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An objective is a specific step, a milestone, which enables you to accomplish a goal. Setting objectives involves a continuous process of research and decision-making. Knowledge of yourself and your unit is a vital starting point in setting objectives.
Strategic planning takes place at the highest levels; other managers are involved with operational planning. The first step in operational planning is defining objectives – the result expected by the end of the budget (or other designated) cycle.
Setting right objectives is critical for effective performance management. Such objectives as higher profits, shareholder value, customer satisfaction may be admirable, but they don’t tell managers what to do. “They fail to specify priorities and focus. Such objectives don’t map the journey ahead – the discovery of better value and solutions for the customer.”
Objectives set out what the business is trying to achieve. Objectives can be set at two levels:
(1) Corporate level
(2) Functional level
Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book ‘The Practice of Management‘. In the 90s, Peter Drucker deemphasised the significance of this organization management method, when he said: “It’s just another tool. It is not the great cure for management inefficiency… Management by Objectives works if you know the objectives, 90% of the time you don’t.”
But Objectives still have an important part to play in any business planning as we need to define clearly what needs to be done and by when. According to Drucker managers should “avoid the activity trap”, getting so involved in their day to day activities that they forget their main purpose or objective. Instead of objectives being the domain of just a few top managers, all managers should:
- participate in the strategic planning process, in order to improve the implementability of the plan, and
- implement a range of performance systems, designed to help the organization stay on the right track.
MBO managers focus on the result, not the activity. They delegate tasks by “negotiating a contract of goals” with their subordinates without dictating a detailed roadmap for implementation. Management by Objectives (MBO) is about setting yourself objectives and then breaking these down into more specific goals or key results.
MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities.
The idea of Objectives is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals.
Some of the important features and advantages of MBO are:
- Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
- Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
- Clarity of goals – the concept of SMART goals:
- Relevant, and
- Time bound.
Goals set using the SMART principles should be clear, motivational and have an explicit linkage between organizational goals and performance targets of the employees. Their focus should be on the future rather than on past. Goals and standards are then set for the specific performance for the future with periodic reviews and feedback.
Examples of SMART objectives:
- Profitability Objectives
- To achieve a 20% return on capital employed by August 2019.
- Market Share Objectives
- To gain 25% of the market for sports shoes by September 2018
- Promotional Objectives
- To increase awareness of the dangers of AIDS in France from 12% to 25% by June 2017.
- To increase trial of X washing powder from 2% to 5% of our target group by January 2019.
- Objectives for Survival
- To survive the current double-dip recession.
- Objectives for Growth
- To increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in 2018.
- Objectives for Branding
- To make Y brand of bottled beer the preferred brand of 21-28 year old females in North America by February 2017.
How to Write Business Objectives
- Spend some time initially thinking about the organization and the unit.
- What are the problems it faces?
- What processes are in need of improvement?
- What practices need review?
- What are the developmental needs and requirements of the people?
- Think about what the person for whom the objectives are being prepared is to do.
- Here, you might be thinking about someone else or you might be thinking about yourself.
- Draft an action component.
- Think about why that action is wanted.
- What results does it produce?
- What outcomes will it have?
- What effects will be created?
- Why are those important? What is their value?
- Modify the action component, if necessary, to emphasize results instead of activity.
- Think about ways of measuring the work you have begun to specify.
- Draft some measurable standards the work must satisfy.
- How could you tell whether or not the work or results occurred?
- What is the measure of those results?
- Ratios of some kind?
- Modify the action component further, if necessary.
- Think about the time frames in which the work is to be accomplished.
- Specify some deadlines, time frames, due dates, etc.
- Rethink it all, rewrite it, rethink it again
- Ask the person who is to be accountable for meeting it what he (or she) thinks it means. Or, if you’re writing them for yourself, ask your boss to tell you what she (or he) thinks it means.
- Rewrite it again if necessary.
Format of Business Objectives
Business objectives should contain three elements.
- Observable, measurable goal. The goal should specifically state how the technical communication product is intended to generate revenue, contain expenses, or comply with regulations.
- Conditions under which the goal should be achieved. At the least, state the deadline when these business goals should be achieved, such as within six months or by the end of the first quarter 20xx.
- Also state other conditions that affect your ability to achieve a business goal.
- Level of performance.
- For goals relating to revenue or expenses, state the financial goal.
- Ideally, this should be expressed in specific financial terms, such as $2.3 million or as a percentage, such as 15.5% percent.
Benefits of Writing Objectives Properly
We write an objective, first, to help us subsequently choose from among the many alternative ways to spend our time only those that move us closer to the objective. Without a specific choice of direction, actions tend to move randomly in first one direction and then another, with little progress in any direction. The direction can be set orally or implicitly, but written objectives are less subject to misunderstanding and memory drift. With the choice, the manager has the opportunity to focus organizational resources to achieve something that would not happen accidentally. The objective is a beacon.
Second, written objectives help us to communicate clearly and durably to another person what she can expect from us. An employer or customer may ask for written objectives so that she can evaluate whether the results are likely to meet her needs and so that she can make plans based on them.
The third benefit arises simply from the processes of writing and choosing. Identifying possibilities explicitly enables us to clarify them, and to assess their feasibility and their relative value to us before committing to the set. For example:
- “The RF handhelds might become a second market for our high-density tunable capacitors.”
- “Manufacturing might increase yield to 20 percent by the end of the quarter.”
- “We can hire an additional half-dozen process engineers in the next six weeks.”
An objective won’t be achieved if the resources of talent, time, material, and equipment are not available. Even if the members of a set of objectives are individually feasible, they may not be feasible in combination. Putting them in writing helps uncover conflicts within the set.
How To Express Objectives
1. Observer independence
If a stated objective is to guide our choices among many alternative actions, then it must be written so that we interpret it in essentially the same way every day without asking someone else. That means the objective serves us better if it is written to be observer-independent.
Why not subjectively measurable if it is our own objective?
- If our goal is only subjectively measurable, we may measure our progress differently every day, and we lose consistency of direction, the beacon value.
- “High software quality” may have a different answer for each developer, each product release and each customer, but specific target values for the incidence of faults at different severity levels and specified development stages support systematic, long-term improvement.
Subjectivity is even more harmful when the objective is a commitment to someone else.
- We might promise to deliver a report “soon,” when that means “within a week” to us and “two hours” to the waiting “customer.”
- What about, “High customer satisfaction as measured by [survey]?” Isn’t this objectively measurable?
- It is, in that a number can be assigned to it, although it measures a subjective response that may change if the customer, or the sampling method, or the customer’s tastes change.
- Such an objective doesn’t provide the “beacon” benefit. There is no way, except by asking the customer, to assess whether a particular action contributes to it or not. Sometimes even that is ineffective, because the customer may not have the technical knowledge to understand whether the action will contribute to his own satisfaction.
- “Customer satisfaction” also lacks the specificity needed to estimate the kind and extent of effort required. That is, it does not provide the third benefit of balancing value with cost.
Objectives must be written so that the person doing the work can readily and frequently measure his or her progress. In some situations, that may be done implicitly.
Written objectives, no matter how well expressed, are only approximations of some real human intention.
- We need to measure our progress toward an objective, but the measurement itself may not be a sufficiently clear statement of the intention.
- If we get so concerned with “objective measurability” that the link to the human intention is blurred, we may lose the essential “beacon” role of an objective.
An intention, “To write software in Java,” may not be well-expressed by the clearly measurable, “To pass such and such programming course,” unless that course is tailored to the real intention, which might be to develop certain kinds of software efficiently and reliably.
Defining the nature and level of competence, “To develop the skill needed to solve any of [representative list of programming problems] in Java with no defects within two hours each,” provides higher value.
2. Achievable and credible
Some organizations make a practice of setting what they call “Stretch” objectives.
- By this they mean that no team can achieve this result with the time and resources provided, but they hope that by making it impossible, the employees will try harder and achieve more than with realistic objectives.
In fact, comparisons often indicate the opposite.
- When teams set an objective they know they can achieve, they achieve it sooner than teams working to imposed “stretch” objectives.
Why? Perhaps this happens because people really do know when an objective is impossible. When an individual knows he will fail no matter how hard he works or what actions he chooses, the objective loses most of its value. Any action will fail, so let’s choose comfortable actions.
When an organization regularly sets unachievable objectives, it loses the third benefit, the opportunity to balance cost with return.
- By not developing the ability to predict actual completion or actual resources to be consumed, the organization will underestimate cost and overestimate sales and return.
- It loses the ability to make wise investment choices.
In an industry like the pharmaceutical industry, chronic misjudgement of the long development time leads to severe errors in predicting return on investment.
In more rapidly moving industries, like electronics, failure to predict delivery dates leads to resources wasted pursuing market windows that could never have been met.
Within organizations, executives sometimes encounter managers who want to set very low objectives so that they can be certain of exceeding expectations.
- As a result, the executive has imprecise knowledge of what to expect, and he or she cannot depend on that employee to meet a major challenge.
- If the internal market works, resources would flow away from such a manager to ones who will promise more.
- It often does exactly that, sometimes flowing to managers who promise much more than they can deliver.
The executive also cannot rely on managers who make exaggerated promises, and the results will usually be less than with realistic objectives.
- If the internal market functions, resources will flow away from managers who regularly make big misses.
- Objectives that cannot be achieved, or that can be achieved too easily, fail the customer expectations test and the resource allocation test.
- Objectives that are too easy also fail are also unsatisfactory.
Achievability can be missing, also, if the objective depends on something outside the performer’s control, in which case it also fails as a beacon.
- The employee cannot choose actions to support the objective because the best choice depends on unknown actions by others.
A competitive objective, “To win the sales contest,” depends in part on what others do, but such objectives may not create helpless interdependence because the performer’s personal responsibility is clear.
The critical needs are for the individual’s role to be clear and the objective to be credible. A team, for example, may have a collective objective that is highly interdependent and still guides team members’ choices of action. Credibility and clarity, not complete control, are the keys.
3. Deliverable, achievement or activity?
Heated arguments occasionally erupt over the importance of writing objectives to describe an outcome, rather than the type of actions to obtain the outcome.
- The underlying intent expressed by, “To do statistically designed experiments on that production line,” for example, might better be captured by a description of the desired end-state, “Consistent productivity above 90 percent on that production line.”
- Expressing it in the latter form might suggest additional actions to add statistical process control after performing the designed experiments and to train operators to interpret run-time statistics.
- This rule tries to leave the objective in place while allowing flexibility about actions to reach it.
- It is that flexibility that has value, not the syntax of the expression.
Pursuit of “outcome-framed” objectives sometimes leads to dogmatic elimination of action words.
- The objective that President Kennedy pledged, “To send a man to the moon and bring him back safely this decade,” however, describes a performance, a kind of action, rather than a change in the state of the universe.
- It had wonderfully high value as a communication and agreement vehicle between the Executive branch and Congress, and between NASA and industry.
- This expression leaves complete flexibility in the choice of the enormous number of actions needed to achieve it.
- The significance of the achievement, though, is not related to a tangible outcome or work product, and its value and its flexibility would likely be lost if it were, instead, expressed in terms of tangible changes in the world.
Knowledge achievements, also, are often not well represented by a change in the state because of their intangibility.
- “To discover,” “to learn,” “to determine,” “to teach,” signify achievements of ubiquitous value in a knowledge-driven economy.
- “Map the human genome,” “determine the incidence of defects in delivered software before and after the process changes,” and “earn an MBA,” are specific examples.
- Success can be determined objectively, but the result is the knowledge or skills, not a change in tangible state.
- Rewriting objectives in terms of a tangible result may reduce the clarity that provides the value.
Re-expressing these objectives without verbs does not add a discernable benefit, any more than President Kennedy’s memorable “send a man to the moon” objective would be improved by replacing the verbs with a description of the outcome.
- The “outcome” was that Neil Armstrong was back on Earth, where he started, and that massive space complexes had been created in Houston and Cape Canaveral, and a handful of moon rocks were distributed to labs around the world.
- None of these outcomes represents the essence of the accomplishment in the way the President’s verbs do.
A competitive objective, “To win the contract,” represents at its core a performance more than a tangible outcome.
- Although the proposal team does consider how to do the future work, its principal focus is on winning, and its objective is clearest when stated as, “To win [the contract].”
Sometimes, of course, the real desire is the end-state, as in the case of the aspiring “executive” who dreams of the supposed prestige, power and affluence but doesn’t really like the managing part, including dealing with difficult people problems. Ironically, statements in terms of end states, rather than of activities, encourage self-deception in this example.
4. Be specific, not generic
Generic outcomes of “customer satisfaction,” “timely completion,” and “morale,” may be important intentions, but because these generic virtues could apply to many other, very different activities, they seldom are sufficient for choosing among daily actions to achieve the desired intention.
- This has nothing to do with measurability.
- Measuring a generic virtue still doesn’t make it a specific virtue that can help us choose between different actions.
- There do exist, for example, psychological instruments to measure “customer satisfaction,” but the tests have nothing that guides us in making the customer more satisfied.
Objectives serve us better if they are specific about the kinds of results (which may be verbs, not nouns) that will be accomplished.
- President Kennedy, for example, might have promised, as politicians often do, “I will restore pride in being American by the end of the decade, and I will measure this with surveys every year.”
- The achievement was a source of great national pride, but defining the specific achievement inspired a nation.
Perhaps even more seriously, generic objectives fail the communication test.
- Our employer or customer cannot determine from the generic statement what we will provide or make plans based on it.
Generic objectives also fail to meet the resource allocation need.
- If the objective could equally well apply to a quite different activity, then it provides no information to evaluate whether we have the skills, time, knowledge, or equipment with which to achieve it.
Whether a certain expression is specific can also be a source of contention.
- When the expression could apply equally well to a feasibility study or a coffee shop, it surely is not specific; consequently, one indication of specificity is: could the objective apply equally well to a quite different kind of activity?
Other occasionally useful tests for specificity:
- Can the customer understand what he or she will receive well enough to assess its value/importance to him or her?
- Will the customer understand it the same way the writer does?
- Would two or more independent experts agree approximately on the cost, time and difficulty of achieving the given objective?
5. Specifying dates
To what extent must an objective be date (time)-specific to be useful?
- Because it’s so easy to apply, the date-specific criterion is almost always invoked in evaluating an objective.
Let’s consider the effects of a specified date in realizing the three suggested benefits.
First, a specified date increases the beacon value in that completion in six months will exclude actions that might be possible in three years.
- It may make it more or less vivid, depending on the date.
- An objective is most effective if it requires sustained effort, probably with many choices of specific actions, but not so far away that it doesn’t seem real.
- If it is too near, the choices are so limited that the increase in achievement due to writing the objective is likely to be small.
- If it is too far, the effect of current actions may be hard to see.
Practically speaking, individuals seem to need related objectives on multiple time scales, such as weekly and monthly.
- An objective to write a book this year doesn’t influence today’s activities unless it is supported by an objective to complete a chapter this week.
Dates contribute even more to the communication and agreement value of an objective.
- A pharmaceutical company preparing to manufacture a new kind of longitudinally compressed tablet really needs to know when the unique new manufacturing press will be able to produce at the needed rate and quality.
- The date influences the value, with early delivery in business commonly worth more than late.
- Consistently timely delivery has a value of its own.
- A manufacturer that can rely on a supplier to provide the right number of components at the right time invests less in inventory, and that has financial value.
Dates on objectives influence their achievability, particularly when multiple objectives are considered simultaneously.
- For both an organization and an individual, multiple objectives might be individually achievable but not when considered together.
- A young company may not be able to develop several products concurrently, even though it could develop any of them individually.
- A software project manager may be able to deliver the specified functionality or reduce the defects within the schedule, but not both.
- Clarifying such choices is an important benefit of specific, written, time-stamped objectives. We may achieve not just a little less by setting our objectives too high, but we may fail at several or all of our objectives.
1. MANAGERS AT WORK. William J. Pardee, WRITING USEFUL TECHNICAL/BUSINESS OBJECTIVES