For leadership teams planning a business is focused around the annual exercise of business planning. Reviewing what went well and what did not, reviewing the overall performance of the organisation, its profits (or losses) and deciding what to do differently and what to keep the same for the forthcoming year. That’s why a good business has clear objectives and goals to achieve.
One key area which good leadership teams consistently get right is in rolling out the right measures, both soft and hard measures of performance inside a business plan. Cascading business plan objectives down to department and down to personal performance objectives are the vital element in implementing a business plan successfully. The key ones include refreshing the vision and connecting clear objectives and soft and hard metrics together to all levels of the organisation.
Business Goals
Having a vision is vital to be successful in the long term, but having objectives will ensure you get you there. Clear milestones for everyone inside your company, top to bottom are the essential component of a successful company. Every successful company has clear goals, strategic ones the outrageous ones (global domination) through to achievable tactical objectives.
Without clear (SMART, see below) objectives a company will loose focus on its goals. Poor or non-specific objectives companies can fall victim to strategic drift, this month’s whim and next month’s quick idea. The failure to cascaded objectives at every level allows good people’s morale and confidence to fall. This is because they cannot see where how they are contributing to the company’s success. Everyone should know how they contribute to the business plan’s success. Failing to set clear objectives in a business plan creates a path to failure in execution and devalues the process of business planning and it becomes a waste of paper, time and effort.
Business Objectives
Objectives should be like a pyramid, with the big objectives at the top, but at every layer underneath there should be the sub objectives that make the bigger one happen. A well run organisation should therefore look like a pyramid, in terms of objectives, with everyone working on their goals which build up together to achieve the big picture goals. This form of management managing by objectives MBO, (not to be confused with a management buy-out MBO), allows people to focus on their objectives, which are aligned to higher goals.
Try not to have too many objectives to achieve. I always recommend no more than 5 per person. The reason why 5? Because it keeps people focused and not drowned in statistics. Even at the company level remember the old KISS concept of simplicity, if you have page after page of objectives some will suffer unless you can resource them. Focus on what really matters to the business, what drives performance and how are they made up. For people think about their Key Performance Indicators, KPI’s they are doing a good job if… Classical KPI’s usually include: revenue, margin, customer numbers, retention, growth, production, saving, are amongst the most common.
Setting Business Objectives
High performance companies often drive all their goals by setting team objectives which are then broken down into Key Performance Indicators (KPIs) for each individual employee. Try not to give any individual or manager too many. An easy way to achieve that is to ensure they can remember and recall them with ease when you meet them.
The benefits of setting good objectives:
1. Objectives define the entire purpose of your business (or unit) in a couple of sentences or bullet points or set of numbers.
2. Objectives are often identified as key performance indicators at the individual persons performance.
3. The objectives that you set determine the quality of the strategy or tactics that you will adopt.
4. Goals allow leaders to Manage By Objectives MBO. This avoids time in argument and also helps in introducing a more participative management culture where employees are encouraged to set their own objectives.
5. Clear KPI’s per person is a successful way to evaluate performance as long as the KPI’s are numerate or translatable into a numerate language.
Remember SMART criteria to define attributes of good objectives:
That is:
· Specific
· Measurable
· Achievable
· Realistic
· Timely
Achievable Goals
If goals and objectives are not SMART then they are unlikely to be achievable. Being better or good for example is too often quoted as a goal or objective, and while that is a statement of direction it is not a clear viable goal or objective. SMART goals and objectives are tangible they are a defined quantifiable number or a supported qualitative measure compared to an existing one.
Goals must be achievable. But for that to happen they must be quantifiable, either numerate or benchmarked compared to a previous number and deliverable within the timeframe to the standard required.
SMART criteria include:
1. Both short range and long range targets should be set.
2. Both quantitative and qualitative
3. Clear. Put them in writing, to be achieved within a specified time frame.
4. Measurable. So that they can be compared with actual results.
5. Challenging. This is so that staff will put greater effort and be more motivated.
6. Achievable. Avoid overly optimistic goals as this might be counter productive due to their demotivating nature.
Goals should be realistic, reasonable, reachable and beatable. Avoid hidden goals and don’t be over specific.
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