Valley Wide Utilities Company, a privately owned utility company, is faced with financial inefficiencies resulting from an expansion of its facilities. President Robert Delgado has requested a review of the firm’s operating standards. He has asked John Givens and Hilda Hirsh to provide a broad outline of MBO performance standards that would identify key standards with which to control performance. Three years ago, Valley Wide Utilities, under the direction of a management consulting firm, implemented a system of MBO for the purpose of evaluating department managers, sales engineers, and consumer service employees.
The advantage of such a system of controls is that top management can very rapidly scan a printout and detect any trouble spots in the department. Givens and Hirsh attempted to set the standards as if the personnel were working at a normal pace. After review, Givens and Hirsh raised the performance level on several items, reasoning that the standard is probably too low if it can be achieved without a challenge. Delgado had specifically asked for goals that were not easily attainable. There was a certain amount of negative reaction, but in the end, the department agreed.