Ceresias Model of Goal Dynamics in Technology-Based Organisations - Literature review Example

?A Critical Review of Francesco Ceresia’s A Model of Goal Dynamics in Technology-Based Organisations Introduction A widely substantiated finding in the literature of organisational behaviour is that difficult, specific goals result in more improved work performance than simple goals, ‘do your best’ goals, or obviously, no goals. Goal setting theory is regarded one of the most reliable and practical motivation theories (Miner 2002). Some scholars, like Pinder (1998), argued that goal setting theory had demonstrated more empirical reliability than any other theory of employee motivation. Research findings reveal that specific and challenging, but achievable, goals are firmly connected to task performance and motivation but only a few are studied concerning the value of goal setting to complex organisations. According to Bassett (1993), studies on goal setting have usually included small teams of workers or large organisations. One of the current studies on the applicability of goal setting theory to complex organisations, and which is the focus of this critical review, is Francesco Ceresia’s A Model of Goal-Dynamics in Technology-based Organisations. The author uses four major theoretical paradigms, namely, (1) goal setting, (2) management by objective practices (MbO), (3) workers’ motivation, and (4) organisational performance. The objective of the study is to create a systems dynamics (SD) model that will demonstrate the relationships between goal setting processes, product sales dynamics, workers’ motivation or commitment, and managing of the processes of goal setting. The researcher uses an imaginary Commercial Department (Alpha s.r.l.) to illustrate the reliability and validity of its causal loop diagram, or SD model in determining the correlation among the four theoretical paradigms aforementioned. The next section provides a general review of the supporting theories in Ceresia’s study, specifically, (1) goal setting for task performance, (2) organisational goal setting, and (3) management by objectives. A critical review of Ceresia’s study follows; this section discusses the contribution of the study to the knowledge base, new approaches that emerged in the study, and the effectiveness in which Ceresia applied the theoretical perspectives to the engineering or built environment. A General Review of the Theoretical Perspectives in Ceresia’s Study In order to accurately, critically analyse Ceresia’s study, it is important to discuss first the different theoretical perspectives that have influenced the development of the study’s objectives and focus. These theories elaborate the fundamental principles that guide the product sales and organizational performance of Beta s.r.l. Since each of these perspectives embodies some relevant assumptions concerning the appropriate structure for systems dynamics, employee, and management, an idea of the principles underlying them is highly useful. Goal Setting for Task Performance Goal setting generate more improved outcomes than failure to set goals. Nevertheless, the explanations are multifaceted. Difficult goals and several controllers and intermediaries should be established before better task performance occurs (Katzell & Yankelovich 1975). However, performance is not a fixed term. Furthermore, performance is not the goal in itself. Sooner or later, workers should be rewarded or recognised for efficient performance if the organisation wants them to stay dedicated to their task and to the organisation, as well (Sengupta 2006). Employee satisfaction is linked to dedication and commitment. If goals are difficult, the enabling controllers are existent, and the intermediaries are functioning, task performance will be efficient and productive on any component the goal identifies as vital, such as quality, quantity, and so on (Curtis 1994). Three fundamental forms of ‘specific’ outcome measures can be applied to assess task performance in the work setting. These three are used in Ceresia’s study (Meyers, Riccucci & Lurie 2001): (1) units of production (e.g. frequency of mistakes, quantity distributed); (2) product sales, costs, profit; and (3) time (e.g. target dates, employee attendance). As stated by Meyers and colleagues (2001), quantifying task performance and goals is very difficult. However, with difficult goals, goal commitment, appropriate task methods, self-efficacy, competence, feedback, alongside determination, dedication, and focus, the outcome will be expressed in improved task performance. Nevertheless, as substantiated in the findings of Ceresia (2011), as the goal becomes more difficult, even with established controllers and intermediaries, the less probable it is to be achieved and the less probable it is to generate worker satisfaction. As stated by Ceresia (2011), ‘negative psychological states’ (p. 27) is the more probable outcome for employees with unreasonably complicated goals. This may then lead to failure. However, the problem is that as the difficulty of the goal heightens, and task performance improves alongside, satisfaction drops off (Nuttin 1984). As stated by Ceresia (2011), “The more the company management set difficult goals, the more the workers confronted themselves with hard work and greater implications. This work context facilitates the development of worker’s negative psychological states (like stress), that affect workers’ self-efficacy perception” (p. 27). Hence capitalising on performance weakens satisfaction. A favourable way out of this dilemma is to set goals that are fairly difficult, specifically, difficult but completely attainable. The reasonable goal strategy would not capitalise on either employee satisfaction or task performance but would maximize the fusion of both (Pearce & Robinson 2003). The drawback of this strategy is that high standards of performance are overlooked. As suggested in the conclusion of Ceresia (2011), a goal setting process that keeps from giving up high standards is to draw on difficult goals to manage task performance. The solution lies in maintaining the difficulty of the goal, but also managing performance in relation to goals instead of to the realisation of goals. Organisational Goal Setting It has been argued that anyone who desires to be successful has to start thinking about the goal before embarking on the creation. This notion defines the perspective of a strategic management, and a strategically managed organisation (Miner 2002). Nevertheless, there are disparities in how organisations and people carry out the goal-setting and strategy development processes. Organisational goal setting is founded on principles of management planning and strategy (Miner 2002). This process requires the following (Pearce & Robinson 2003, 88): (1) assessing the environment; (2) creating a vision (defining the organisation’s purpose, philosophy, mission, and goals); (3) formulating strategy by setting measurable objectives, including the plans or tactics to attain those objectives; (4) executing the strategy; and (5) controlling and evaluating the entire process. Strategic management puts emphasis on organisational performance. It is a means to progress and influence the future (Pearce & Robinson 2003). As stated by Peter Drucker (1974), strategic management is forward-thinking; it tries to determine the future implications of current strategies for the attainment of the goals of the organisation. Strategic management is an outcome-based management principle. It is a principle of managing the organisation’s activities and tasks in order to attain its goals (Pearce & Robinson 2003). It is not a method but instead an idea with definite goals, ideology, mission, and purpose. Strategic management, basically, is a principle of outcomes, perceptions, and outlooks (Miner 2002). It establishes a series of decisions and activities that lead to decisiveness, agreement, and dedication to an essential goal for the whole organisation. Management by Objectives (MbO) Theoretically, management by objective is crucial in participative management, for an employee can aid in forming individual goals for their task, establishing the indicators used in assessing performance, and obtaining regular feedback on performance (Bassett 1993). The primary appeal of an MbO system is enhanced performance. Organisations are increasingly becoming involved in MbO due to the possible substantial improvements in organizational performance for an insignificant extra cost (Olson & Terpstra 1993). There are several primary benefits of MbO according to the literature (Bassett 1993, 98-100): (1) MbO allows employees to be engaged in their own goal setting process; participation results in dedication and dedication results in improved performance; (2) MbO offers definite performance standards for employees. Precise performance standards are vital for successful performance evaluations; (3) Performance feedback is most productive; (4) There is an enhanced understanding of the goals of the larger organisation; and (5) MbO encourages strategic planning. In principle, MbO offers the chance to gain enhanced control for employees and managers. Employee motivation is enhanced because uncertainties are eliminated. Goal congruity thru more effective communication between subordinate and superior is also one of the guarantees of an MbO programme (Curtis 1994). Studies have showed that recognition of goals fulfils a very vital function in establishing the attainment of goals. Goal recognition is enlarged through the vast focus on involvement in MbO systems (Meyers et al. 2001). According to Bassett (1993), the literature demonstrated that many individuals think that continuous improvement is feasible; they establish performance goals at the outset at targets greater than previous targets, and afterwards maintain that high goals. Critical Review of Ceresia’s Study This section will primarily focus on the methods used by Ceresia to formulate his causal loop diagram. These methods are the primary contribution of Ceresia’s study to the knowledge base. Ceresia’s objective is to develop a model that demonstrates the behaviour of an organisation’s (Beta s.r.l.) Commercial Department that aims to attain its established goals through (1) goal setting, (2) MbO, and (3) training guidelines (Ceresia 2011, 8). Basically, Ceresia uses three methods for representing the company’s dynamical procedures, especially in relation to the emerging correlation between ‘product sales’, ‘employee motivation and performance’, and ‘shipment’, namely, observing nonlinear systems dynamics, employing system control limits, and adding complexity to regulate complexity (Anderson & Johnson 1997) The interesting thing about the methods of Ceresia is that the mechanism of regulating complexity applies to two control paths: (1) At times the goal is to lessen the uncertainty related to complex processes by controlling the company motivations in some way. For instance, this process is shown in the section ‘growth through traditional performance’ (Ceresia 2011, 10): In the proposed model we assume that the workers analyse the date about the state of the system (product sales) every 2 weeks, when the company sends them the products sales report. Therefore, the last issue is to set an adequate time span during which the workers need to build these beliefs once they can read the real data, which we can estimate to be of 2 weeks. So, we may assert that workers need 1 month to build their traditional performance belief. (2) At other times, the organisational goal is to determine potential business alternatives and conditions that will become accessible, and assess the chances of success for different adjusted actions. This is evident in the variable ‘balance through past success’, ‘growth through turnover’, and ‘growth through bank credit’. For example, this is shown in the below equation (Ceresia 2011, 17): This targeting strategy has been demonstrated to be an effective solution for the company that is characterised by highly uncertain profit levels. Beta s.r.l.’s product sales, as shown in the equations below, are indirectly linked to levels of supply and demand. Levels of supply, as a result, vary alongside arbitrary interest rates and investment to purchase products (Ceresia 2011, 17): Under these conditions, the company is likely to regulate their distribution and prices haphazardly. Profitability and average product sales of the company can hence be increased by setting a profitability goal that is actively an uncertain rigid point. This is shown in the below equation (Ceresia 2011, 18): However, this kind of targeting requires some methodical trial and error. Meanwhile, Ceresia fails to exhaustively present the control variables that influence the complex distribution and product sales of beta s.r.l. The only practical and definite explanations are related to the composition of work groups and management levels. Limitations of Ceresia’s Study The weaknesses of Ceresia’s study rest in its application of management by objectives. Some of the primary weaknesses of Ceresia’s MbO programme are (1) traditional performance (i.e. ‘a worker can built a belief even in a very short time, especially if the observed data is powerful, not ambiguous or doubtful, as seems to be in our case’ (Ceresia 2011, 10)) and perceived performance (i.e. ‘we can note that both perceived performance and traditional performance are psychological variables, that is, they are in the mind of workers: while the former is considered as a random (normal) function of product sales, the latter is interpreted as a fixed variable of each operational period’ (Ceresia 2011, 13)) are fundamentally fixed; (2) insubstantial importance is given to the discretion privileges of the manager; (3) majority of the variables, specifically, employee performance and product sales, are interconnected, restraining employees’ autonomy of decision and control; (4) the duration is very short, providing limited motivation for advanced planning; and (5) it takes for granted the individual goals of employees. Basically, the main problem with Ceresia’s application of MbO lies in the distribution of rewards on the basis of performance evaluations that appraise the achievement of goals. It is obvious in the way he presents the correlations between goal difficulty, goal specificity, and employee motivation and performance that the workers are likely to take on an economically rational approach toward their goals. Economic rationality states that individuals will attempt to capitalise on their actions’ expected value (Curtis 1994). The most certain way of accomplishing this within the perspective of an MbO-oriented evaluation programme, as stated by Bassett (1993), is to make sure that goals are established, and sustained, at the least possible level to exploit the odds of achieving them. The least reasonable level then becomes the recognised upper limit. Workers are disinterested in carrying out the aforementioned goals. Very difficult goals may capitalize on outcomes temporarily; however, the risk that such performance will increase the company’s expectations of their employees in the future results in the assumption that constant rewards are capitalized by preventing high performances (Miner 2002). Hence, goals employed as performance criteria, like level of product sales, have a tendency to force employees to sustain unnaturally low performance limits (Seijts, Meertens & Kok 1997). These demands are similar to those enforced by situational factors, as shown in Ceresia’s cause-and-effect relationship or causal loop diagram above, in piece-rate circumstances and as harmful to efficiency. Another obvious flaw in the above diagram is the limited comparability in the criteria of performance. For an evaluation programme to be successful and equitable, the criteria it enforces should be equivalent to the difficulty of the goal (Ford 1999). Inadequacy of comparability generates a conflict that MbO will have difficulties mitigating. Although the employees in the study are taking part in setting their own goals, the level of difficulty of these goals is normally resolved more by the comparative negotiation abilities of employee and manager than by fairness. The absence of comparability among task descriptions is also demonstrated in performance criteria for independent domains of performance in the general ranks on the evaluations. These variables are not included in the study. In addition, there is too much focus on short-term goal attainment, or evaluation is to produce information to be employed as the centre of organisational decisions and actions. When MbO is put into practice under this limitation, the company should decide to stress goals that can be attained in one year at the most (Ford 1999). This quick-fix paradigm typifies the rewards and organisational planning of Beta s.r.l. that combine performance standards and MbO. Even though the MbO system developed by Ceresia has the capability to generate large-scale developments, in the performance of Beta s.r.l.’s employees, strategy implementation is difficult and crucial. For Ceresia’s MbO programme to be effective, the management of the company has to recognise and accept the principle of the MbO programme. Merely employing strategies of MbO or formulating an MbO programme will be futile in guaranteeing goal attainment. Ultimately, according to Olson and colleagues (1993), MbO may merely offer temporary productivity or efficiency for there is no study proving the impacts of an MbO system for several years. MbO has been a basis of performance assessments and organisational structures for more than four decades now. It was launched and regarded as a solution for a number of organisational difficulties (Sengupta 2006). But in these four decades MbO remains struggling to prove its ability (Pearce & Robinson 2003). The functional problems experienced by Ceresia’s study reveal critical uncertainties as to whether or not it will endure as an appealing programme for organisations. As indirectly shown in the study of Ceresia, the difficulties experienced with MbO as an instrument of performance evaluation will not be mitigated until each and every company expectation has been established. Unless the consequences of criteria level and distribution reward in the MbO programme of Ceresia are taken into account and modified correctly, his MbO programme will keep on getting weaker. If Ceresia’s MbO programme is to be more than a quick-fix development solution for Beta s.r.l., it is crucial to acknowledge and consider the possible difficulties of employing MbO to establish criteria of performance and distribution of rewards. MbO generates a cluster of objectives and goals within which performance is assessed. Perceiving this cluster of objectives and goals as a projection of future situations aids in identifying possible difficulties in executing an MbO programme; evident difficulties are: the organisation, the employees, and the management may not have similar goals and objectives; the environment of strategy planning may influence the goals established; and, the capability of determining goals may affect their decision. As stated by Sengupta (2006), the most detrimental difficulties are the relationship between the goals set by the employees, the expectations of the organisation, and the level of doubt in achieving the goals. Conclusions Therefore, as shown in Ceresia’s study, logical reasoning determines that workers under a guaranteed situation will keep from giving any guarantees that have a significant chance of not being attained. Achieving more than the set goals could elevate goals in the future goal setting. Goal setting, management by objectives, and training policies are practical instruments for eliminating unpredictability, prejudicial perception, and management unpredictability. Nevertheless, there are large numbers of problems that cannot be easily answered when forecasts are involved. Some decision should constantly be made to identify whether possible difficulties with contradictory goals, view of the goals, temporary short-sightedness, views about the necessary goal difficulty, and goal specificity will come about. Problems that emerge in Ceresia’s model of goal dynamics will not solve themselves, but will aggravate over time. Hence, it is crucial to forecast and thwart possible difficulties, particularly in complex organisations. References Anderson, V. & Johnson, L. (1997) Systems thinking basics: from concepts to causal loops. The University of California: Pegasus Communication. Bassett, G. (1993) The Evolution and Future of High Performance Management Systems. 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