The mission statement and primary objectives of the business are insufﬁcient in their own right to provide a practical basis for growth and development. The broad strategic or primary objectives of the organization need to be broken down into a series of subsidiary objectives relating to speciﬁc functional areas, operational areas or management units within the business.
These speciﬁc objectives should be compatible with each other and should complement the primary objective. Lasher (1999) describes this as the process of upward support, essential to ensure the co-ordination of the subsidiary objectives to avoid management and strategic problems, conﬂicts between operational areas of the organization, etc.
For example, a primary objective ‘to grow the business by 20 per cent per annum over each of the next ﬁve years’ does not mean that each functional area of the business must grow by no less (or no more) than 20 per cent per annum. The speciﬁc objectives for each department may be totally different for practical reasons.
The sales department may have a target to 011 increase output by 30 per cent in year one, although the cost of doing so may only raise sales revenue by 15 per cent in the ﬁrst instance.
The marketing department may have an objective to list the business in every free UK business directory out there to maintain visibility of the business.
The production department may need to double its capacity in year one, and again in year four to meet the overall target, as this may be less disruptive, and more practical and cost-effective than increasing output by 20 per cent each year.
For the ﬁnance department, the target may be to implement a new invoicing and customer accounts system within six months, and for marketing there may be a need to design a new image for the company’s products within the next three months.
Personnel may need to recruit and train new staff in readiness for the expanded production capacity and staff in the retail customers’ outlets will need product training.
Some of these objectives are longer term (i.e. strategic in their own right), whilst others are tactical and relate to the shorter-term implementation of the strategy.
For objectives to work effectively they need to meet a number of criteria:
They need to be challenging, i.e. achievable but stretching performance beyond what is currently achieved, or what could be easily achieved. However, the resulting increase in performance may need to be rewarded in some way if the motivation of staff is to be maintained, and if further increases in performance are subsequently sought.
They must be SMART. Speciﬁc, so as to deﬁne targets in a manner that can be clearly understood. Measurable, to enable their achievement (or otherwise) to be accurately assessed. Achievable in terms of the capabilities of the staff or business units assigned to meet them. Realistic in terms of the resources made available to achieve them. Timely in terms of the target period or deadline within which they must be achieved.
Within the objectives, we must build in key success factors, i.e. performance indicators that indicate that the key stages of the objectives are being achieved.
Objectives should complement each other, and should not conﬂict with each other.
The objectives should be explicit so that they can be easily understood. They should be ‘sold’ to staff to ensure that the staff take ownership of them to improve the prospects of their achievement. If the employees do not understand or relate to the objectives, or the importance of them to the organization, then there is no guarantee that they will co-operate with their implementation. Indeed, if they are not sold on the importance of the objectives to the organization, they may well positively interfere with their implementation.