CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Effective day-to-day administration of a business calls for a range of managerial tools, and management by objectives (MBO) is one of them. In its basic form, MBO is a participative approach in which superiors and subordinates identify the major areas of responsibility together, set standards for good and poor performance, and then measure actual results against those standards (Okoli et al., 2023). It is also known as managing by objectives or management by goals.

Shonubi and Sodipo (2019) describe MBO as a process through which objectives are agreed within an organisation so that both managers and employees know what those objectives are and what is expected of them. Okolocha (2020) explains how this works in practice: the manager presents the goals of the department, each subordinate proposes objectives for his or her own job, and the two negotiate and agree on them, so that a set of verifiable targets for each person is jointly determined and prioritised. Because the approach concentrates on results rather than on activity, people are judged by what they contribute to organisational output (Okoli et al., 2023). MBO therefore depends on commitment and co-operation from both sides, and on a clear time frame within which the agreed goals are to be achieved.

Scholars do not always agree on what MBO is for. Some treat it mainly as an assessment tool, others as a motivational method, and others as a planning and control technique (Okoli et al., 2023). Islami et al. (2018) studied it as a performance appraisal system among 172 employees in 13 enterprises in Kosovo and found that it improved employee effectiveness, with individual performance evaluation and a clear statement of expected results emerging as its most important features. For MBO to work, managers must also build a sense of accountability in their subordinates, guide their activities towards the agreed goals and help them develop the skills needed to contribute more effectively (Oshogbunu et al., 2022).

Organisations exist because people cannot achieve many of their aims alone. They shape the way people live and work, and their survival depends largely on capable men and women who know how to combine the four basic resources of man, machine, materials and money in pursuit of organisational goals. Management techniques such as MBO are among the means by which this combination is made effective.

In Nigeria, MBO has been examined in a number of sectors. In banking, Shonubi and Sodipo (2019) found a significant impact of MBO on organisational performance at Guaranty Trust Bank Plc. Felix (2018) reported that involving workers in goal setting, delegating authority and motivating staff each raised productivity among deposit money banks in Yola. Idoko et al. (2022) found that joint control improved employee commitment and that setting specific goals improved punctuality at Union Bank Plc in Enugu. Okolocha (2020), studying commercial banks in Onitsha, found that employee participation and compensation both had positive effects on productivity, although neither was statistically significant at the 5% level. Outside banking, Brimah et al. (2020) linked the application of MBO principles to the effectiveness of a pharmaceutical company in Ilorin, Okoli et al. (2023) found that goal setting was strongly associated with job satisfaction and feedback with commitment among manufacturing workers in Anambra State, and Nwite (2016) examined its use in school administration in Ebonyi State.

Despite this evidence, MBO is not applied consistently in Nigerian organisations. Many firms concentrate goal setting at the top and leave out lower-level staff, and a large number have not adopted the technique at all (Okoli et al., 2023). Where management tools are poorly understood or wrongly applied, the result is waste and weak performance. Against this background, the researcher set out to examine the prospects and problems of MBO as an instrument for organisational performance in Nigeria, using First Bank of Nigeria Plc, Okpara Avenue, Enugu Main branch, one of the leading financial institutions in the country, as the case study.

1.2 Statement of the Problem

Many organisations in Nigeria either do not use MBO or use it only in name. Where it is applied, staff are often left out of the process of setting standards and goals, so that targets are handed down rather than agreed (Okoli et al., 2023). Employees in such organisations are unsure what is expected of them and of how their behaviour should change to meet those expectations, and the outcome is low efficiency and low productivity (Okoli et al., 2023).

The literature identifies a number of recurring problems with MBO: failure to set specific goals, a breakdown of joint control, lack of support from top management, resentment among subordinates, difficulty in quantifying objectives, a long and costly process, an emphasis on short-term goals, and inadequate skills and training (Okoli et al., 2023). Empirical findings on the benefits of employee participation are also not uniform, since some studies report significant gains (Shonubi & Sodipo, 2019; Idoko et al., 2022) while others report positive but statistically insignificant effects (Okolocha, 2020). This study therefore investigates the level of participation, the delegation of authority and responsibility, and the problems affecting the use of MBO at First Bank of Nigeria Plc, Enugu Main.

1.3 Objectives of the Study

The broad objective of the study is to find out the prospects and problems of management by objectives as an instrument for organisational performance in Nigeria. The specific objectives are to:

1. determine the problems affecting management by objectives as an instrument for organisational performance;
2. find out the level of participation of managers and employees in setting the goals to be achieved in the organisation; and
3. determine whether employees are given appropriate authority and responsibility for achieving the set objectives.

1.4 Research Questions

In line with the objectives, the study seeks answers to the following questions:

1. What are the problems militating against the use of management by objectives as an instrument for organisational performance?
2. To what extent do managers and employees participate in setting the goals to be achieved in the organisation?
3. To what extent are employees given appropriate authority and responsibility for effective management by objectives?

1.5 Hypotheses

The following hypotheses, stated in null (H0) and alternative (H1) form, guide the study:

Hypothesis One

H0: Managers and employees do not participate in setting the goals to be achieved in the organisation in order to increase performance.

H1: Managers and employees participate in setting the goals to be achieved in the organisation in order to increase performance.

Hypothesis Two

H0: Non-commitment of top managers is not one of the problems militating against the use of management by objectives as an instrument for organisational performance.

H1: Non-commitment of top managers is one of the problems militating against the use of management by objectives as an instrument for organisational performance.

Hypothesis Three

H0: Employees are not given appropriate authority and responsibility for achieving the set objectives.

H1: Employees are given appropriate authority and responsibility for achieving the set objectives.

1.6 Significance of the Study

The researcher. The study will help the researcher meet part of the requirements for the award of a Master’s degree in Management.

The firm (First Bank of Nigeria Plc). The findings will show the bank the value of involving subordinates in setting objectives. Studies of Nigerian banks and firms link employee participation, clear goal setting and regular feedback to higher commitment, job satisfaction and organisational performance (Shonubi & Sodipo, 2019; Idoko et al., 2022; Okoli et al., 2023), which in turn supports productivity, profitability, growth and sustainability, as well as customer and employee satisfaction.

Future researchers. The study will serve as a reference for those working in related areas, and its findings can form a basis for further research.

1.7 Scope of the Study

The study is concerned with the use of MBO as an instrument for organisational performance and is restricted to First Bank of Nigeria Plc, Enugu Main branch. It covers the period from 2006 to 2011.

1.8 Limitations of the Study

Several factors constrained the researcher in the course of this work. The most important were the following.

Time. The research is a demanding task that requires a great deal of time and energy, and the time available to the researcher was limited.

Finance. Limited funds made it impossible to obtain all the materials needed for the project, and the cost of repeated travel to First Bank of Nigeria Plc, Okpara Avenue, was high.

Respondents’ reluctance and limited materials. Some people are wary of being questioned and tend to avoid researchers, because they fear that activities not meant for public view will be exposed. This made it harder to obtain information and research materials.

1.9 Definition of Relevant Concepts

MBO: Management by objectives, a participative management technique in which superiors and subordinates agree on objectives and review results against them (Okoli et al., 2023).

Organisational performance: the extent to which an organisation achieves its goals, as reflected in outcomes such as productivity, profitability and employee and customer satisfaction.

Participation: the involvement of employees in decision-making instead of merely acting on orders (Okolocha, 2020).

WAEC: West African Examinations Council.

SSCE: Senior Secondary Certificate Examination.

OND: Ordinary National Diploma.

B.Sc: Bachelor of Science.

PLC: Public Limited Company.

FBN: First Bank of Nigeria.

References

Brimah, B. A., Bamidele, A. G., Rabiu, R. O., & John, I. S. (2020). The connexus of management by objectives and organisational performance: Evidence from Tuyil Pharmaceutical Limited, Ilorin. SocioEconomic Challenges, 4(2), 90–98. https://doi.org/10.21272/sec.4(2).90-98.2020

Felix, F. (2018). Management by objectives (MBO) as an instrument for organizational performance of deposit money banks in Nigeria. European Journal of Business and Management, 10(26).

Idoko, E. A., Okolie, J. I., & Nnubuogu, P. (2022). Effect of management by objectives (MBO) on the employee performance of Union Bank Plc. in Enugu metropolis. Advance Journal of Management, Accounting and Finance, 7(11), 1–18.

Islami, X., Mulolli, E., & Mustafa, N. (2018). Using management by objectives as a performance appraisal tool for employee satisfaction. Future Business Journal, 4, 94–108.

Nwite, O. (2016). Principal’s application of management by objective in secondary schools in Ebonyi State, Nigeria. International Journal of Education, Learning and Development, 4(6), 19–30.

Okoli, I. E. N., Ewah, E. A. B., & Chukwu, C. U. (2023). Accelerating employee performance through management by objectives: Evidence from manufacturing firms. European Journal of Business and Management Research, 8(4), 216–222. https://doi.org/10.24018/ejbmr.2023.8.4.2063

Okolocha, C. B. (2020). Effect of management by objectives (MBO) on organizational productivity of commercial banks in Nigeria. International Journal of Trend in Scientific Research and Development, 4(5), 1469–1476.

Oshogbunu, E. O., Amah, E., & Okocha, B. F. (2022). Management by objective and organizational productivity: A literature review. South Asian Research Journal of Business and Management, 4(3), 99–113.

Shonubi, A. O., & Sodipo, O. O. (2019). Management by objective as a tool for organizational performance in Guaranty Trust Bank Plc. Nigerian Journal of Management Sciences, 7(1), 70–79.