Goals and objectives provide organizations with a plan that determines a course of action and aids them in preparing for future changes. They provide guidance and direction, facilitate planning, motivate and inspire employees, and help organizations evaluate and control performance. Organizational goals inform employees where the organization is going and how it plans to get there. When employees need to make difficult decisions, they can refer to the organization's goals for guidance.
More than 60 years ago Peter Drucker, one of the fathers of the organizational development, introduced the term “management by objectives” in his classic management text, The Practice of Management (1954), that looks at management as a whole creating the discipline of modern management practices and introducing deep and fundamental changes in the nature of the organizational setting. On the matter, Drucker introduced the essential elements needed for setting objectives to be SMART1. This acronym translated stands for:
Specific. For the best results, an objective needs to be clear and specific. Instead of saying “to improve non-conforming product,” a specific Quality Objective would be “to reduce non-conformances on the third widget line,” if the third widget production line is showing data as the most troublesome area for non-conforming product.
Measurable. If an objective can’t be measured, how will you know if it has been obtained? In order to make a Quality Objective effective, it needs to be measurable, so this means that having an objective “to reduce non-conformances on the third widget line from 15% to 5%” is much more effective than saying “to improve quality of the products on the third widget line”. You can measure the defects being made, and therefore make plans to reduce the number of defects, but a vague measure of “quality” is more ephemeral and very hard to plan improvements for.
Agreed/achievable. For an objective to be agreed it first needs to be created and approved by top level management. Once management agrees on the objective it needs to be communicated to each level of the organization that will be required to implement the plans to achieve the objective, and the people at these levels of the organization need to agree that the plan is achievable. Without this buy -in they may not fully work towards the goal and the plan may be doomed to failure.
Realistic. Being realistic with an objective will make selling it within your organization easier. If you tell your employees that you want to reduce defects from 50% to 2%, they will not be able to see how this is possible, especially if the plans around the object do not support the improvement. It is better to set realistic goals and overachieve than it is to set unrealistic goals and always fall short of the expectation.
Time-Based. To be truly effective, an objective needs to have a time associated with it. To say “reduce non-conformances on the third widget line from 15% to 5% in the next year” allows for better planning, since a plan needs to have dates in order to be properly tracked. Again, having the time associated will allow you to monitor how close you expect to be in achieving your goals.
One effect of these approach has been to sharpen the ability of setting objectives in order to design effective strategic and operational plans for an organization. However, the so called Goal setting technique, being a future-oriented process, is very often performed imperfectly, being implemented by “imperfect” human beings also known as managers.
Years after, Mintzberg et al (2003) reminded us that “[…] a strategy is the pattern that integrates an organization’s goals, policies, and action sequences into a cohesive whole”. The strategy needs to be set for the different levels of results that the organization wishes to achieve (which in the simple way means right down to objectives needed for the output). In other words, a set of specific objectives should be designed to help allocating the organization’s resources into a unique working body, and have relevance at all levels of the organization, meaning that each employee should understand how his/her job supports meeting the organization mission and vision, based on internal processes and synergies (top-down/bottom-up), and external factors.
I had the chance to meet both Peter Drucker and Henry Mintzberg during my working experience. I admire them. And with them I certainly share a universal definition of objective which we can take for granted: […] An objective is a statement which describes what an individual, team or organization want to achieve through activities. Moreover […]When organizational and personal goals are not aligned, it may have a detrimental effect on performance.
But in today’s world is this appropriate? Is this enough? Can we explain an objective just in term of what the individual, team or organization is hoping to achieve? I believe that today’s managers must rethink the value of the impact caused by the objective’s achievement and revise their ways of designing what they want introducing a new mindset based on what we want. If we confirm the principle of semantic where something smartest is superior to something smart the new way of designing objectives must include three more letters:
• E, which will stand for Ecological/Environmental/Equitable. A well planned objective should look at the impact in the environment and not be limited to the actual output produced by the organization’s action. And what about the principles of equity?
• S, Sustainable: A well planned objective needs to be linked to a broader programme or policy framework for long life, not driven by aid professionals where the relationships between the provider and the beneficiary are contractual and progress to be locally owned.
• T, Team builder: A well planned objective should favor (or at least encourage) a participative style of interaction (versus an authoritarian style) during its implementation, where everyone understand to have a key role in the process.
These “new” requirements describe a fairly comprehensive set of a cultural revolution in the society, and consequently in the management. Producing a good shampoo in certain quantities following procedures that reflect the planning and in respect of certain indicators must surely be linked to a SMART objectives. However, leaving aside the risk that this production ends up polluting a river, forcing abandonment of the site over time, the dismissal of workers, reclamation costs and the disappointment of citizens does not reflect the SMARTEST goal.
Implementing the SMARTEST approach in a systematic manner means more than merely drive a system's process with relative time concern (someone at some point will take care of the consequences). It means aligning business goals, quality of life and process measures to create real improvement in the world where we live. In my lessons on Goal setting I often quote Machiavelli with his “the goal justify the means…”. Things have changed. Machiavelli also said: “our destiny depends half on chance and half on ourselves”.