CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY 

Management needs a lot of tools to be able to administer effectively in the day to day running of the business. Management by objectives (MBO) is one of such tools.

It is a way of getting improved results in managerial method whereby the superior and the subordinate managers in an organization identifies major areas of responsibility, in which they will work.

Set some standards for good or bad performance and the measurement of results against those standards (Derek, 2005: 156). 

Management by objectives is also called managing by objectives. However, there have been certain individuals who have long placed emphasis on management by objectives and by so doing have management by objectives refers to a structured management technique of setting goals, for any organizational unit. 

Management by objectives gives the employee the opportunity to participate in decision making, the limits within these limits.

It assumes that the employees have been properly selected and trained, and is informed that the employee will be responsible for achieving the desired results in the organization.  Organizations are ubiquitous.

According to Mullins (2005: 256), organizations are designed by people to overcome individual limitations and achieve individually. 

Hence, organization becomes a means of survival for the people and exerts an important daily influence on the life of the people and the way they live.

The major decider for the survival of any organization is the presence of capable men and women with the right technique to combine the organization resources (Man, Machine, materials and Money) to achieve organization goals. 

It is appropriate to note that management of companies in Cameroon lack sufficient techniques to make them manage effectively. 

Some of these tools are not used and when used, they are not properly utilized.

Management by objective is not only a managerial strategy to achieve a well-coordinated managerial goals, but it is also a popular management technique that cut across for pervade all human activities namely business areas, educational, government, health care and non-profit organization. 

Most of the techniques, system, tools of management are hardly understood resulting in losses and damages to the organization.

Besides it is the wrong use of techniques and unwillingness of top management to utilize the right tool to solve the management problems. 

It is on these bases that the researcher intends to find out the effect of management by objective on employees’ productivity in the financial sector of Buea, Cameroon. 

1.2 STATEMENT OF THE PROBLEM

The financial services sector is perhaps the most significant economic sector in modern societies.

The financial sector mobilizes savings and allocates credit across space and time.

It enables firms and households to cope with economic uncertainties by hedging, pooling, sharing, and pricing risks, thereby facilitating the flow of funds from the ultimate lenders to the ultimate borrowers, improving both the quantity and quality of real investments, and thereby increasing income per capita and raising our standards of living.

Financial institutions in Cameroon face today a dynamic, fast-paced, competitive environment at a global scale.

With the socio-political crisis spanning for years now in the country has created a number of challenges to further worsen the state of the financial institutions in Cameroon. 

Failure to buy and sell money which is one of the primary function of financial institutions, the sector is shrinking into a financial wilderness with no ability to recover loans given out to customers. 

Managers of many financial institutions who have never faced a crisis of the scale before are now experience managerial problems and some serious financial woes. 

This has led many employees to lose their job and closure of some financial institution.

CréditMutuel a 19-year-old microfinance is one other financial institution that has been close down. City Trust Credit fund, Cedacci are all financial institutions in Cameroon that have all suffered the same fate due to the disbursing financial environment created a competitive financial market at a global scale and the socio-political crisis in the country.

The collapse of these financial institutions could be link to mismanagement of their managers that is, failure to recognise and implement the right management technique and style for better organisational and employee’s productivity amid crisis time.

In response, management of financial institution in Cameroon are forced to adapt in order to survive.

Managers who want their employees to perform in high level, must set high standards of performance.

The employees must know precisely what is expected from them and what makes a high performance.

Under intense pressures to perform well or to increase productivity, financial institutions are forced to take a careful look into the performance of their employees and the role they are called upon to play in the Cameroon economy of the 21st century faced with a financial meltdown.

In order to improve employees’ productivity and overall organisational performance; managers are looking for various management techniques to better increase overall organisational performance by increasing employees’ productivity.

One of such technique available to them is Management by Objective (MBO).

For the first time “Management by Objectives” is created and named by Drucker (1954) (Pg 96 1-s2) as a contemporary management creator in his book “The Practice of Management”.

The researcher therefore intends to ascertain the effect of management by objective on the productivity or performance of employees in the financial sector of Cameroon precisely Buea with the intend to bring to light a better way for managers to manage their organisations so as to increase employees’ performance which is central for their organisation gaining a niche the financial market and customer’s confidence.

1.3 RESEARCH QUESTION

Research questions are questions posed by the researcher, answer to which would lead to the solution of the problem. The research questions are as follows

1. To what extend does managers and employees participation in decision making of the organisation affects employees’ performances.
2. To find out the impact of participation of managers and employees in goals setting in the organisation on employees’ performance.

1.4 OBJECTIVE OF THE STUDY

The broad objective of the study is to find out the effect of management by objectives employee’s productivity in an organisation.   The specific objectives of the study include:

1. To determine the extent to which employees’ performances are affected when both management and employees are jointly involved in decision making in the organization.
2. To examine the impactof participation of both managers and employees on employees’ performancein goals setting in the organization.

1.5 RESEARCH HYPOTHESES

The following hypothesis will guide the study:

H_o      The involvement of both managers and employees in decision making in the organization does not affect employees’ productivity.

H₁      The involvement of both managers and employees in decision making in the organization does not affect employees’ productivity.

H_o      Managers and employee’s participation in the setting of goals to be achieved in the organization do not affect employee’s performance. 

H₁      Managers and employees’ participation in the setting of goals to be achieved in the organization affect employees’ performance.

1.6 SIGNIFICANCE OF THE STUDY

1.6.1 TO ORGANIZATIONS

The impact of Banks and MFIs in the Cameroonian economy cannot be over emphases as the effect of their success or failure can be immediately felt by the economy.

Such was the case in 2010, when one of the leading financial institution COFINEST collapse leaving investors and customers with no option but to withdrew their money from financial institutions because of no trust.  

These led to managements of financial institution to fines ways to especially improve on the performance of their employees so as to regain trust in the market. 

MBO is one technique available for managers to increase on their employees’ productivity thus, improving the overall organizational performance to regain the trust of their customer.

This study will therefore will significant to financial institutions in Buea as they could learn how to effectively manage their workforce so as to increase productivity using MBO as a managing technique.