The emphasis (of MBO)

«The emphasis (of MBO) is on trying to predict and influence the future rather than on responding and reacting by the seat of the pants. It is also a ‘results-oriented” philosophy of management, one of which emphasizes accomplishments and results. The focus is generally on change and on improving both individual and organizational effectiveness.»

A successful implementation of MBO in any country requires a narrow examination of such elements as customs and traditions of that country, which give support to the application of MBO.

These elemets are higly influenced by the history.

Starting from the early centuries, Russian people got accustomed to live under the central rule when the tsar was the only decision-making body in the country. The communication between the rulers and ruled was flowing only one-way. The landlords, owning the farmers, set quotes to farmers without thinking whether they would be able to achieve them.

Afterwards, when the bolshewiks came to rule instead of the monarchy, the same thing happened. Working for a state enterprise, the employees didn”t have a chance to set objectives for their work they performed. The central planning department set quotes, by which all the organizations had to obey even if those planks were set too high to reach. Workers were responsible for reaching organizational goals no matter for at what costs, but on the other side the means by which they had to reach the organizational goals were predetermined by the central planning department.

So, we can see that the word «central», which «disables» MBO, was quite common and used heavily thrughout the whole history of Russia. Nevertheless, I would say, there were some elements of MBO such as rewarding the employees when they exceeded the quotes set by the central department. Reward was very seldom material. Usually, you would have received a red flag for an excellent work, and your photo would have been printed in the organization”s newspaper. In addition to the rewards, people were working for a common purpose: to reach the communism. And each piece they had produced contributed to this goal. Anyway, this system of rewards worked; it was a good source of motivation although it was resting solely in the willigness of the employees to contribute to the process.

Factors that influence management in Russia

After we had examined the historical factors that influence the application of MBO, let”s come down to determine factors that influence overall management in Russia now. As a result, it gives also some impact on the ability of MBO to be successful in this country.

The first and also the most important factor is the social one. Managing an organization became a real challenge for managers during these hard times. Their decisions are highly influenced by the social environment surrounding the organization. Such a factor as, for instance, values goes hand in hand with the organization”s purpose (profit) in Western societies, but Russian people”s values are different.

Russians, as they got accustomed that the only aim of the organization is to contribute to the public welfare, can”t and do not want to understand that the transition to capitalism and, particulary, to a free market economy will delete all the organizations that don”t bring profit that is at least enough to cover the expenses. That is why, for instance, formerly free hospitals are forced to charge fees. No matter whether it is for-profit or non-for-profit organization. It happened so that every organization should make money to live on.

As Russia has been passing its stage of transition to a free market economy for only 7 years, there is a lack of specialized managers. Formerly, the best profession was considered to be a physician, but starting from 1991, people realized that the economy needed skilled managers (and employees), lawyers, etc. So, at the time being, there are only a few organizations that are led by professional managers and the rest by, for instance, doctors and teachers; as a result, Russia has a high rate of firm”s failures.

The overall atmosphere of distrust has created such a situation where it is difficult to deal with any firm. You are afraid of being cheated; as a result, people are more likely to go for help to a state-owned organization than to a private one.

Political instability in Russia explains why organizations in this country are so highly centralized. Due to need of the availability to adapt to the continuously changing situation, which requires application of conceptual skills, managers are forced to have a total control over their «child», no matter how big the organization is.

Lack of important laws creates another challenge for the Russian managers; however, for some of them it is an advantage, for instance, for Mafia.

Such an important function of management as planning, which is important for MBO in order to be successful, can”t be realized fully because of ever changing situation. The manager can”t predict the future and plan for the organization because of the uncertainty about the future. That is why in Russia, also called «the country of wonders», it is more likely to fail in business than in other countries.

Another challenge for a manager is to run an organization under economic instability. The heavy dependence on the foreign investments from the USA, World Bank, IMF etc. contributes to factor of uncertainty: no investments – economic recession.

In addition to that, the main financial resources are concentrated within a small group of people, called «semibojarshina», owning the largest firms in Russia. And these become more and more involved in the political process. They extract resources, pass laws only if they are advantageous for their companies. The rest can only watch this «game».

Focusing on the USA has led to copying the Western way of life, trying to produce goods and services like Americans without actually having knowledge or background in it.

All these factors put pressure on the managers and influence the relationship between managers and employees, which is a prediciding factor for applying the MBO approach to a particular organization.

Relationship between the employer and the employee

MBO offers people a field within which to penetrate. Workers have a relative freedom of choice in deciding which means to choose for reaching a stated goal. They are motivated through reward given to individuals on the basis of how close they come to reaching their goals. Under MBO people should be self-directed and should like their work, and, of course, any MBO program is based on responsibility and proposes democratic leadership.

Throughout the previous paragraph we can see that MBO works best under Theory Y. In order to know whether individual”s way of thinking about workers enables MBO to exist in this country, I”ve taken twenty Russian people (all work for Russian organizations) and tried to get out their assumptions about workers. The result was as follows.

From the results we can see that most participants stuck to the Theory X, the theory that incorporates people who do not like work, must be forced to do the job, are motivated through the threat of punishment, see their personal gain in job security, and deslike responsibility. Under such conditions, an autocratic leadership is necessary.

And only 4 people prefer the Theory Y. The theory that incorporates that people do not dislike work, work through self-direction, are motivated through recognition & reward, see their personal gain in fulfillment, and accept responsibility. Under such conditions a democratic leadership is possible.

We see that the Theory Y, which enables MBO, got only 20%. From this research, I”ve proved my assumptions that the way of thinking about workers does not allow any MBO program to be implemented successfully.

An impact on MBO has also the system of expectations, so it is important to know what different counterparts (employer and employee) expect from each other.

To know what a Russian employer expects from a Russian employee I”ve asked 5 Russian people that are running companies to fill out a questionnaire. The result was the following.

The second answer crosses out to ability of MBO to be successful. It does not allow an employee to be creative, to be able to set objectives together with the superior… So we can see that the employer is not «mentally» ready to apply the MBO approach at the time being.

To know what a Russian employee expects from a Russian employer I”ve asked 15 Russian people that are working for Russian organizations to fill out a questionnaire. The result was the following.

Nobody has mentioned any of the MBO”s characteristics (ability to set objectives,…). That gives us much food for thoughts. If employees” primary goals, while working for an organization, do not match the MBO”s gains (advantages), then MBO won”t be advantageous for the employees. As a result, the question arises «Why should employees be for the application of MBO at their organization?»