Procedures and Policies do not always work

Sometimes the existence of procedures and policies is not enough to prevent disasters. Such was the case with the Challenger Space Shuttle disaster. On January 28, 1986, the shuttle lifted off into a clear blue sky. In just 73 seconds, after a flawless liftoff, the Challenger erupted in a ball of flame, broke into segments, and plunged into the ocean. The entire crew died.

All shuttles flights were immediately suspended pending on investigation by a presidential commission, which released its report in June 1986. The immediate blame of the explosion fell on a faculty O-ring seal between segments on the solid fuel booster rockets. Cold weather and buffering winds during the launch further weakened the O-rings, allowing flame to leak out and trigger the explosion.

The commission criticized NASA’s management procedures and policies. Fingers were also pointed at Morton Thiokol, the company that built the rocket boosters. Some engineers there had long suspected something was wrong with the basic design of the O-rings, yet when they complained, wrote memos and ‘blew whistles’ nothing happened until the explosion. Senior managers evidently saw the engineers’ jobs as implementing policies and procedures. Not questioning them.

Such disaster can only be prevented of policies and procedures are created that encourage constructive disagreement and dissent among employees. Such policies are important for maintaining quality, as is emphasized by Deming’s 8th point, on getting fear out of the workplace. And as the Challenger disaster points out, allowing room for dissent may be an ethical imperative.

Using Procedures to facilitate implementation:

Policies and procedures are powerful tools for implementing strategy and gaining greater commitment from employees. To show this, we will take a closer look at procedures for setting annual objectives management by objectives and reward systems.

Annual Objectives:

Annual objectives lie at the very heart of strategy implementation. They identify precisely what must be accomplished each year to achieve an organization’s strategic goals. In the process, they also provide managers with specific targets for the coming year’s performance. For example, if strategy at Sega dictates an increase in market share, annual objectives for the coming year might include a 15 percent increase in sales, the introduction of the two new video games, and the opening of a regional distribution center in a specific area of the country, and the negotiation of a certain line of credit to pay for the increased production and marketing expenses. Annual objectives clarify managers’ roles in the implementation of an organizations’ strategy.

Well designed annual objectives are clearly linked to the organization’s long term goals, and they are measurable. It is important that they quantity performance so there can be little dispute over a unit’s results. Some areas, like production, naturally lend themselves to the kind of measurement. It is more difficult to create quantitative standards for public reactions.

Management by Objectives (MBO):

MBO goes beyond setting annual objectives for organizational units it setting performance goals or individual employees. The approach was first proposed by Peter Drucker in his 1954 book. The Practice of Management. Since that time, MBO has spurred a great deal of discussion evaluation and research and inspired many similar programs.

MBO refers to a formal set of procedures that begins with goal setting and continues through performance review. Managers and those they supervise act together to set common goals. Each person’s major areas of responsibility are clearly defined in terms of measurable expected results or ‘objectives’ used by staff members in planning their work, and by both staff members and their managers for monitoring progress. Performance appraisals are conducted jointly on a continuing basis, with provisions for regular periodic reviews.

The heart of MBO is the objective, which spell out the individual actions needed to fulfill the unit’s functional strategy and annual objectives. MBO provides a way to integrate and focus the efforts of all organization members on the goals of higher management and overall organizational strategies.