Organizational Goals and

Objectives

Lecture II
 Goals
• In addition to performing a function, all organizations
also have some incentive for their existence and their
operations.
– The goals of an organization are the reasons for its existence.

• The activities of the organization are directed to the

attainment of its goals.
• A goal is a future expectation, some desired future state.
• Goals are intentions behind decisions or actions.
• A goal can be used in a very broad sense to refer to the
overall purpose of the organization – e.g. to produce
the best motorcars in the world.
 Goals
• A goal may also be used to refer to more specific
desired accomplishments
– Example, to produce and sell 100 tables within a week.

• The goals of an organization will determine its inputs, a

series of activities through which the outputs are
achieved, and interactions with its external environment.
• The extent to which an organization is successful in
attaining its goals is a basis for the evaluation of
organizational performance and effectiveness.
• To make our dreams come true, we need to set specific,
measurable goals with realistic, achievable deadlines.
 The functions of goals
• The concept of organization goals serves a
number of important functions:
– Goals provide a standard of performance. They
focus attention on the activities of the organization
and the direction of the efforts of its members.
– They provide a basis for planning and management
control related to the activities of the organization.
– They provide guidelines for management decision-
making and justification for actions taken. They
reduce uncertainty in decision-making and give a
defense against possible criticism.
 The functions of goals
• Goals influence the structure of the organization
and help determine the nature of technology
employed.
• Goals help to develop commitment of
individuals and groups to the activities of the
organization.
• Goals serve as a basis for the evaluation of
change and organization development.
• Goals are the basis for objectives and policies of
the organization.
 Integration of goals
• Manager and other members of the
organization will have:
– their own perception of goals of the
organization
• E.g. to manufacture high-quality furniture which
satisfy requirements of customers.
– their personal goals
• E.g. to earn high wages, to achieve promotion, to
gain social satisfaction, to achieve status – which
they expect to fulfill by participating in the
activities of the organization.
Integration of goals
 Integration of goals
• If organization goals and personal goals are pulling in
different directions, conflict will arise and performance is
likely to suffer.
• An organization will be more effective when personal
goals are compatible with organization goals.
• Management has a responsibility to clarify organization
goals and to integrate personal goals (including their
own) with the overall objectives of the organization.
• Management should endeavor, therefore, to structure
the organization so that people may realize their own
goals by helping the organization to satisfy its goals.
 Classification of organizational goals

• In terms of their relationship with the concept and

compliance:
– Order goals are negative and attempt to place some
kind of restraint upon members of the organization and to
prevent certain forms of behavior.

– Economic goals are concerned with the production of

goods and/or services for the people outside the org.

– Cultural goals are concerned with symbolic objects and

with creating or maintaining value system of society.

– Social goals, which serve the various needs of members of

the organization, are classified as a sub-type under
cultural goals.
 Classification of organizational goals

• By adopting a system’s view:

– Consumer goals – related to the nature of outputs in
terms of the market to be served and consumer
satisfaction i.e. the range and nature of
good/services made in order to meet the needs of
customers or clients.
– Product goals – relate to the nature and
characteristics of the outputs themselves – i.e. the
good/services provided.
• Example, In the range, design, quality, and availability of
their outputs.
Classification of organizational goals
• Operational goals – relate to the series of activities
involved in providing outputs, and to the operation and
functioning of the organization.
– Example, are management and opportunities and risks, the
choice of structure, the nature of technology and management
process.

• Secondary goals – relate to goals that are not the main

aim of the organization, they arise from the manner in
which the organization uses its power and influence in
pursuit of its outputs, and in undertaking the series of
activities to achieve there outputs.
– Example, political aims, aid to the community, the development
of staff and social responsibilities.
 Alteration of goals
• Survival of the organization will depend upon its ability to adapt
to change and to the demands of its external environment.

• Commitment to the objectives and policies of the organization,

peoples cognitive limitations and their uncertainties and fears,
may mean a reluctance to change.

• It is important that the organization does not restrict innovation

but is ready to respond positively to changing circumstances
and increasingly, to anticipate future change.

• Management has to balance the need for adaptability in

meeting the challenges and opportunities presented by
change with, at the same time, preserving an atmosphere of
stability and continuity in the interest of members of the
organization.
 Mission statements

• It is popular for large organizations to

produce a mission statement which sets
out:
– the purpose and general direction for the
organization to follow.
– organization guiding values and principles.
– and overall objectives.
 Mission statements
• A mission statement is setting out:
• “…how that organization intends to fulfill its
main business objectives while recognizing the
legitimate interests of other stakeholders such
as customers, employees, suppliers, and the
communities in which the organization
operates”.
 Mission Statements

• An effective mission statement must resonate

with
– The people working in and for the organization
– The different constituencies that the organization
hope to affect.

• It must express the organization’s purpose in a

way that inspires commitment, innovation, and
courage.
 Mission Statements

• At the very least, a mission statement should

answer three key questions:
– What are the opportunities or needs that we exist to
address? (the purpose of the organization)
– What are we doing to address these needs? (the
business of the organization)
– What principles or beliefs guide our work? (the values
of the organization)
 NWSC
• Vision: To be a leading customer centered water utility
in the world.
• Mission: To sustainably and equitably provide cost
effective quality water and sewerage services to the
delight of all stakeholders while conserving the
environment.
• Core values
– Professionalism
– Reliability
– Integrity
– Innovation
– Team work
– Excellence
– Result Oriented
Your Mission Statement Should…
• Express your organization’s purpose in a way that
inspires support and ongoing commitment.
• Motivate those who are connected to the
organization
• Be articulate in a way that is convincing and easy
to grasp
• Use proactive verbs to describe what you do.
• Be free of jargon
• Be short enough so that anyone connected to the
organization can readily repeat it.
 Objectives and policy
• In accordance with its ideology or
philosophy, the goals of the organization
are translated into objectives and policy.
• Terminology and use of the two terms
varies but
– Objectives are seen here as ‘what’
– Policy as the ‘how’, ‘where’, and ‘when’ –
the means that follow the objectives.
 Objectives and policy
• Objectives set out more specifically the goals of
the organization, the aim to be achieved and
the desired end-results.
• Policy is developed within the framework of
objectives.
– It provides the basis for decision-making and the
course of action to follow in order to achieve
objectives.

• The establishment of objectives and policy is an

integral part of the process of management,
and a necessary function in every organization.
A systematic view of goals and
objectives
Environment
influences

Determination Goal
Formulation of of objectives Inputs Series of
goals and policy activities outputs

Corporate strategy

Realization of goals
Measurement of organization success
 Objectives and policy
• Objectives should be SMART, i.e.
– Specific
– Measurable
– Attainable (Achievable)
– Result-oriented (relevant)
– Time-bounded.

• Clearly defined and agreed objectives is the

first stage in the design of organization structure
and help facilitate systems of communication
between different parts of the organization.
 Objectives and policy
• A policy is a guideline for organizational action and the
implementation of goals and objectives.
• Policy is translated into rules, plans and procedure; it
relates to all activities of the organization, and to all
levels of the organization.
• Clearly stated, policy can help reinforce the main
function of organization, make for consistency and
reduce dependency on the actions of individual
managers.
• Policy clarifies the roles and responsibilities of managers
and other members of staff and provides guidelines for
managerial behavior.
 Objectives and policy
• Policy provides guiding principles for areas of
decision-making and delegation.
• For example, specific decisions relating to
personnel policy could include:
– Giving priority to promotion from within the organization

– Enforcing retirement at government pensionable age

– Employing only graduate or professionally qualified engineers

– Permitting line managers, in consultation with the personnel

manager, to appoint staff up to a given salary/wage level.
 Distinction between objectives
and policies
• Objectives emphasize aims and are stated as
expectations, but policies emphasize rules and are
stated in the form of directives.
• Objectives and policy together provide corporate
guidelines for the operation and management of the
organization.
• The formulation of objectives and policy, and the
allocation of resources, provide the basis for strategic
planning which is the first stage in the planning and
control process of business organizations.
 Illustrative Example
Objective Policy
Marketing Complete Market The Company will sell to every
Coverage retail outlet that is credit-worthy,
as decided by the Company
Accountant.
Production Low unit costs from The company will not produce
long production runs one-off jobs without the specific
authority of the board
Finance To maintain Account will draw up a cash
adequate liquidity budget and inform the Board if
working capital is likely to fall
below a specified limit
Personnel Good labor relations Set up and maintain schemes for:
joint consultation, job evaluation,
wage incentives.
 The profit objective
• In order to be successful, the primary objectives
of business organizations may be seen as:
– To continue in existence, i.e. to survive.
– To maintain growth and development.
– To make profit.

• Although the objective of profit maximization is

undoubtedly of great importance, it is not, by
itself, a sufficient criterion for effective
management of a business organization. Issues
concerning social responsibility…
Objectives of business organization
OBJECTIVES

SURVIVAL
Avoid Personal
uncertainties goals of
GROWTH AND members
DEVELOPMENT

STEADY AND Social, for ex.

Economic,
CONTINUOUS Satisfaction of
for ex. R&D;
PROFIT members;
sales and
promotion; responsibilities
efficiency to society
Process of management
and combined efforts of
members of the
organization
 Fallacy of single objective
• To emphasize only profit, for instance, misdirects
managers to the point where they may endanger
the survival of the business.
• To obtain profit today they tend to undermine the
future.
• To manage a business is to balance a variety of
needs and goals.
• … the very nature of business enterprise requires
multiple objectives which are needed in every area
where performance and results directly and vitally
affect the survival and prosperity of the business.
 8 key areas in which objectives should
be set in terms of performance and
results
1. Market standing, e.g. market share, range of products
and market, pricing, customer loyalty and satisfaction.
2. Innovations, e.g. innovations to reach market goals,
developments arising from technology advancements,
new processes…
3. Productivity, e.g. optimum use of resources, use of
techniques such as Operations Research (OR) to help
decide alternative courses of action,
4. Physical and financial resources, e.g. plant, machines,
offices and replacement of facilities, supply of capital
and budgeting, planning for money needed, provision
of supplies.
8 key areas in which objectives should
be set in terms of performance and
results
5. Profitability, e.g. profitability forecasts and anticipated
time scales, capital investment policy, yardsticks for
measurement of profitability.
6. Manager performance and development, e.g. the
direction of managers and setting of their jobs, the
structure of management, the development of future
managers.
7. Worker performance and attitude, e.g. union relations,
the organization of work, employee relations.
8. Public responsibility, e.g. demands made upon the
organization, such as by law or public opinion,
responsibilities to society and the public interest.
 The need for strategy
• Objectives and policy are formalized within a
framework of a corporate strategy which serves to
describe an organization’s sense of purpose, and plans
and actions for its implementation.
• Without an explicit statement of strategy it becomes
more difficult for expanding organization to reconcile
coordinated action with entrepreneurial effort.
• An explicit strategy is necessary for reasons:
– There is need for people to cooperate together in order to
achieve the benefit of mutual reinforcement

– There are the effects of changing environment conditions

 The concept of synergy
• Synergy results when the whole is greater than the sum
of its component parts;
– in simple terms for instance 2+2 = 5 effect.
• Synergy is usually experienced in situations of expansion
or where one organization merges with another, such as
a company responsible for development and
production of a product merging with one that markets
the product.
– Example: A TV manufacturer merging with a TV rental
organization.
– Example: Real Estate companies merging with banks
– Example: A computer firm with expertise in the design and
marketing of hardware, with an expert in software manufacture
and systems design.
 SWOT Analysis
• The SWOT analysis provides convenient headings under
which to study an organization and may provide a basis for
decision-making and problem-solving.
• Strength are those positive aspects or distinctive attributes or
competencies which provide a significant market
advantage or upon which the organization can build.
– Present market position, size, structure, managerial expertise, physical
or financial resources, staffing, image or reputation.
• Weaknesses are those negative aspects or deficiencies in
the present competencies or resources of the org, or its
image or reputation, which limit its effectiveness and which
need to be corrected or need action taken to minimize their
effect.
– Example: Obsolete equipment.
 SWOT Analysis
• Opportunities are favorable conditions and usually arise from
the nature of changes in the external environment.
Opportunities provide the potential for the org to offer new or
to develop existing, products, facilities or services.

• Threats are the converse of opportunities and refer to

unfavorable situations which arise from external
developments likely to endanger the operations and
effectiveness of the organization.
– Example: Legislation, the introduction of a radically new product by
competitors, political or economic unrest, changing social conditions
and the actions of pressure groups. Organizations need to be
responsive changes that have already occurred and to plan for
anticipated significant changes in the environment and to be
prepared to meet them.