Introduction A successful implementation of MBO in any country requires a narrow examination of such elements as customs and traditions of that country, which give support to the application of MBO. History These elements are highly influenced by the history. Starting from the early centuries, Russian people got accustomed to live under the central rule when the tsar was the only decision-making body in the country. The communication between the rulers and ruled was flowing only one-way. The landlords, owning the farmers, set quotes to farmers without thinking whether they would be able to achieve them. Afterwards, when the bolsheviks came to rule instead of the monarchy, the same thing happened.
Working for a state enterprise, the employees didn’t have a chance to set objectives for their work they performed. The central planning department set quotes, by which all the organizations had to obey even if those planks were set too high to reach. Workers were responsible for reaching organizational goals no matter for at what costs, but on the other side the means by which they had to reach the organizational goals were predetermined by the central planning department. So, we can see that the word, which MBO, was quite common and used heavily throughout the whole history of Russia.
Nevertheless, I would say, there were some elements of MBO such as rewarding the employees when they exceeded the quotes set by the central department. Reward was very seldom material. Usually, you would have received a red flag for an excellent work, and your photo would have been printed in the organization’s newspaper. In addition to the rewards, people were working for a common purpose: to reach the communism. And each piece they had produced contributed to this goal. Anyway, this system of rewards worked; it was a good source of motivation although it was resting solely in the willingness of the employees to contribute to the process.
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Factors that influence management in Russia After we had examined the historical factors that influence the application of MBO, let’s come down to determine factors that influence overall management in Russia now. As a result, it gives also some impact on the ability of MBO to be successful in this country. Social factors The first and also the most important factor is the social one. Managing an organization became a real challenge for managers during these hard times. Their decisions are highly influenced by the social environment surrounding the organization. Such a factor as, for instance, values goes hand in hand with the organization’s purpose (profit) in Western societies, but Russian people’s values are different.
Russians, as they got accustomed that the only aim of the organization is to contribute to the public welfare, can’t and do not want to understand that the transition to capitalism and, particular, to a free market economy will delete all the organizations that don’t bring profit that is at least enough to cover the expenses. That is why, for instance, formerly free hospitals are forced to charge fees. No matter whether it is for-profit or non-for-profit organization. It happened so that every organization should make money to live on. As Russia has been passing its stage of transition to a free market economy for only 7 years, there is a lack of specialized managers.
Formerly, the best profession was considered to be a physician, but starting from 1991, people realized that the economy needed skilled managers (and employees), lawyers, etc. So, at the time being, there are only a few organizations that are led by professional managers and the rest by, for instance, doctors and teachers; as a result, Russia has a high rate of firm’s failures. The overall atmosphere of distrust has created such a situation where it is difficult to deal with any firm. You are afraid of being cheated; as a result, people are more likely to go for help to a state-owned organization than to a private one. Legal and political factors Political instability in Russia explains why organizations in this country are so highly centralized. Due to need of the availability to adapt to the continuously changing situation, which requires application of conceptual skills, managers are forced to have a total control over their, no matter how big the organization is.
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Lack of important laws creates another challenge for the Russian managers; however, for some of them it is an advantage, for instance, for Mafia. Such an important function of management as planning, which is important for MBO in order to be successful, can’t be realized fully because of ever changing situation. The manager can’t predict the future and plan for the organization because of the uncertainty about the future. That is why in Russia, also called, it is more likely to fail in business than in other countries. Economic factors Another challenge for a manager is to run an organization under economic instability.
The heavy dependence on the foreign investments from the USA, World Bank, IMF etc. contributes to factor of uncertainty: no investments – economic recession. In addition to that, the main financial resources are concentrated within a small group of people, called, owning the largest firms in Russia. And these become more and more involved in the political process. They extract resources, pass laws only if they are advantageous for their companies. The rest can only watch this.
Focusing on the USA has led to copying the Western way of life, trying to produce goods and services like Americans without actually having knowledge or background in it. All these factors put pressure on the managers and influence the relationship between managers and employees, which is a factor for applying the MBO approach to a particular organization. Relationship between the employer and the employee MBO offers people a field within which to penetrate. Workers have a relative freedom of choice in deciding which means to choose for reaching a stated goal. They are motivated through reward given to individuals on the basis of how close they come to reaching their goals. Under MBO people should be self-directed and should like their work, and, of course, any MBO program is based on responsibility and proposes democratic leadership.
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Throughout the previous paragraph we can see that MBO works best under Theory Y. In order to know whether individual’s way of thinking about workers enables MBO to exist in this country, I’ve taken twenty Russian people (all work for Russian organizations) and tried to get out their assumptions about workers. The result was as follows. From the results we can see that most participants stuck to the Theory X, the theory that incorporates people who do not like work, must be forced to do the job, are motivated through the threat of punishment, see their personal gain in job security, and des like responsibility. Under such conditions, an autocratic leadership is necessary. And only 4 people prefer the Theory Y.
The theory that incorporates that people do not dislike work, work through self-direction, are motivated through recognition & reward, see their personal gain in fulfillment, and accept responsibility. Under such conditions a democratic leadership is possible. We see that the Theory Y, which enables MBO, got only 20%. From this research, I’ve proved my assumptions that the way of thinking about workers does not allow any MBO program to be implemented successfully. An impact on MBO has also the system of expectations, so it is important to know what different counterparts (employer and employee) expect from each other. To know what a Russian employer expects from a Russian employee I’ve asked 5 Russian people that are running companies to fill out a questionnaire.
The result was the following. The second answer crosses out to ability of MBO to be successful. It does not allow an employee to be creative, to be able to set objectives together with the superior… So we can see that the employer is not ready to apply the MBO approach at the time being. To know what a Russian employee expects from a Russian employer I’ve asked 15 Russian people that are working for Russian organizations to fill out a questionnaire. The result was the following.
Nobody has mentioned any of the MBO’s characteristics (ability to set objectives, … ).
That gives us much food for thoughts. If employees’ primary goals, while working for an organization, do not match the MBO’s gains (advantages), then MBO won’t be advantageous for the employees.
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As a result, the question arises Opinions on MBO After the five employers had understood the main points of MBO, they were asked the following three questions: 1. Would your employees benefit from applying MBO program to your organization? 2. Would you benefit from applying MBO to your organization? 3. Would you apply MBO program to your organization? The answers follow. In my opinion, the employer does not want to loose the power over his employee, which comes from the country’s history. Formerly, they didn’t have power – now they have it, and as soon as you get power, you do not want to loose it.
At the time being we can’t realize that MBO will be successful because of the need to have, centralized organization. It will take time to get rid of the ghost of the past. Every manager will realize soon that being able to make all the decisions about your organization won’t bring success to your organization. After the fifteen employees had understood the main points of MBO, they were asked the following three questions: 1. Would your employer benefit from applying MBO program to your organization? 2. Would you benefit from applying MBO to your organization? 3.
Would you apply MBO program to your organization? Their answers were quite predictable. In my opinion, the Russians got used to get a fixed salary under the Communist rule, and they really liked it. You didn’t have to work much because you knew for sure that you may work or not work, but you will get your salary at the end of the month. Under MBO you have to work hard to get the money, and that is what Russians normally do not like. So, the Russian is also not ready to work and to implement a MBO program. The most crucial thing is that some elements of MBO already exist within Russian organizations.
So, almost each employee is assigned a specialized set of objectives, and in many organizations performance reviews are conducted to how close individuals are to attaining their objectives. Ability of MBO to solve the existing business-related problems in Russia To determine whether Russians need MBO, we shall know whether its application will solve the existing business-related problems. Will the MBO approach solve the problems in business? Let’s take the major characteristics of MBO and apply them to the economic situation in Russia. First, the main problem of Russian products is the poor quality. As the MBO approach focuses on quantity, not quality, it will make the things worse. Second, MBO is a time-consuming process, and, because the business conditions change rapidly in this country, this approach to management won’t be able to adapt quickly to different situations.
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Third, the famous Russian bureaucracy with the burdensome paperwork would have raised its importance under MBO. Fourth, the ability of setting objectives under MBO won’t have a great impact on employees because Russians tend to be concerned only about the work they were assigned and the money they would get after accomplishing the task. With, the advantage of MBO in improved planning can’t be applied to this country because of the rapid changes. Last, at the time being, the only motivation for employees is the fixed salary they would get after they had accomplished their task, not more and no less. So, we can see that MBO won’t be advantageous for Russia; it won’t solve existing problems in business. Then, why should we apply this approach if it does not help the country? Organizational and Individual’s goals The MBO approach to management works best when the organizational goals are completely compatible with the individual’s ones.
The degree of their compatibility shows the extent to which MBO will be successful and will contribute to the attainment of organizational objectives. The more the two goals match, the more chance is to succeed applying the MBO program. MBO offers an individual to fulfil its self-actualization needs and contributes the same way to the attainment of organizational goals, such as improved planning etc. The main goal for an organization, which is completely compatible with the manager’s one, is to get the profit; however, this goal does not characterize only Russian organizations. It is the attitude, or the way the organization is going to reach it, which is different.
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Under the in Russia, the managers are concerned about getting as much profit as possible, and they do not pay attention to social responsibility, public welfare, or, simply, paying taxes. Under such business conditions that are now in this country, the managers do not care about their workforce. They do not give fringe benefits, do not educate the labor. They do not care much about the working conditions or safety. So, how can we expect from such managers that they would pass over some decision-making to their employees, provide them with a framework, and allow them to set objectives that they think they would be able to reach. The Russian manager’s first purpose is to survive, not thinking about how to run an organization for the benefit of everybody.
The individual’s goals and needs are, however, different from the organizational ones. When a person is working for a private firm and gets much money, and they do so, then, he does not think about being able to set objectives. His main aim is to try to preserve this job. You must consider that an average salary in Russia is about $100 a month, and you get minimum $1, 000 at any private firm. So, there is a real difference between these two salaries. MBO goes hand in hand with fulfilment of self-actualization needs, which are characterized by accomplishment, opportunities for advancement, growth, and creativity.
A Western manager tries to create such a palette inside his organization that would enable workers to fulfil their needs. The level of needs the firm offers to fulfil depends on the average in the country. Organizations try to set a level higher than the average in the society, so being able to attract employees. So, for instance, in Austria the most people have reached the last step in the hierarchy of needs, the self-actualization need; therefore, there are not so many alternatives for a firm to choose between.
This explains the situation when a firm fulfils all the individual’s needs, including the self-actualization need. To fulfil the last one, managers offer the MBO approach, which became popular only in 60 s, when people in Western societies reached the esteem need and were searching for ways how to fulfil the self-actualization need. But in Russia, the most people are concerned about fulfilling their physiological needs, to have money to survive. So, why should a firm apply a MBO program, a tool to fulfil the fifth step of the hierarchy of needs if people are seeking for the first step.
Why to offer too much, spend more money on this program? So, in my opinion, it will take time for Russia to reach conditions that would enable MBO to be requested. It will happen as soon as the most Russians have fulfilled their fourth need, the esteem need, and will seek to fulfil the last one, but it will take time. However, this MBO won’t work in Russia at least now because of incompatibility of the organizational and individual’s goals, as we have seen before. Is MBO possible in Russia? It is not so that everything is against the MBO program in Russia. So, for instance, the creativity, which is quite important for applying the MBO approach, characterizes Russian people, which are quite famous for their ability to create from nothing. For a better explanation, let’s take the Russian aviation industry.
Being put under pressure of hard times, when it is difficult to obtain proper financial and physical resources for production, they find a way to accomplish the plan set in Moscow. We can see their output at the aviation shows and exhibitions. Even having difficulties through the whole process of production, construct ers are capable of producing competitive products. According to all the above mentioned, the history, tradition, inability of solving problems, the wrong time for the application, incompatibility of organizational and individual’s goals, etc. , I can say that the MBO approach to management will not sustain in Russia at least now! However, no doubt, it will be possible in the future. Conclusion It took many decades, or even centuries, for the European countries to create welfare states and to start applying the Management by Objectives approach to management.
So, I think, once Russia will recognize the benefits of MBO and will apply this program for the overall success of the country’s economy. My model for analyzing the possibility of a successful application of MBO in a given country While working on this research paper, I could arrive at a very important decision. I could create a model for analyzing the possibility of a successful application of MBO in a given country through analyzing the external environment of that country and the internal environment of that organization. The model is shown in the following chart. MBO Bibliography 1. Raia, Anthony P.
Managing by Objectives (Glenview, III. : Scott, Foresman, 1974).
2. Certo, Samuel C.
Modern Management. 7 th ed. , 1997. 3. Meson, Albert, Khedouri. Management.
3 rd ed. , 1988. 4. Pearce II, John A. and Richard B.
Robinson, Jr. Management. New York: Random House, 1989.
