Setting Business Objectives-Road to Success
A business without clear objectives has no target but to fail.
Can you reach a destination without knowing where you want to go? Of course not! You will wander the whole city wasting your time and money but never reach your desired place.
Business objectives are just like the final destination of a long journey. The reason why you are carrying out the whole process of organizing resources and providing a product to the customers.
Business Objectives are the short-term and long-term plan of action that helps the business to achieve its main goal. Objectives are divided into departmental objectives and further split into employees’ and teams’ objectives.
Difference between Goals and Objectives.
Before moving forward with setting objectives, understanding the difference between business goals and business objectives is necessary because it becomes confusing for many people.
Business Goal is the main target that the business wants to achieve. Goals are wide and open, without any specific plan of action. Goals are difficult to measure, however, setting goals is an integral part of business planning as they provide a direction in which the management and employees have to work. Setting goals helps in increasing employee engagement and motivation.
Business Objectives are the specific targets that are established based on goals. Objectives are the measurable tasks and specific actions that help a business achieve its goal. Objectives can be time-based and used as a way to evaluate the performance of the business.
Let’s understand the difference with the help of an example.
Company X has a goal of increasing its market share. Now, you can see there are no specific details about how the business has to achieve that goal. Here comes the objectives;
- Increasing sales by 10% in one year
- Reducing costs by 5% by increasing the productivity of the employees through training programs
- Installing an advanced version of production plants by the end of November.
Here you can see objectives provide a precise procedure of achieving the goal of increasing market share.
“In simple words, Goals are the outcome and objectives are the process which leads to the outcome”
Business goals and objectives must be flawlessly integrated otherwise they will yield no positive outcome and demotivate the employees. The selection of goals and objectives should be supremely meticulous and impeccable.
3 Important factors to consider before setting objectives.
Objectives enable businesses to perform at their optimum level however, objectives can never be achievable if they are set without considering the environment, circumstances, and resources of the business. Here are the three important factors that should be considered by the businesses before setting their objectives.
Stage of the business (Business life cycle)
The stage at which the business is operating will determine the nature of its objectives. If the business is new in the market then the objectives will be focused on ensuring successful survival in the market. In the beginning, the objectives would not be to increase sales or capture a certain percentage of the market. They would be more focused on informing the customers about the business and providing the best environment to the employees to prevent higher labor turnover.
After the successful survival, the business would grow and at this point, the objectives would entirely change. Here businesses would want their employees to increase productivity. The business will have the objectives of increasing production and volume of sales by a particular percentage.
Hereafter, when the business would be in the maturity phase the objectives will be set to maintain high performance. Launching new products or updating the previous ones would be the key objectives at this stage. Management might have the objective of finding new ways of expansion within a specific time limit. Similarly, the marketing department might be told to carry out market research to find a new idea for a new product.
Lastly, the declining phase of a business is crucial, and setting good objectives according to the situation can re-establish the business identity in the market. Here, a business will look to identify where it is lacking and why. There might be a complete shift in technology or trends which have caused the decline. Therefore, the objectives will be more likely inclined towards finding a new way forward for the business. The business might have an objective of successfully switching to newer technology and training employees according to the modern production techniques.
Mindset of employees
The mindset of employees is one of the most significant factors which should be considered by the top management before setting objectives. The motivated and self-driven workforce will want to accomplish challenging objectives however, demotivated and low morale workforce would not be stimulated by difficult objectives. Workers with a lower level of stimulation and desire for achievement will be more settled with small and easy targets.
Consequently, the management would have to conscientiously assign objectives to the workforce according to their potential. If the worker with a low level of potential is delegated to perform difficult tasks and the workers with a higher level of potential have easy targets then the overall motivation level of the employees will drastically decrease.
Objectives should not contradict
You will be thinking about how Business objectives can contradict? Yes, it can and might cause huge trouble for the business.
Individual objectives, team objectives, departmental objectives, and managerial objectives should complement each other. The objective of reducing expenditure for finance department and the objective of launching massive market research for the marketing department might never be achieved together.
Similarly, the individual target of increasing productivity and at the same time reducing costs on employee safety, training, and facility will devastate the business plan and nothing will be achieved.
Therefore, business objectives should be diligently assigned to departments, teams, and employees in such a way that everyone contributes to the objectives of each other and the business’s main goal.
Six most important characteristics of business objectives
Achievable
Objectives must be set considering the capabilities and resources of the business. Objectives that are set beyond the capacity of resources can demotivate employees and businesses would never be able to analyze the performances of employees effectively. When employees know a certain objective is unachievable then they will not put their best efforts to get to the target, it will restrain their willingness to work hard.
Understandable
Objectives should bring complete clarity in the minds of managers and employees about what they have to achieve exactly. Objectives should be communicated thoroughly to the employees and all the concerns should be eradicated as soon as possible. Targets should not be too complex to comprehend otherwise, employees would never be able to work according to what is needed from them.
Measurable
Quantified objectives will be incredibly effective. It will make the tracking of performance feasible as the workers can easily compare what they have done and what they should have done. A measurable objective would look like this.
“Production team will finish 50 products daily working six hours a day ”
The production team can evaluate their performance at the end of each working day by checking whether they produced 50 products or not. These types of objectives are lucid and easy to evaluate.
Relevant to the business’s mission and goal
Objectives should be set considering that they will aid in the completion of the main goal of the business. If the business has the main goal of increasing revenue then the objective would look like this.
“Marketing department should increase the demand for the product by 10 percent in the next three months through advertisement campaigns”.
It will leave no margin for any confusion in the business and all the workers and managers will be working towards the completion of the business’s main goal.
Changeable
Flexibility is a crucial aspect of the objectives. There are innumerable factors that are affecting the business consequently, the business environment can unanticipatedly shift at any time. It becomes so important for businesses to quickly adapt to the changing circumstances. Therefore, objectives must not be invariable, they should remain elastic every time so that the business could effectively adapt to the changing conditions.
Multiple Objectives
The business has more than one objective at the same time and the business cannot afford to allocate all its resources in completion of single objective. Therefore, the business will have to work on different objectives at the same time and allocate its resources according to the degree of importance an objective have. All objectives are not equally important. The business should spend a large proportion of its resources, time, and money on the most important objective.
Conclusion
The objectives created after considering all the important factors discussed above will be motivating for the employees and productive for the businesses. It is worthwhile to set the business objectives according to these parameters otherwise the business would find itself in a chaotic situation with demotivated workforce and confused management.
