Setting objectives. (Checklist 052).

This checklist is designed for those managers who participate in setting corporate objectives and who then have to interpret and apply such objectives to their own functional or departmental operation, including setting objectives with and for the people under their responsibility.

Management Standards

This checklist has relevance to the MSC National Occupational Standards for Management: Key Roles A, C and G--Manage Activities, Manage People and Manage Projects.

Definition

An objective is an end towards which effort is directed and on which resources are focused. An objective should be specific (so that it is clear to those who are to work towards it), measurable (so that people will know when they have got there or not), and usually tackled within certain time and cost constraints.

Setting corporate objectives means clarifying the strategic and policy requirements of the organisation and setting and agreeing complementary operational objectives in relation to them. It is an integrated process which links corporate planning to business operations. As objectives are "rolled down" the organisation, they are usually made more specific. Every department, every team and every individual can and should have objectives.

Much ink has been spilled over the differences between aims, objectives, goals and targets. There are no real differences except those of scale and time; some may be long-term and high-level, others short-term and low-level. The key is to use the terms that you--and the people you are dealing with--understand. Throughout this checklist we use the term objective.

Requirements of objectives

In order to have a chance of success, objectives need to:

* identify a purpose and an area of responsibility such as improving performance or service

* be specific and measurable

* be achievable but challenging--within given time and resources

* be written down--for both clarification and referral

* be subjected to a process of discussion, compromise and agreement between those setting the objective and those who are to tackle it

* be agreed with the performer--this is not always possible but highly desirable because ownership leads to commitment.

Advantages of integrated objective-setting

These include:

* a better understanding of corporate planning at operational level

* a clear sense of direction

* a better understanding of accountability throughout the organisation

* greater understanding in setting priorities

* improved communication and motivation.

Managing without objectives

By failing to manage by objectives you risk:

* not knowing where you are going

* never knowing what you have achieved

* not knowing whether what you are doing is in tune with longer-term plans or higher-level objectives

* confusion and demoralisation.

Action Checklist

1. Develop and communicate the organisation's Mission/Vision statements

People often confuse a Mission with a Vision statement. It is quite possible--even desirable--to have objectives relating to both.

The Mission statement lays down the purpose for which the organisation exists and provides the umbrella statement for the organisation's "standing" objectives.

The Vision statement is the expression of an ultimate aim to which the organisation aspires and encapsulates the "change" objectives.

For example:

* Our purpose is to make top quality cars. (Mission)

* Our aim is to become the largest-selling car manufacturer in the world by the year 2000. (Vision)

Such statements should be clearly communicated to and reinforced with all personnel, not just senior management. Writing a mission statement is the subject of another checklist.

2. Identify corporate objectives from the Mission/Vision statement

It is important to link corporate objectives to Mission and Vision statements. This is usually the purpose of the strategic plan and the function of senior management, although this process is being increasingly cascaded throughout the organisation in empowered organisations.

The strategic plan is formulated by an assessment of:

* what the organisation intends to accomplish and where it intends to be in terms of its market position vis-a-vis the competition

* being in the right markets at the right time with the right product(s) and service(s)

* ensuring a sustainable and profitable growth.

Writing a strategic plan is the subject of another checklist.

Much will depend on the values of the organisation; values may well be challenged and re-assessed when setting high-level objectives, and vice versa--the adoption of new objectives may well lead to a reappraisal of values. The organisation's values will influence how it tackles its objectives in terms of the importance it attaches to the environment, the welfare of its staff and job security, and its public image in general.

For many organisations however, objective-setting still remains a largely top-down exercise. In such cases, objectives should be set out in a plan and communicated to all staff.

3. Agree the objectives for senior managers

This is a process of splitting the corporate objectives by function, business unit, or by product or service. It will be necessary to rank the objectives in terms of priority, draw up time-frames for achieving them and identify the resources required to tackle them: this precedes the operational and financial (budgeting) planning of that function or business unit.

4. Cascade to departments and individuals

Again, some organisations make this a two-way process so that communication on key decisions is bottom-up as well as top-down. Don't wait forever for top-down objectives; establish your own at departmental level which reflect the organisation's mission, and are in harmony with what your customers need and what your resources are geared to deliver.

5. Agree objectives with those who are to tackle them

Setting objectives should not happen by dictat or decree; rather it should be by proposing and seeking ideas, by discussion, negotiation, compromise and agreement. That is an ideal situation; the minimum that both objective-setter and objective-performer should require from a one-to-one meeting is an answer to each of Kipling's six honest serving-men: who, what, where, when, why and how?

6. Identify appropriate performance measures

Performance measures should allow progress against objectives to be measured.

Performance measures (which can be employed on a team or individual basis) should indicate what is expected and how well people are doing towards their objectives. Performance measures should be clear, concise, easy to collect and interpret, and relevant in that they should provide information which tells you and your organisation how well you are performing.

Measures are usually related to:

* efficiency (how quickly you deliver)

* effectiveness (how good/accurate/relevant was the service delivery for the customer)

* cost-efficiency

* cost-effectiveness.

They would usually cover information relating to:

* finance--costs as well as income

* customers--new and lost

* markets--penetration thereof

* resources--consumed, saved or required anew

* processes--how efficiently and effectively, tasks and activities are accomplished.

Performance measures should also be agreed between job holder and manager and should be reviewed regularly (especially if there are significant changes to the work content). They are of benefit to the organisation or the individual in terms of personal development. Managers may well need time to help staff understand and interpret objectives for their department or their part of the organisation, even to help them work out their own contribution to corporate objectives. (Performance measures are the subject of a further checklist).

7. Set up procedures for reviewing performance

This--with section 6 above--is the principal content of the performance appraisal. It is in the appraisal discussion that past performance is reviewed, learning opportunities are identified and new or revised objectives are set for the next period.

Dos and don'ts in objective setting

Do

* Set priorities by ranking that which "must" be done and that which "we would like to have done".

* Write objective statements which are SMART--Specific, Measurable, Action-oriented, Realistic, Time (and resource) constrained.

Don't

* Leave out those who are responsible for achieving the goal from the discussion and agreement process necessary to setting it.

* Neglect to re-start the cycle by reviewing and revising objectives.

Related checklists

* Conducting a performance appraisal

* Making rational decisions

* Performing a SWOT analysis

* Performance management

* Producing a corporate mission

* Strategic planning

* Testing for personal effectiveness

* Writing a business plan

Further reading

Thought starters

* Are you clear on the "fit" between what you do and where the organisation is going?

* Do your people have clear targets which are live issues in the work-place?

* Are targets measured for performance against financial, customer and personal development indicators?

Further information

Checklists are available in the following formats:

* Individual checklists.

* A complete set of 195 on CD-ROM or in hard copy.

Print Get the Mag Weekly Updates