CHAPTER 6 – GOALS AND OBJECTIVES

∙ Learning Objectives
o Understand the nature of goals and objectives and why they are important.
o See how our thinking about goals and objectives has evolved.
o Know what characterizes good goals and objectives.
o Understand the roles of goals and objectives in employee performance reviews. o
Map out relationships among economic, social, and environmental goals and
objectives.
o Set and manage your own goals and objectives.

∙ The Nature of Goals and Objectives

o Goals and objectives provide
the
foundation for measurement.
Goals
are outcome statements that
define
what an organization is trying
to
accomplish, both programmatically
and organizationally. Goals are
usually a collection of related
programs, a reflection of major
actions of the organization, and provide rallying points for managers. For
example, Wal-Mart might state a financial goal of growing its revenues 20% per
year or have a goal of growing the international parts of its empire. Try to think of
each goal as a large umbrella with several spokes coming out from the center.
The umbrella itself is a goal.
o In contrast to goals, objectives are very precise, time-based, measurable actions
that support the completion of a goal. Objectives typically must (1) be related
directly to the goal; (2) be clear, concise, and understandable; (3) be stated in
terms of results; (4) begin with an action verb; (5) specify a date for
accomplishment; and (6) be measurable.
o Apply our umbrella analogy and think of each spoke as an objective. Going back to
the Wal-Mart example, and in support of the company’s 20% revenue growth goal,
one objective might be to “open 20 new stores in the next six months.” Without
specific objectives, the general goal could not be accomplished—just as an
umbrella cannot be put up or down without the spokes. Importantly, goals and
objectives become less useful when they are unrealistic or ignored. For instance, if
your university has set goals and objectives related to class sizes but is unable to
ever achieve them, then their effectiveness as a management tool is significantly
decreased.
o Measures are the actual metrics used to gauge performance on objectives. For
instance, the objectiveof improved financial performance can be measured using
a number metrics, ranging from improvement in total sales, profitability,
efficiencies, or stock price. You have probably heard the saying, “what gets
measured, gets done.” Measurement is critical to today’s organizations. It is a
 fundamental requirement and an integral part of strategic planning and of
principles of management more generally. Without measurement, you cannot tell
where you have been, where you are now, or if you are heading in the direction
you are intending to go. While such statements may sound obvious, the way that
most organizations have set and managed goals and objectives has generally not
kept up with this commonsense view.
∙ From Management Objectives to the Balanced Score Card
o As you might expect,
organizations use
a variety of measurement
approaches—
that is, how they go about setting
and
managing goals and objectives. If
you
have an understanding of how the use
of these approaches has evolved,
starting with management by objectives
(MBO), you will also have a much better
view of how and why the current incarnations, as seen by variations on the
Balanced Scorecard, have many desirable features.
o MBO is a systematic and organized approach that allows management to focus on
achievable goals and to attain the best possible results from available resources. o
MBO aims to increase organizational performance by aligning the subordinate
objectives throughout the organization with the overall goals that management has
set. Ideally, employees get strong input to identify their objectives, time lines for
completion, and so on. MBO includes ongoing tracking and feedback in the process
to reach objectives.
o MBO was first outlined by Peter
Drucker in 1954 in The Practice
of
Management. One of Drucker’s
core
ideas in MBO was where
managers
should focus their time and
energy.
According to Drucker, effective MBO
managers focus on the result, not the
activity. They delegate tasks by
“negotiating a contract of objectives”
with their subordinates and by
refraining from dictating a detailed road map for implementation.
o MBO is about setting goals and then breaking these down into more specific
objectives or key results. MBO involves (1) setting company-wide goals derived
from corporate strategy, (2) determining team- and department- level goals, (3)
collaboratively setting individual-level goals that are aligned with corporate
 strategy, (4) developing an action plan, and (5) periodically reviewing performance
and revising goals.
o A review of the literature shows that 68 out of the 70 studies conducted on this
topic showed performance gains as a result of MBO implementation.
o It also seems that top management commitment to the process is the key to
successful implementation of MBO programs.
o The broader principle behind MBO is to make sure that everybody within the
organization has a clear understanding of the organization’s goals, as well as
awareness of their own roles and responsibilities in achieving objectives that will
help to attain those goals. The complete MBO system aims to get managers and
empowered employees acting to implement and achieve their plans, which
automatically achieves the organization’s goals.
∙ Characteristics of Effective Goals and Objectives
o To be clear, this section does not outline which goals or objectives are appropriate
or inappropriate, economically, ethically, morally, or otherwise. Instead, you will
learn many of the characteristics of good goals and objectives, with the aim of
becoming a better organizational goal setter (in the last section of this chapter, we
remind you about SMART criteria, which is the application of many of this
section’s
takeaways to the development of your personal and professional goals and
objectives).
o At the same time, you should be able to look at a set of goals and objectives and
critique them effectively, such that more appropriate goals and objectives can be
developed to replace them.
o We tend to think that goals and objectives are easy to set, and yet, this intuition is
often wrong in the organizational context. Goals and objectives are difficult to set
because we might not know what they should cover or because we lay out too
many of them with the hope that we are covering all the bases.
o Similarly, goals and objectives can proliferate in organizations because new ones
are set, while old ones are not discarded. Stanford University management
professor Kathleen Eisenhardt noted that there must be a certain balance to the
number and type of goals and objectives: too many goals and objectives are
paralyzing; too few, confusing.
∙ Using Goals and Objectives in Employee Performance Evaluation
o Since leadership is tasked with accomplishing things through the efforts of others,
an important part of your principles of management tool kit is the development and
performance evaluation of people. A performance evaluation is a constructive
process to acknowledge an employee’s performance. Goals and objectives are a
critical component of effective performance evaluations, so we need to cover the
relationship among them briefly in this section.
o For instance, the example evaluation form needs to have a set of measurable goals
and objectives spelled out for each area. Some of these, such as attendance, are
more easy to describe and quantify than others, such as knowledge. Moreover,
research suggests that individual and organizational performance increase 16%
when an evaluation system based on specific goals and objectives is
implemented.
o Most organizations conduct employee performance evaluations at least once a
 year, but they can occur more frequently when there is a clear rationale for doing
so—for instance, at the end of a project, at the end of each month, and so on. For
example, McKinsey, a leading strategy consulting firm, has managers evaluate
employees at the end of every consulting engagement. So, in addition to the
annual
performance evaluation, consultants can receive up to 20 mini- evaluations in a
year. Importantly, the timing should coincide with the needs of the organization
and the development needs of the employee.
o Performance evaluations are critical. Organizations are hard-pressed to find good
reasons why they can’t dedicate an hour-long meeting at least once a year to
ensure the mutual needs of the employee and organization are being met.
o Performance reviews help managers feel more honest in their relationships with
their subordinates and feel better about themselves in their supervisory roles. o
Subordinates are assured clear understanding of what goals and objectives are
expected from them, their own personal strengths and areas for development, and a
solid sense of their relationship with their supervisor. Avoiding performance issues
ultimately decreases morale, decreases credibility of management, decreases the
organization’s overall effectiveness, and wastes more of management’s time to do
what isn’t being done properly.
o Finally, it is important to recognize that performance evaluations are a not a
panacea for individual and organizational performance problems. Studies show
that performance-appraisal errors are extremely difficult to eliminate.
∙ Integrating Goals and Objectives with Corporate Social Responsibility o One of the
overarching lessons of this chapter is that goals and objectives are only effective to
the extent that they reinforce the organization’s strategy and therefore
the realization of its vision and mission. This section is somewhat integrative in
that it provides knowledge about the ways that goals and objectives related to
social and environmental issues can be tied back into strategy using a Balanced
Scorecard approach.
o CSR is about how companies manage their business processes to produce an
overall positive effect on society. This growth has raised questions—how to define
the concept and how to integrate it into the larger body of an organization’s goals
and objectives. The Dow Jones Sustainability Index created a commonly
accepted definition of CSR: “a business approach that creates long-term
shareholder value by embracing opportunities and managing risks deriving from
economic, environmental and social developments.”

∙ Your Personal Balanced Score Card

o One of the powerful tools in a manager’s tool kit is the Balanced Scorecard, a
model that groups goals, objectives, and metrics into the areas of financial,
customer, internal business process, and learning and growth. As you know, the
scorecard is effective because it helps managers link vision, mission, and strategy
to the goals and objectives that employees strive to achieve.
o What you may not know, however, is that you can apply the scorecard to your
personal and professional objectives. Through this process you might also learn
more about where and how a Balanced Scorecard can be applied in an
organizational context in your role as a manager or employee. That is the purpose
 of this section.
o The Balanced Scorecard, championed by Kaplan and Norton, can be translated
into your own individual scorecard, one that helps you achieve your personal and
professional goals and objectives.
o Recall that the scorecard for an organization starts with vision and mission,
followed by goals (financial, internal business processes, customer, and learning
and growth), which have corresponding objectives, metrics, and tactical activities.
When these components are applied to you as an individual, you might see the
pieces of the scorecard labeled as shown in the following figure. Let’s review each
piece together.
o As with an organization’s mission and vision, your personal mission and vision
reflect who you are and where you want to go. Mission reflects your values and
philosophy of life. Vision captures what you want to achieve.
o Which values and principles guide your way? What are your most deeply cherished
aspirations? What do you want to achieve? How do you distinguish yourself in
society and among your peers and family? If you were to read your biography in
20 years, what would you want it to say about you?

∙ Link for Video

The Nature of Goals and Objectives https://youtu.be/VW2Agtxc23Y
From Management Objectives to the https://youtu.be/LVgrCgaBZ5A
Balanced Score Card

Characteristics of Effective Goals and Objectives https://youtu.be/F3sE8pgvw3s

Using Goals and Objectives in Employee https://youtu.be/EZp0G6JLlhM
Performance Evaluation
Integrating Goals and Objectives with https://youtu.be/7OAoPHvcInk
Corporate Social Responsibility
Your Personal Balanced Score Card https://youtu.be/O71daIs6x_M
∙ References:
o Principles of management (1St ed.). New York: Flat World Knowledge. Based on
information from Goodwill Industries of North Central Wisconsin. (2009). A brief
history of Goodwill Industries International. Retrieved March 3, 2010

o Walker, R. (2008, November 2). Consumed: Goodwill hunting. New York Times
Magazine, p. 18; Tabafunda, J. (2008, July 26). After 85 years, Seattle Goodwill
continues to improve lives. Northwest Asian Weekly. Retrieved March 1, 2010

o Slack, E. (2009). Selling hope. Retail Merchandiser, 49(1), 89–91

o Castillo, L. (2009, February 24). Goodwill Industries offers employment programs.

Clovis News Journal. Retrieved April 22, 2010