Tuesday, March 20, 2012

Rules to Setting company Goals and Objectives: Why and How to be Smart








We all know that nothing runs without a plan, and a plan cannot run without having its objectives set.

That applies to any kind of plan, whether we're talking business or personal finances, university degrees or Ngo programs, website promotion or weight loss.

Setting objectives and milestones is of crucial importance for any planning activity and is the core of its success, or failure.
Knowing how to set objectives is not exactly rocket science in terms of complexity, but any strategist should know the basic rules of how to formulate and propose objectives. We will see in this article why objectives play such a major role within a company's planning and strategic activities, how they influence all business processes, and we will characterize some guidelines of setting objectives.

Rules to Setting company Goals and Objectives: Why and How to be Smart

The importance of Setting Objectives

One might wonder why we need to form objectives in the first place, why not let the business or a definite activity just run smoothly into the hereafter and see where it gets. That would be the case only if we genuinely do not care whether the activity in discussion will be prosperous or not: but then, to use a beloved saying, "if something deserves to be performed, then it deserves to be performed well". In other words, if we don't care for the results, we should not toddle with the activity at all.

Setting objectives before taking any activity is the only right thing to do, for any reasons:

- it gives a target to aim to, therefore all actions and efforts will be focused on attaining the objective instead of being inefficiently used;

- gives participants a sense of direction, a descry of where they're going to;

- motivates the leaders and their teams, since it is quite the convention of establishing some sort of bonus once the team successfully completed a project;

- offers the withhold in evaluating the success of an activity or project.

The 5 Rules of Setting Objectives: Be Smart!

I am sure most managers and leaders know what Smart stands for, well, at least when it comes of establishing objectives. However, I have seen some of them who cannot fully justify the five characteristics of a good-established objective - things are somehow blurry and confused in their minds. Since they can't justify in details what Smart objectives genuinely are, it is extremely doubtful that they will always be able to formulate such objectives.

It is still unclear from where the blurring comes: perhaps there are too many sources of information, each of them with a slightly separate coming upon what a Smart objective genuinely is; or perhaps most habitancy only briefly "heard" about it and they never get to reach the substance behind the packaging.

Either way, let us try to search the meaning of the Smart acronym and see how we can formulate sufficient objectives.
Smart illustrates the 5 characteristics of an sufficient objective; it stands for definite - Measurable - Attainable - Relevant - Timely.

1. Be Specific!

When it comes of business planning, "specific" illustrates a situation that is genuinely identified and understood. It is regularly associated to some mathematical determinant that imprints a definite character to a given action: most tasteless determinants are numbers, ratios and fractions, percentages, frequencies. In this case, being "specific" means being "precise".

Example: when you tell your team "I need this article in any copies", you did not contribute the team with a definite instruction. It is unclear what the determinant "several" means: for some it can be three, for some can be a hundred. A much good schooling would sound like "I need this article in 5 copies" - your team will know exactly what you expect and will have less chances to fail in delivering the desired result.

2. Be Measurable!

When we say that an objective, a goal, must be measurable, we mean there is a stringent need to have the possibility to measure, to track the action(s) associated with the given objective.

We must set up a clear principles or form clear procedures of how the actions will be monitored, measured and recorded. If an objective and the actions pertaining to it cannot be quantified, it is most likely that the objective is wrongly formulated and we should consider it.

Example: "our business must grow" is an obscure, non-measurable objective. What exactly should we measure in order to find out if the objective was met? But if we change it to "our business must grow in sales volume with 20%", we've got one measurable objective: the measure being the percentage sales rise from gift moment to the given moment in the future. We can speculate this very easy, based on the recorded sales figures.

3. Be Attainable!

Some use the term "achievable" instead of "attainable", which you will see it is merely a synonym and we should not get stuck in analyzing which one is correct. Both are.

It is understood that each leader will want his business / unit to give excellent performances; this is the spirit of competition and such reasoning is much needed. However, when setting objectives, one should deeply analyze first the factors determining the success or failure of these objectives. Think of your team, of your capacities, of motivation: are they adequate in order for the objectives to be met? Do you have the means and capabilities to achieve them?

Think it straight through and be honest and realistic to yourself: are you genuinely capable of attaining the goals you've set or are you most likely headed to disappointment? always set objectives that have a fair opening to be met: of course, they don't need to be "easily" attained, you're entitled to set difficult ones as long as they're realistic and not futile.

Example: you own a newborn movers business and you set the objective of "becoming no. 1 movers within the state". The qoute is you only have 3 trucks available, while all your competitors have 10 and up. Your goal is not attainable; try instead a more realistic one, such as "reaching the Top 5 fastest growing movers business in the state".

4. Be Relevant!

This thought is a minute more difficult to be perceived in its full meaning; therefore we will start explaining it by using an example in the first place.

Imagine yourself going to the It agency and telling them they need to growth the profit to revenue ratio by 5%. They will probably look at you in astonishment and mumble something undistinguished about managers and the way they mess up with people's minds.

Can you tell what is wrong with the objective above? Of course! The It agency has no idea what you were talking about and there's nothing they can do about it - their job is to form and assert your computerized infrastructure, not to understand your economic speech. What you can do it setting an objective that the It agency can have an impact upon, and which will ultimately lead to the growth you wanted in the first place. What about asking them to sacrifice expenditures for hardware and software by 10% monthly and be more cautious with the consumables within their agency by not exceeding the allocated budget? They will genuinely understand what they need to do because the objective is relevant for their group.

Therefore, the potential of an objective to be "relevant" refers to setting accepted objectives for a given personel or team: you need to think if they can truly do something about it or is it irrelevant for the job they perform.

5. Be Timely!

No much to discuss about this aspect, since it is probably the easiest to be understood and applied.

Any usable and performable objective must have a clear timeframe of when it should start and/or when it should end. Without having a timeframe specified, it is approximately impossible to say if the objective is met or not.

For example, if you just say "we need to raise profit by 500000 units", you will never be able to tell if the objective was achieved or not, one can always say "well, we'll do it next year". Instead, if you say "we need to raise profit by 500000 units within 6 months from now", anyone can see in 6 months if the goal was attained or not. Without a clear, clear timeframe, no objective is any good.

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