Description
SYBMS STM NOTES - Vision, Mission, Business, Goals and Objectives
• Vision • Mission • Business • Goals • Objectives VISION: Aspirations, expressed as strategic intent, should lead to an end; otherwise they would just be castles in the air. That end is the vision of an organization or an individual. It is what the firm or a person would ultimately like to become. For instance, some of you, say in 10 years, or may be even earlier, would like to become general managers managing an SBU in a large, diversified multinational corporation. Or some others among you would like to believe that you will be an entrepreneur in 10-15 years owning your own company dealing with IT services and employing cutting-edge technology to serve a global clientele. A firm thinks like that too. A vision is more dreamt of than it is articulated. This is the reason why it is difficult to say what vision an organization has. Sometimes it is not even evident to the entrepreneur who usually thinks of the vision. By its nature, it could be as hazy and vague as a dream that one experienced the previous night and is not able to recall perfectly in broad daylight. Yet it is a powerful motivator to action. And it is from the actions that a vision could often be derived). Walt Disney probably wanted to make people happy. Jamshetji Tata dreamt of a self-reliant India in steel making. Narayan Murthy wanted to demonstrate that running a business is legally and ethically possible in India through entrepreneurship. All these visionaries had a vision that might have gradually become clear as they took actions to materialize their dreams. Vision can be defined in several ways. It can be a “description of something (an organization, a corporate culture, a business, a technology, an activity) in future.” It can also be a mental perception of the kind of environment an individual, or an organization aspires to create within a broad time horizon and the underlying conditions for the actualization of this perception.”
What a Vision should and should not be: A Vision should be: An organizational charter of core values and principles The ultimate source of our priorities, plans and goals A puller (not pusher) in the future. A determination of what makes us unique A Vision should not be: A “High” concept’ statement, motto or literature or an advertising slogan. A history of our proud past. Passionless
MISSION: While the essence of vision is a forward-looking view of what an organization wishes to become, mission is what an organization is and why it exists. Several years ago Peter F Drucker raised important philosophical questions related to business: What is our business? What will it be? and what should it be? These three questions, though simply worded, are in reality the most fundamental questions that any organization can put to itself. The answers are based on the analysis of the underlying needs of the society that any organization serves to fulfill. The satisfaction of that need is, then, the business of the organization. Understanding Mission Organizations relate their existence to satisfying a particular need of the society. They do this in terms of their mission. Mission is a statement, which defines the role that an organization plays in a society. It refers to the particular needs of that society, for instance, its information needs. A book publisher and a magazine editor are both engaged in satisfying the information needs of society but they do it through different means. The book publisher may aim at producing excellent reading material while a magazine editor may strive to present news analysis in a
balanced and unbiased manner. Both have different objectives but an identical mission. Definition: According to Thompson “essential purpose of the organization, concerning particularly why it is in existence, the nature of the business(es) it is in and the customers it seeks to serve and satisfy.” Characteristics of a Mission Statement Organizations legitimize themselves by performing some function that is valued by the society. A mission statement defines the basic reason for the existence of the organization. Such a statement reflects the corporate philosophy, identity, character and image of an organization. It may be defined explicitly or could be deduced from the management’s actions, decisions or the chief executive’s press statements. When explicitly defined, it provides enlightenment to the insiders and outsiders of what the organization stands for. In order to be effective, a mission statement should posses the following seven characteristics. 1. It should be feasible A mission should always aim high but it should not be an impossible statement. It should be realistic and achievable – its followers must find it to be credible. But feasibility depends on the resources available to work towards a mission. In the sixties, the U.S. National Aeronautics and Space Administration (NASA) has a – mission to land on the moon. It was a feasible mission that was ultimately realized. It should be precise A mission statement should not be so narrow to restrict the organization’s activities nor should it be too broad to make itself meaningless. ‘Manufacturing bicycles’ is a narrow mission since it severely limits the organization’s activities while ‘mobility business’ is too broad a term as it does not define the reasonable contour within which an organization could operate. It should be clear A mission should be clear enough to lead to action. It should not be a high-sounding set of platitudes meant for publicity purposes. Many organizations to adopt such statements but probably they do so for emphasizing their identity and character. For example, Asian Paints stresses ‘leadership through excellence’. India Today sees itself as ‘the complete news magazine’. The Administrative Staff College of India considers itself as ‘the college for practicing managers’ and Bajaj
2.
3.
Auto believes in providing ‘value for money, for years’. To be useful, a mission statement should be clear enough to lead to action. The ITC’s stated corporate philosophy of aligning its organizational activities with national priorities helps it in choosing areas for diversification like hotel, paper and agro-industry. 4. It should be motivating A mission statement should be motivating for members of the organization and of the society, and they should fee it worthwhile working for such an organization or being its customers. A bank which lays great emphasis on customer service is likely to motivate its employees to serve its customers well and to attract clients. Customer service, therefore, is an important purpose for a banking institution. It should be distinctive A mission statement which is indiscriminate is likely to have little impact. If all scooter manufacturers defined their mission in a similar fashion, there would not be much of a difference among them. But if one defines it as providing scooters that would provide value for money, for years it creates an important distinction in the public mind. It should indicate how objectives are to be accomplished Besides indicating the broad strategies to be adopted a mission statement should also provide clues regarding the manner in which the objectives are to be accomplished. The Centre for Development of Telematics (C-DOT) had set its first three year mission (1984-87) as developing, designing and Engineering a large digital exchange suitable for Indian conditions, and its second mission (1987-90) as developing the technologies prerequisites for an integrated system digital network of the future. 3 These mission statements specifically deal with objectives to be achieved within a given time period.
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In day-to-day decision-making managers are not concerned about survival and, therefore, do not actively think about their organization’s mission for society. Thus, a mission statement becomes an ideology that is occasionally used for legitimization. But for strategic decision-making, it is important to consider the mission in each phase of the strategic management process. How are Mission Statements Formulated? Most organizations derive their mission statements from a particular set of tasks they are called upon to perform in the light of national priorities. Most public
sector organizations, set up in India during the fifties and sixties, owe their existence to the vision of Jawaharlal Nehru, the first prime minister, who enunciated and tirelessly worked for the national aim of building a strong and selfreliant India by laying the foundations of many of our basic infrastructural industries. Mission statements, whether derived from national priorities or not, could be formulated either formally or informally. Usually, entrepreneurs lay down the corporate philosophy, which the organization follows in its strategic and operational activities. Such a philosophy may not be consciously and formally stated but may gradually evolve due to the entrepreneur’s actions. Generally an entrepreneur has a perception of the type of organization that he wants his company to be. Mission statements could be formulated on the basis of the organizational purpose that the entrepreneur decides in the initial stages of an organization’s growth. Major strategists could also contribute to the development of a mission statement. They do this informally by lending a hand in the creation of a particular corporate identity or formally through discussions and the writing down of a mission statement. Chief executives play a major role in formulating a mission statement both formally and informally. They may set up executive committees to formally discuss and decide on a mission statement or enunciate a corporate philosophy to be followed for strategic management. Consultants may also be called upon to make an in-depth analysis of the organization to suggest an appropriate mission statement. B.N. Sinha, managing director of the Scientific Instrument Company Ltd, who took the help of a management consultant in deciding his company’s mission and purpose describes the process of formulating a mission: “… as a starting point, we (i.e. the company managers, consultant and the chief executive) spent quite a bit of time on identifying out ‘mission’ of business --- After a lot of discussion, we identified our mission as follows: to be a vibrant organization set on contributing to the scientific and technical progress of the county; keeping its customers and employees satisfied in terms of service and work reward; giving adequate return on investment to the sharesholders.” A mission statement, once formulated, should serve the organization for many years. But a mission may become unclear as the organization grows and adds new products, markets and technologies to its activities. Then the mission has to be reconsidered and re-examined to either change or discard it and evolve a fresh statement of organizational mission and purpose. A helpful approach to defining as well as refining a mission statement is to define the business itself. Business:
Business Definition See the Strategic Intent Table which includes 4 points Vision, Mission, Business and Objects. While talking about Mission, it says why does business exist? While talking about Objectives, it says, when the business will justify its existence i.e. long and short term goals. Business answers the question How it justifies its existence? The answer of the question as How business justifies its existence, requires an entrepreneur to define his business. Business definition helps to define the Objectives or goals of the company. E.g. Business ---? Textile For e.g. a businessman wants to enter textile business then it’s a very broad term which he needs to focus further as given below: TEXTILE
PERSONAL WEARS
NON-PERS-WEARS
Suiting
Shirting
Sarees
Uniforms
Cotton
Silk
Synthetic
High priced
Medium P
Lower priced
Dimensions of Business Definition
Derek F. Abell, in a path breaking analysis, suggests defining business along the three dimensions of customers of customer groups, customer functions and alternative technologies. Customers groups relate to ‘who’ is being satisfied customer needs describe ‘what’ is being satisfied and alternative technologies mean ‘how’ the need is being satisfied. Exhibit 4.3 presents a diagrammatic view of these three dimensions. Customer functions (What Product)
Customer groups (segment) Alternative technologies (technology side) Customer Groups are people or who (Segment) you want to serve the product Customer functions are what? (What product do you want to offer) Alternative technologies are how? (How are you going to manufacture the product?) i.e. the technology side. The above-mentioned approach towards three dimensions is an inter-related approach. All elements are inter related. By bringing changes in one of the elements given above, rest of the elements will also be changed. Such a clarification helps in defining business explicitly. A clear business definition is helpful for strategic management in many ways. For instance, a business definition can facilitate the choice of objectives, help in exercising a choice among different strategic alternatives, lead to functional policy implementation and suggest appropriate organizational structures. In sum, we observe that the model provides powerful insights into understanding and defining business.
Objectives and Goals:
“The goal is where we want to be. The objectives are the steps needed to go there.” “It is very easy to measure each of the objectives, either the objectives have been accomplished or have not been accomplished.”
CRITERIA FOR GOALS / OBJECTIVES SMART: (EXPLAINATION IN DETAIL – BY STUDENTS) S? SPECIFIC M? MEASURABLE A? AGREED (MBO Process) R? REALISTIC T? TIME CONSTRAINED Role of Objectives Objectives play an important role in strategic management. We could identity the various facts of such a role as described below. • Objective define the organization’s relationship with its environment By stating its objectives, an organization commits itself to what it has to achieve for its employees, customers and the society at large. • Objectives help an organization pursue its mission and purpose By defining the long-term position that an organization wishes to attain and the shortterm targets to be achieved, objectives help an organization in pursuing its mission and purpose. • Objectives provide the basis for strategic decision-making By directing the attention of strategists to those areas where strategic decisions need to be taken, objectives lead to desirable standards of behaviour and, in this manner, help to coordinate strategic decision-making. • Objectives provide the standards for performance appraisal By stating goals ad targets to be achieve in a given time period, and the measures to be
adopted, objectives lay down the standards against which organizational as well as individual performance could be judged. In the absence of objectives, an organization would have no clear and definite basis for evaluating its performance. Managers who set objectives from themselves and for their organizations are most likely to achieve them than those who do not specify their performance targets. The importance of the role that objective play in strategic management could be aptly summed up in the truism: if one does not know where he has to go, any path will take him there. Features / Characteristics of Objectives Objectives, as measures of organizational behaviour and performance, should posses certain desirable characteristic in order to be effective. Given below are seven such characteristics. 1. Objectives should be understandable Because objectives play an important role in strategic management and are put to sue in a variety of ways, they should be understandable by those who have to achieve them. A chief executive who says that “something ought to be done to set things right” is not likely to be understood by his managers. Subsequently, no action will be taken or even a wrong action might be taken. Objectives should be concrete and specific To say that “our company plans to achieve a 12 per cent increase in sales” is certainly better than stating that “our company seeks to increase its sales”. The first statement implies a concrete and specific objective and is more likely to lead and motivate the managers Objectives should be related to a time frame If the first statement given above is restricted as “our company plans to increase its sales by 12 per cent by the end of two years”, it enhances the specificity of objectives. If objectives are related to a timeframe, then managers know the duration within which they have to be achieved. Objectives should be measurable and controllable Many organizations perceive themselves as companies which are attractive to work for. If measures like the number and quality of job applications received, average emoluments offered and staff turnover per year could be devised, it would be possible to measure and control the achievement of this
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objective with respect to comparable companies in a particular industry and in general. 5. Objectives should be challenging Objectives that are too high or too low are both demotivating and, therefore, should be set at challenging but not unrealistic level. To set a high sales target in a declining market does not lead to success. Conversely a low sales target in a burgeoning market is easily achievable and therefore, leads to sub-optimal performance. Different objectives should correlate with each other Organizations set many objectives in different areas. If objectives are set in one area disregarding the other areas, such an action is likely to lead to problems. A classic dilemma in organizations, and a source in inter-departmental conflict, is setting sales and production objectives. Marketing departments typically insist on a larger variety of products to cater to a wider market segment while production departments generally prefer to have greater product uniformity in order to have economies of scale. Obviously, trade-offs are required to be made so that different objectives correlate with each other, are mutually supportive, and result in synergistic advantages. This is especially true for organizations which operate on a profit-centre basis. Objectives should be set within constraints There are many constraints – internal as well as external – which have to be considered in objectivesetting. For example, resource availability is an internal constraint which affects objective-setting. Different objectives compete for scare resources and trade-offs are necessary for optimum resource utilizations. Organizations face many external constraints like legal requirements, social responsibility, consumer interests, and environmental pollution. all these limit the organization’s ability to set and achieve objectives.
6.
7.
In sum, objective-setting is a complex process. We will further examine a few issues relevant to objectives, in order to understand this complex process. Hierarchy of Objectives VISION ? MISSION ? CORP. OBJECTIVES ? SBU OBJECTIVES (BUSINESS LEVEL) ? FUNCTIONAL LEVEL OBJ ? OPERATIONAL LEVEL OBJ ? INDIVIDUAL OBJECTIVES WHERE “?” SIGN REPRESENTS LEADS TO
doc_972094331.doc
SYBMS STM NOTES - Vision, Mission, Business, Goals and Objectives
• Vision • Mission • Business • Goals • Objectives VISION: Aspirations, expressed as strategic intent, should lead to an end; otherwise they would just be castles in the air. That end is the vision of an organization or an individual. It is what the firm or a person would ultimately like to become. For instance, some of you, say in 10 years, or may be even earlier, would like to become general managers managing an SBU in a large, diversified multinational corporation. Or some others among you would like to believe that you will be an entrepreneur in 10-15 years owning your own company dealing with IT services and employing cutting-edge technology to serve a global clientele. A firm thinks like that too. A vision is more dreamt of than it is articulated. This is the reason why it is difficult to say what vision an organization has. Sometimes it is not even evident to the entrepreneur who usually thinks of the vision. By its nature, it could be as hazy and vague as a dream that one experienced the previous night and is not able to recall perfectly in broad daylight. Yet it is a powerful motivator to action. And it is from the actions that a vision could often be derived). Walt Disney probably wanted to make people happy. Jamshetji Tata dreamt of a self-reliant India in steel making. Narayan Murthy wanted to demonstrate that running a business is legally and ethically possible in India through entrepreneurship. All these visionaries had a vision that might have gradually become clear as they took actions to materialize their dreams. Vision can be defined in several ways. It can be a “description of something (an organization, a corporate culture, a business, a technology, an activity) in future.” It can also be a mental perception of the kind of environment an individual, or an organization aspires to create within a broad time horizon and the underlying conditions for the actualization of this perception.”
What a Vision should and should not be: A Vision should be: An organizational charter of core values and principles The ultimate source of our priorities, plans and goals A puller (not pusher) in the future. A determination of what makes us unique A Vision should not be: A “High” concept’ statement, motto or literature or an advertising slogan. A history of our proud past. Passionless
MISSION: While the essence of vision is a forward-looking view of what an organization wishes to become, mission is what an organization is and why it exists. Several years ago Peter F Drucker raised important philosophical questions related to business: What is our business? What will it be? and what should it be? These three questions, though simply worded, are in reality the most fundamental questions that any organization can put to itself. The answers are based on the analysis of the underlying needs of the society that any organization serves to fulfill. The satisfaction of that need is, then, the business of the organization. Understanding Mission Organizations relate their existence to satisfying a particular need of the society. They do this in terms of their mission. Mission is a statement, which defines the role that an organization plays in a society. It refers to the particular needs of that society, for instance, its information needs. A book publisher and a magazine editor are both engaged in satisfying the information needs of society but they do it through different means. The book publisher may aim at producing excellent reading material while a magazine editor may strive to present news analysis in a
balanced and unbiased manner. Both have different objectives but an identical mission. Definition: According to Thompson “essential purpose of the organization, concerning particularly why it is in existence, the nature of the business(es) it is in and the customers it seeks to serve and satisfy.” Characteristics of a Mission Statement Organizations legitimize themselves by performing some function that is valued by the society. A mission statement defines the basic reason for the existence of the organization. Such a statement reflects the corporate philosophy, identity, character and image of an organization. It may be defined explicitly or could be deduced from the management’s actions, decisions or the chief executive’s press statements. When explicitly defined, it provides enlightenment to the insiders and outsiders of what the organization stands for. In order to be effective, a mission statement should posses the following seven characteristics. 1. It should be feasible A mission should always aim high but it should not be an impossible statement. It should be realistic and achievable – its followers must find it to be credible. But feasibility depends on the resources available to work towards a mission. In the sixties, the U.S. National Aeronautics and Space Administration (NASA) has a – mission to land on the moon. It was a feasible mission that was ultimately realized. It should be precise A mission statement should not be so narrow to restrict the organization’s activities nor should it be too broad to make itself meaningless. ‘Manufacturing bicycles’ is a narrow mission since it severely limits the organization’s activities while ‘mobility business’ is too broad a term as it does not define the reasonable contour within which an organization could operate. It should be clear A mission should be clear enough to lead to action. It should not be a high-sounding set of platitudes meant for publicity purposes. Many organizations to adopt such statements but probably they do so for emphasizing their identity and character. For example, Asian Paints stresses ‘leadership through excellence’. India Today sees itself as ‘the complete news magazine’. The Administrative Staff College of India considers itself as ‘the college for practicing managers’ and Bajaj
2.
3.
Auto believes in providing ‘value for money, for years’. To be useful, a mission statement should be clear enough to lead to action. The ITC’s stated corporate philosophy of aligning its organizational activities with national priorities helps it in choosing areas for diversification like hotel, paper and agro-industry. 4. It should be motivating A mission statement should be motivating for members of the organization and of the society, and they should fee it worthwhile working for such an organization or being its customers. A bank which lays great emphasis on customer service is likely to motivate its employees to serve its customers well and to attract clients. Customer service, therefore, is an important purpose for a banking institution. It should be distinctive A mission statement which is indiscriminate is likely to have little impact. If all scooter manufacturers defined their mission in a similar fashion, there would not be much of a difference among them. But if one defines it as providing scooters that would provide value for money, for years it creates an important distinction in the public mind. It should indicate how objectives are to be accomplished Besides indicating the broad strategies to be adopted a mission statement should also provide clues regarding the manner in which the objectives are to be accomplished. The Centre for Development of Telematics (C-DOT) had set its first three year mission (1984-87) as developing, designing and Engineering a large digital exchange suitable for Indian conditions, and its second mission (1987-90) as developing the technologies prerequisites for an integrated system digital network of the future. 3 These mission statements specifically deal with objectives to be achieved within a given time period.
5.
6.
In day-to-day decision-making managers are not concerned about survival and, therefore, do not actively think about their organization’s mission for society. Thus, a mission statement becomes an ideology that is occasionally used for legitimization. But for strategic decision-making, it is important to consider the mission in each phase of the strategic management process. How are Mission Statements Formulated? Most organizations derive their mission statements from a particular set of tasks they are called upon to perform in the light of national priorities. Most public
sector organizations, set up in India during the fifties and sixties, owe their existence to the vision of Jawaharlal Nehru, the first prime minister, who enunciated and tirelessly worked for the national aim of building a strong and selfreliant India by laying the foundations of many of our basic infrastructural industries. Mission statements, whether derived from national priorities or not, could be formulated either formally or informally. Usually, entrepreneurs lay down the corporate philosophy, which the organization follows in its strategic and operational activities. Such a philosophy may not be consciously and formally stated but may gradually evolve due to the entrepreneur’s actions. Generally an entrepreneur has a perception of the type of organization that he wants his company to be. Mission statements could be formulated on the basis of the organizational purpose that the entrepreneur decides in the initial stages of an organization’s growth. Major strategists could also contribute to the development of a mission statement. They do this informally by lending a hand in the creation of a particular corporate identity or formally through discussions and the writing down of a mission statement. Chief executives play a major role in formulating a mission statement both formally and informally. They may set up executive committees to formally discuss and decide on a mission statement or enunciate a corporate philosophy to be followed for strategic management. Consultants may also be called upon to make an in-depth analysis of the organization to suggest an appropriate mission statement. B.N. Sinha, managing director of the Scientific Instrument Company Ltd, who took the help of a management consultant in deciding his company’s mission and purpose describes the process of formulating a mission: “… as a starting point, we (i.e. the company managers, consultant and the chief executive) spent quite a bit of time on identifying out ‘mission’ of business --- After a lot of discussion, we identified our mission as follows: to be a vibrant organization set on contributing to the scientific and technical progress of the county; keeping its customers and employees satisfied in terms of service and work reward; giving adequate return on investment to the sharesholders.” A mission statement, once formulated, should serve the organization for many years. But a mission may become unclear as the organization grows and adds new products, markets and technologies to its activities. Then the mission has to be reconsidered and re-examined to either change or discard it and evolve a fresh statement of organizational mission and purpose. A helpful approach to defining as well as refining a mission statement is to define the business itself. Business:
Business Definition See the Strategic Intent Table which includes 4 points Vision, Mission, Business and Objects. While talking about Mission, it says why does business exist? While talking about Objectives, it says, when the business will justify its existence i.e. long and short term goals. Business answers the question How it justifies its existence? The answer of the question as How business justifies its existence, requires an entrepreneur to define his business. Business definition helps to define the Objectives or goals of the company. E.g. Business ---? Textile For e.g. a businessman wants to enter textile business then it’s a very broad term which he needs to focus further as given below: TEXTILE
PERSONAL WEARS
NON-PERS-WEARS
Suiting
Shirting
Sarees
Uniforms
Cotton
Silk
Synthetic
High priced
Medium P
Lower priced
Dimensions of Business Definition
Derek F. Abell, in a path breaking analysis, suggests defining business along the three dimensions of customers of customer groups, customer functions and alternative technologies. Customers groups relate to ‘who’ is being satisfied customer needs describe ‘what’ is being satisfied and alternative technologies mean ‘how’ the need is being satisfied. Exhibit 4.3 presents a diagrammatic view of these three dimensions. Customer functions (What Product)
Customer groups (segment) Alternative technologies (technology side) Customer Groups are people or who (Segment) you want to serve the product Customer functions are what? (What product do you want to offer) Alternative technologies are how? (How are you going to manufacture the product?) i.e. the technology side. The above-mentioned approach towards three dimensions is an inter-related approach. All elements are inter related. By bringing changes in one of the elements given above, rest of the elements will also be changed. Such a clarification helps in defining business explicitly. A clear business definition is helpful for strategic management in many ways. For instance, a business definition can facilitate the choice of objectives, help in exercising a choice among different strategic alternatives, lead to functional policy implementation and suggest appropriate organizational structures. In sum, we observe that the model provides powerful insights into understanding and defining business.
Objectives and Goals:
“The goal is where we want to be. The objectives are the steps needed to go there.” “It is very easy to measure each of the objectives, either the objectives have been accomplished or have not been accomplished.”
CRITERIA FOR GOALS / OBJECTIVES SMART: (EXPLAINATION IN DETAIL – BY STUDENTS) S? SPECIFIC M? MEASURABLE A? AGREED (MBO Process) R? REALISTIC T? TIME CONSTRAINED Role of Objectives Objectives play an important role in strategic management. We could identity the various facts of such a role as described below. • Objective define the organization’s relationship with its environment By stating its objectives, an organization commits itself to what it has to achieve for its employees, customers and the society at large. • Objectives help an organization pursue its mission and purpose By defining the long-term position that an organization wishes to attain and the shortterm targets to be achieved, objectives help an organization in pursuing its mission and purpose. • Objectives provide the basis for strategic decision-making By directing the attention of strategists to those areas where strategic decisions need to be taken, objectives lead to desirable standards of behaviour and, in this manner, help to coordinate strategic decision-making. • Objectives provide the standards for performance appraisal By stating goals ad targets to be achieve in a given time period, and the measures to be
adopted, objectives lay down the standards against which organizational as well as individual performance could be judged. In the absence of objectives, an organization would have no clear and definite basis for evaluating its performance. Managers who set objectives from themselves and for their organizations are most likely to achieve them than those who do not specify their performance targets. The importance of the role that objective play in strategic management could be aptly summed up in the truism: if one does not know where he has to go, any path will take him there. Features / Characteristics of Objectives Objectives, as measures of organizational behaviour and performance, should posses certain desirable characteristic in order to be effective. Given below are seven such characteristics. 1. Objectives should be understandable Because objectives play an important role in strategic management and are put to sue in a variety of ways, they should be understandable by those who have to achieve them. A chief executive who says that “something ought to be done to set things right” is not likely to be understood by his managers. Subsequently, no action will be taken or even a wrong action might be taken. Objectives should be concrete and specific To say that “our company plans to achieve a 12 per cent increase in sales” is certainly better than stating that “our company seeks to increase its sales”. The first statement implies a concrete and specific objective and is more likely to lead and motivate the managers Objectives should be related to a time frame If the first statement given above is restricted as “our company plans to increase its sales by 12 per cent by the end of two years”, it enhances the specificity of objectives. If objectives are related to a timeframe, then managers know the duration within which they have to be achieved. Objectives should be measurable and controllable Many organizations perceive themselves as companies which are attractive to work for. If measures like the number and quality of job applications received, average emoluments offered and staff turnover per year could be devised, it would be possible to measure and control the achievement of this
2.
3.
4.
objective with respect to comparable companies in a particular industry and in general. 5. Objectives should be challenging Objectives that are too high or too low are both demotivating and, therefore, should be set at challenging but not unrealistic level. To set a high sales target in a declining market does not lead to success. Conversely a low sales target in a burgeoning market is easily achievable and therefore, leads to sub-optimal performance. Different objectives should correlate with each other Organizations set many objectives in different areas. If objectives are set in one area disregarding the other areas, such an action is likely to lead to problems. A classic dilemma in organizations, and a source in inter-departmental conflict, is setting sales and production objectives. Marketing departments typically insist on a larger variety of products to cater to a wider market segment while production departments generally prefer to have greater product uniformity in order to have economies of scale. Obviously, trade-offs are required to be made so that different objectives correlate with each other, are mutually supportive, and result in synergistic advantages. This is especially true for organizations which operate on a profit-centre basis. Objectives should be set within constraints There are many constraints – internal as well as external – which have to be considered in objectivesetting. For example, resource availability is an internal constraint which affects objective-setting. Different objectives compete for scare resources and trade-offs are necessary for optimum resource utilizations. Organizations face many external constraints like legal requirements, social responsibility, consumer interests, and environmental pollution. all these limit the organization’s ability to set and achieve objectives.
6.
7.
In sum, objective-setting is a complex process. We will further examine a few issues relevant to objectives, in order to understand this complex process. Hierarchy of Objectives VISION ? MISSION ? CORP. OBJECTIVES ? SBU OBJECTIVES (BUSINESS LEVEL) ? FUNCTIONAL LEVEL OBJ ? OPERATIONAL LEVEL OBJ ? INDIVIDUAL OBJECTIVES WHERE “?” SIGN REPRESENTS LEADS TO
doc_972094331.doc