step 5:

Employees that achieve the goal that have been set will get their reward. For example, will be

promoted to manager level, upgrade their salary, vacation and others depend on the top

management term and conditions.

10

IMPLEMENT THE SMART METHOD

Specific

This method will be implements in the Step 1 and Step 2. The objective must be clear and

every staff member and the supervisor know exactly what they are talking about. For the

individual employee they have to know who, what, when and where the work is to be

done. Meaning is everyone knows who is doing what, where they are and when they

should be doing the work and discover the goals that fit the vision statement.

Measurable

The out-put of the objective can be measure. For example, Ensure Reducing non-

conformity works to 1 per month. Then the employees know what to do to achieve it.

Achievable / appropriate?

The objectives that have been set can be done. The objectives that cannot be fulfill by

employee. Meaning that the top management has to study or get the full information and

whither the employee can fulfill it before set the objective. It not the company will not

achieve their vision.

Realistic

The top management also have to study either the objective can be fulfill within the time

that they have been set. They have to get all the information and data before set the

objective and the time required to achieve the target. If the objective needs 5 year to

succeed then they have to make it 5 year not 3 year.

Time-related.

Is a specific, reasonable amount of time specified to accomplish each objective? (Same as

realistic)

ADVANTAGE

The Company

1. Motivation – Involving employees in the whole process of goal setting and increasing

employee empowerment increases employee job. Satisfactions and commitment.

2. Better communication and Coordination – Frequent reviews and interactions between

superiors and subordinates helps to maintain harmonious relationships within the

enterprise and also solve many problems faced during the period.

3. Clarity of goals – The Top Management knows each employee objective and knows how

to evaluate them.

11

4. The performance evaluation of the individual employees can be written around the work

to be accomplished rather than more subjective items.

5. The employee understands better where he/she stands with the boss since the work and

the evaluation of the work is known and discussed.

6. The company will achieve the target and employee will commit and motivated to bring

the company to a high level. Meaning that the company will achieved the target and at

the same time get the committed and knowledgeable employee.

Employee

1. The work of the individual is clearly defined by the objectives in writing to prevent

misunderstanding at a future date.

2. The employee knows their performance and how to up grate to achieve the target.

3. The objective will set depend on the employee level and scope of works and if they don’t

have knowledge regarding that objective, they can request from the management to have

a training. This can upgrade employee knowledge and motivation.

4. The employee can learn new things and can get a new experience and knowledge.

5. Can motivate themselves to target for a high salary and to be as a management level by

achieve the target that have been set.

6. The employee that achieves the target will be rewarded and this can motivate themselves

and others staff to achieve their target.

CONCLUSION

To be successful with the management by objective, all the staff have to committed with their

goals and the top management have to give their support to the employee to achieve their target.

COMMUNICATION FROM TOP, DOWN AND HORIZONTAL IS THE KEY TO SUCCESS.

12

REFERENCE

1. Management by Objectives - SMART

http://www.valuebasedmanagement.net/methods_smart_management_b...

2. MANAGEMENT by OBJECTIVES ( MBO) - focus on achievable goal...

http://www.1000ventures.com/business_guide/mgmt_mbo_main.html

3. MANAGEMENT BY OBJECTIVES (MBO): Six Stages (By Peter Dru...

http://www.1000advices.com/guru/mgmt_mbo_6stages_druker.html

4. management by objectives (MBO) definition

http://www.businessdictionary.com/definition/management-by-objectiv...

5. Management by Objectives (MBO) - Motivating people by aligning thei...

http://www.mindtools.com/pages/article/newTMM_94.htm

6. MBO - Management By Objectives http://www.mgmt-

uplink.com/smallbusiness/management/mbo/

7. MBO Management By Objectives Performance Appraisal Employee Ev...

http://www.performance-appraisal.com/results.htm

8. PERFORMANCE MEASUREMENT - Manager's Diagnostic Toolkit (f...

http://www.1000ventures.com/business_guide/mgmt_diagnostic_kit.html

9. Use S.M.A.R.T. goals to launch management by objectives plan

http://articles.techrepublic.com.com/5100-10878_11-5683094.html

10. Management by objectives: Definition from Answers.com

http://www.answers.com/topic/management-by-objectives

11. What Is Management By Objectives And Its Advantages And Disadvant...

http://www.blurtit.com/q993172.html

12. Management by objectives - Wikipedia, the free encyclopedia

http://en.wikipedia.org/wiki/Management_by_objectives

13

APPENDIX

Customers survey form.

14

Customer complent from

15

Approved drawing