The management by objective (MBO) mindset was very popular in the years leading up to the release of ISO 9001, a mindset W. Edwards Deming lived to rebuke personally (see Out of the Crisis, p. 75-76). While MBO is not a nonconformity per ISO 9001, it is not required by ISO 9001 and auditors should not expect MBO-type objectives in order for organizations to demonstrate measurable objectives or improvement.
On p. 75 of Out of the Crisis, we find the subheading: “11.b Eliminate numerical goals for people in MANAGEMENT.” (Caps mine.) Having already addressed using quotas to improve operational performance, Deming seems to be applying the same reasoning to using numerical goals at a management level. The first sentence beneath the heading: “Internal goals set in the management of a company, without method, are a burlesque.”
Deming tells us that management by numbers is where ignorance, fear, and leadership intersect. Deming’s point about ignorance is not judgmental. What he is saying, it seems to me, is this: if management knew how to improve system performance by precisely x percent, then the plan would be to implement this knowledge. Absent that knowledge, and aware only of the need to improve, they demand improvement without imparting the knowledge of how to get it done. The fact that improvement is demanded by numerical objective without a plan to achieve this improvement shows us that management wants to improve, but they don’t know how. Again, if they did, they would be telling us how, not simply demanding that it be done.
For example, if a system is now operating at, by some measure, 90%, MBO would seek to improve performance by establishing some (numeric) goal above 90% , say, 91%–by next quarter. The objective is to meet that number—doing whatever is necessary (brow-beating?) to make it come out to 91% in the next quarter. It’s management by fear.
So, just by pressuring people to perform better, the 91% might be achieved. So it might seem effective. But it’s not. It’s only temporary. Why? Because the system didn’t improve, people were just trying extra hard. People can only try extra hard for so long. Projecting the appearance of effectiveness—going from 90% to 91%—the bar for next quarter is raised to 92%. “C’mon, now try even harder everyone.” After the herculean efforts wane, performance will return to 90%. That’s what the system is designed to achieve. Using MBO, the expectation is that the system will perform better than it’s designed to perform.
On the other hand, if the objective to improve operations from 90% to 91% were supported with a plan to achieve this improved performance, then it isn’t MBO. It’s just good management. For example: “We are at 90% now. By next quarter we want to be at 91%. Here’s how we are going to achieve that: a) we’re installing another machine, which will provide us enough added capacity to increase 0.5% in that period; the other .5% we expect from reducing set-up times, the Production Manager has the details on precisely what we plan to do there . . .” This is not MBO, because management actually has knowledge about how to achieve the goal—by making planned improvements to the system–it’s not just a number somewhere above 90%.
ISO 9001 does not require MBO. Numeric improvement goals relative to each measureable objective are not required. While the standard requires measurable objectives, measurement, and improvement, it does not require MBO to prove any of them.
Deming tells us that when you take a system measurement, the result tells us what the system is currently capable of. By its current design, it operates at its current performance level. That’s what you get, given how the system works. If performance improvement is desired, it won’t be achieved until the system is improved somehow. PDCA is applied in various levels and functions of operations to achieve small-step and break-though improvements. These result in performance improvement which continues until the level of performance has been optimized to management’s satisfaction.
Bio:
T. D. (“Dan”) Nelson has been closely involved with ISO 9000 since 1994 as a technical writer, quality manager, management representative, consultant, author, and CB auditor. Holding an MA in Business Administration from the University of Iowa, Dan also has 12 years of experience as an IRCA-certified QMS Lead or Principal Auditor, conducting registration audits and surveillance audits, and training Lead Auditor candidates in accredited courses. Using a process approach, Dan has taken several scores of clients of various shapes and sizes through registration to ISO 9001:1994/2000/2008 and related sector schemes (e.g. QS 9000, AS9100, ISO 13485, and ISO 17025). Dan’s numerous articles about the process approach have also been published by Quality Digest, Inside Quality, ASQ’s Quality Management Division, the Society for Manufacturing Engineers (SME), and the South African Quality Institute (SAQI); Dan has been featured as a guest blogger by RABQSA, and has been featured on Quality Digest Live. Dan is available for management consulting, training, and coaching, as well as auditor training and coaching. Contact: dan@tdnelson.com 720 412 7994