After reading this article you will learn about:- 1. Meaning of Objectives 2. Features of Objectives 3. Importance 4. Multiplicity 5. Hierarchy.
Meaning of Objectives:
Objectives refer to specific, measurable ends. They are identifiable goals towards which all organisational activities are directed. They are the end results of the organisation’s operations. Objectives are the specific targets or standards against which actual performance can be measured.
“It is a future target or end result that an organisation wishes to achieve.” Planning is meaningless if objectives are not framed. Objectives serve as guide to planning i.e., planning is directed towards specific objectives.
Production target of 1,000 units every month or profit after tax of Rs. 10 lakh every year are the specific and measurable goals or objectives which can be estimated and verified. Objectives are the precise end-results which an organisation wants to achieve.
Features of Objectives:
Challenging goals require innovative and creative organisational members. An organisation with aspiring work force accepts the challenging goals. They do not find the routine objectives attractive.
Goals, though challenging, should be attainable. People work hard to achieve challenging and innovative goals but goals should be within their skills and abilities. Managers should, therefore, frame goals which can be achieved within the constraints of physical, financial and human resources.
3. Specific and measurable:
Goals can be tangible and intangible. Intangible or “qualitative goals involve subjective judgement about whether or not a goal is reached.” Assessing manager’s performance or worker’s morale are the qualitative goals. Though important, they cannot be easily measured unless some quantifiable standards of performance are framed. “Quantitative goals encompass objective numerical standards that are relatively easy to verify.”
Production target of 2,000 units every month is a specific and measurable goal which can be estimated and verified. Objectives can be broad (qualitative) or specific (quantitative). As broad objectives cannot be measured, specific objectives are framed to achieve the broad objectives. Increase in sales (broad objective) can be achieved by framing specific objectives of how much increase in sales (say, 10 per cent) and in what time period (say, one year).
4. Time limit:
Goals must be achieved within a specified time-period. Organisational performance should be reviewed and assessed at regular intervals so that goals can be achieved within the specified time-frame.
Goals at lower levels should support the higher level goals, short-run goals should support the long-run goals and goals of different departments should also support each other. If the organisation wants to increase sales by 5%, production department should support this goal by producing 5% more and finance department should also release funds for producing and selling more.
Objectives at different levels of the organisation form an ends-means chain or a hierarchy where objectives at one level provide an end and a means for attaining objectives at the higher level.
At a point of time, an organisation has multiple goals and, therefore, goals should be arranged in the order of priority. This helps in optimum allocation of scarce resources over different objectives. A business organisation, for example, should lay priorities for profit- oriented activities and non-profit or service activities. This ensures efficient utilisation of resources.
Objectives are flexible. Depending upon the internal and external environmental variables, they can be changed to ensure the organisation’s survival. If the initial purpose for which the organisation was established is achieved, there can be additions/deletions in the existing objectives so that organisation continues to operate.
An organisation that was initially established to look after war victims at the time of World War changed its objectives to look after social and public health once the war was over (The Indian Red Cross Society). Objectives can also be added to sustain or grow an organisation. An NGO can add a wide variety of social objectives to its existing objectives like lung health, anti-tobacco campaigning, old age homes, child nutrition, women education etc.
Importance of Objectives:
Objectives provide the following benefits to organisation:
1. Basis for managerial functions:
Objectives provide basis for all managerial functions. Planning, organising, staffing, directing and controlling are directed towards organisational objectives. Unless organisational objectives are clearly identified, managerial functions will not be effectively carried out.
2. Basis for organisational existence:
Objectives provide foundation or legitimacy to business organisation. An organisation will not come into existence if it has no objective to achieve. Objectives enable the organisation to make its profile (identify its strengths and weaknesses) and relate it with environmental profile (opportunities and threats). Organisation can, thus, relate itself with the environment.
3. Basis for various types of plans:
Different types of plans like policies, programmes, procedures etc. are directed towards organisational objectives. If objectives are clear, managers will be able to make the plans. Clearly defined objectives encourage unified planning. They promote vision of the future so that instructions can be given to move in the right direction.
4. Standards of performance:
Objectives provide standards of performance against which actual performance is measured. Organisational performance is directed towards objectives. Objectives, thus, provide the basis for control. Deviations in actual performance are rectified and performance of sub-units, units and departments is synchronized in a common direction.
5. Unity of action:
Objectives provide unity of action. All organisational activities related to all departments (production, marketing etc.) are targeted towards organisational objectives.
Objectives at one level are a source of inspiration and motivation to achieve goals at higher levels. Workers strive hard to achieve innovative and challenging goals. Rational and attainable objectives motivate employees to work hard. Organisational goals should also satisfy personal goals. If goals fulfill personal needs of employees, they feel motivated to contribute to organisational goals also.
7. Basis for coordination:
Objectives coordinate the efforts of people in different departments. Individual, sectional and departmental goals are coordinated towards corporate goals. They also integrate the efforts of individuals with those of the groups and the organisation.
People as individuals (internal and external to the organisation) cannot think differently from groups and the organisation. Creditors, suppliers, customers, employees — all depends upon how well the objectives of the organisation are defined.
8. Basis for decision-making:
Decision-making is goal-oriented. Objectives frame the areas for discretion within which organisational decisions can be made.
9. Basis for organisation structure:
Organisation structure is designed keeping in view concepts like departmentation, span of control, delegation, decentralisation etc. All these activities have to move towards a common direction. Framing realistic and attainable objectives play important role in this regard.
Multiplicity of Objectives:
One may generally think that objective of business organisation is to make profits and that of a non-profit organisation is to provide service or meet the needs of various constituents of society (stakeholders). However, this is not always true.
All organisations have multiple objectives. Emphasis on one goal (profits) may ignore other goals (growth, market share, innovation etc.) which are also important for long-run survival and growth of the organisation.
In the modern times, having only one goal (profit maximisation) is unethical as business operates in the social system. It influences various elements of society and is influenced by them. It has multiple objectives to meet the needs of different sections of society. This not only helps the business meet its primary goal of profit maximisation but also ensures its long-run survival in the market.
No single objective can ensure success of the organisation. Multiple objectives enable a business to influence diverse interest groups which interact with it. They provide opportunity to the firm to optimise its resources and frame plans, priorities, philosophies and policies towards them.
Some of the multiple objectives of business organisation are economic objectives (profit maximisation, high productivity, optimum allocation of resources, customer creation, innovation), organic objectives (effective utilisation of manpower, development of human resource, participation in management, training and motivation), social objectives (customer satisfaction, remove social problems, fair trade practices, employment opportunities) and national objectives (development of backward areas, generation of export surplus, contribution to research and development, provide social justice).
Hierarchy of Objectives:
There is generally a hierarchy of objectives viewed as the means-ends chain. Objectives at different levels of the organisation form a hierarchy where objectives at one level are end in themselves and means for attainment of objectives at the higher level. Together objectives at all levels form an integrated chain. Objectives framed by top managers to achieve growth rate of 15% is an end of top-level.
In order to achieve this growth rate, sub-objective for middle-level managers is to increase sales. Increasing sales is an end of middle-level managers but means for achieving goals at the higher level. This process goes on till objectives are framed for each level in the organisation. Objectives for each level are an end in themselves but a means for attaining objectives for higher levels.
In a hierarchy, goals/objectives are generally framed at three levels:
1. Top level: Strategic goals,
2. Middle level: Tactical goals, and
3. Lower level: Operational goals.
1. Strategic goals:
These are the formal goals framed by top managers and address issues related to the organisation as a whole. These goals ensure survival and successful working of a business enterprise. According to Drucker, there are eight major areas in which organisations frame strategic goals. These are:
Market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility and profit requirements.
2. Tactical goals:
Each department sets specific goals to promote overall organisational goals (strategic goals). Tactical goals are the goals of specific departments framed by middle-level managers. While strategic goals are general in nature, tactical goals are specific. They are stated in measurable terms.
3. Operational goals:
“Operational goals are targets or future end results set by lower management that address specific, measurable outcomes required from the lower level.”
These goals are framed by lower-level managers for divisions or sub-units of each department. As tactical goals help to achieve strategic goals, operational goals help to achieve both strategic and tactical goals.These levels of goals form a means-ends chain where goals at lower levels provide a means to attain the ends (goals) at the higher level.
In the hierarchy of objectives, there should be complete coordination of objectives at different levels of the ends – means chain so that right means contribute to the right ends. Lack of coordination can lead to goal distortion and goal displacement.
Due care should be taken by managers to ensure that there is:
a. No disagreement amongst the units operating at different levels regarding the means for goal accomplishment.
b. No influence of personal biases and judgments on the part of any organisational member that negatively affects integration of the links involved in the ends-means chain.