Valley Wide Utilities Case Study

Problems

Macro

The company was faced with financial inefficiencies resulting from an expansion of its facilities. Three years prior, under advisement from outside firm, Valley Wide implemented an MBO program to evaluate department managers, sales engineers, and consumer service employees.
President Delgado appointed John Givens and Hilda Hirsh to provide a broad outline of MBO performance standards, identify key standards controlling performance, and more specifically, isolate goals not easily attained.

Micro

At the beginning stages, negative feedback was received, but eventually departments came around. During the first year participation was encouraged, employees set high goals, productivity increased, and rewards were obtained.
However, in the course of the past year, performance evaluation problems are surfacing, dissatisfaction is emerging, managers are stating MBO standards are too tight and unfair, and workers are threatening to leave.

Causes

John and Hilda may not have the knowledge or skills to evaluate and change performance levels of individuals or teams.
Manager and line supervisors should be participating in MBO programs. They can assist by identifying deficiencies, facilitating process improvements, and measuring goals and objectives
Other departments started complaining that Hirsh was only looking for failure to report under the cover of the MBO system. There is no trust in this company due to management.
Employee morale is decreasing because higher performance standards cannot be met and/or are unattainable. Department managers are accusing Hirsh as focusing one cost measurement within the MBO program (i.e. departmental labor cost) instead of all costs within each area (i.e. customer satisfaction).
The case study does not provide enough information to determine what or how the MBO has been