After reading this article you will learn about the setting up of objectives of an organisation.
Generally, top management determines the overall objectives of the organisation. In practice, however, the objectives are framed by interaction of various groups within and outside the organisation. The objectives must not only provide profits to the firm but also cater to interests of the society.
The objectives generally represent the value system of managers, organisational strengths and weaknesses and various factors of the external environment. These objectives are general in nature. They are the broad objectives that show direction in which organisation will move. Survival, growth, profits, contribution to national image and social interests are some of the general/broad objectives. These are often difficult to transform into action.
Managers, thus, determine specific objectives within the framework of general objectives which are attainable by the organisational members. They are usually short-run in nature and have to be achieved within a definite time period. They may relate to expansion in the existing market with the same product (growth) or new product (diversification), cost reduction, product differentiation etc.
They are the measurable standards against which actual performance is measured. They also help in achieving the long-run or general objectives. It is, therefore, necessary that objectives are clearly specified, consistent with general objectives, realistic and rational, achievable and periodically reviewed.
1. Specific objectives should contribute to general objectives.
2. They should set objective and tangible standards for measuring performance and exercising control.
3. They provide guidelines for action.
4. They are short-range in character and set specific targets to be achieved in specific time period.
For example, the general objective of ‘increasing the turnover’ can be better understood in specific terms as ‘double the turnover in two years’. Increase the profits can be better specified as earn 15 per cent post-tax returns on capital investment. Improve the research activities will be more meaningful if specific objective of spending 3 per cent of profits on research activities is set.