CASE related facts
Western Utilities a privately owned utility company currently faced with financial inefficiencies resulting from an expansion of its facilities. President Robert Delgado has personally asked them to raise the standard of employee performance as well as setting goals that are not easily attainable.
MBO is being implemented by John Givens and Hilda Hirsh to identify key standards with which to control performance. 3 year ago, MBO is implemented for the purpose of evaluating department managers, sales engineer and consumer service employees.
During the past year however, a significant amount of dissatisfaction among employees has emerged. As some employees feels that the goals set by the management is unachievable, however during the first year the employee’s was encouraged and reward were obtained hence productivity increased.
Now, however problems are being reported in the evaluation of performance and many have complained that the standards set by Hirsh were too tight and unfair. Bill Wanton the manager of consumer department exceeded the monthly labor cost standard and is given a” red-line” performance by Hilda Hirsh. Bill Wanton argued that he is in a difficult situation weather to please his employee to give overtime or to cut cost and follow the tight budget.
After several departments have made complained, Robert Delgado questioned the company system as maybe MBO doesn’t work in the utility. One of the reasons that MBO system fails is because of the hard unattainable goals. Although goals should be difficult, employee’s in the company should be able to attain or at least approach them otherwise employee will view the goal as impossible, become discouraged and may abandon their current task as several engineers are threatening to resign