Did you know, that just 16% of frontline employees have a clear understanding of their connection with corporate priorities? – Harvard Business Review
Companies that can clearly define their primary goals and objectives not only have a better vision of the future but also make better strategic decisions. Having well-defined objectives that follow the company’s vision and values, helps workers stay focused and work towards the accomplishment of their targets in harmony.
In this blog post, we will take a look at the definition of Objectives, their Components, Levels, and Types. Let’s first understand what is the meaning of objective.
What is Objective?
Organizational objectives are of prime importance for the growth and success of any business. They serve as a guide that provides purpose and direction to an organization and helps allocate its resources and efforts toward achieving target outcomes.
These objectives need to be
- Highly specific
- Measurable
- Time-bound
- Relevant
- Achievable
Definition of Objective:
Organizational objectives can be defined as the long-term goals that a company establishes for itself. These objectives define what the organization aims to achieve in the future and help shape its strategies and actions. These objectives can cover different priorities such as business growth, customer satisfaction, and efficient resource allocation. The main purpose of organizational objectives is to provide a clear sense of direction and purpose for the entire organization, ensuring that all its activities and efforts are in line with its overall goals.
Components of Objective
The criteria for organizational objective should be such that it contains all the components required for it to work efficiently and help the organization achieve its goals. The following are the components of the objective that make it operative.
1. S.M.A.R.T. Objective
Objectives are most effective when they follow the SMART principle. The SMART principle requires organizational objectives to be –
- Specific: Objectives should be clearly defined and should specify what is to be achieved. It could be related to revenue, production volume, quality of output, etc. For example – the company targets sales of product ABC to increase.
- Measurable: Goals should be quantifiable as much as possible. It should be measurable using metrics like dollars, percentages, survey rankings, etc. For example – the company targets sales of XYZ products to increase by 15%.
- Achievable: The objective should be challenging and motivating so that employees work hard and efficiently with a vision of achieving them. At the same time, they must be within the company’s internal capabilities to achieve them. For example, targeting an increase in sales of XYZ products by 150% may not be attainable, but instead targeting an increase by 50% is surely possible.
- Realistic: The objective must be in accordance with the conditions under which it could be achieved; considering the market competition, conditions, company resources, and capabilities. An objective that feels impossible and unrealistic can discourage employees.
- Time-specific: Setting a deadline for goals makes them easier to understand and monitor. Knowing when to hit the target might make the workers more efficient. For example – the company targets sales of ABC products to increase 10% by the next year.
2. Transparent Objective
When all members of a company know and understand the organization’s objectives, they feel like a part of the team. This inclusion and transparency will ultimately lead to improved employee engagement and better contributions in the workplace.
3. Affirming Objective
An organization’s objectives should affirm and align with the company’s values. It shows what the organization prioritizes and spends its resources on. Depending on the nature of the organization, its objective may include:
- Customer Satisfaction Measures
- Employee Performance Ratings
- Revenue Goals
- Productivity Measures
- Social Responsibility Initiatives
Levels of Organizational Objectives
Levels of Objectives can be presented in a hierarchical manner. It organizes the objectives into different levels of a hierarchy. This level of objectives indicates that managers at different levels in the hierarchy are concerned with different kinds of organizational goals or objectives according to the authority that they are delegated.
The objectives can be classified into three broad levels:
- Policy – Top-Level Managers
- Strategic – Middle-Level Managers
- Operational – Lower/Working Level Managers
The top-level managers and directors are involved in determining the mission, purpose, and overall objectives of the company. They are the policymakers.
Middle-level managers are concerned with setting key-result-area objectives and division of objectives.
The lower or working-level managers are concerned with setting objectives for departments and units as well as for their subordinates.
Types of Objectives
You can choose what suits best for your organization from among the 3 different types of objectives. These are as follows-
1. Strategic Objectives
These envision where the organization wants to be in the future. It is the top management that establishes them and uses them as guides in operating the business. These are typically broader, long-term goals that apply to the entire organization as a whole.
For example – your organization may have a strategic objective to have a client retention rate of 80% in the next 5 years.
2. Tactical Objectives
These typically apply to each specific division or department of the organization. Middle-level managers design these departmental goals, which help focus efforts on supporting and achieving the bigger strategic objectives of the company, by sketching out what their division or department must do to contribute to accomplishing the strategic goals.
For example – a tactical objective can be to improve the marketing department of a sales company.
Tactical objectives bridge the gap between strategic goals and operative goals.
3. Operational Objectives
Usually created by lower-level managers, Operational objectives are specific, short-term plans that grade a department’s performance on a weekly, monthly, or quarterly basis. Lower-level managers establish it to manage short-term objectives and achieve tactical goals.
For example – An operational objective to reach the Strategic Objective, of an 80% client retention rate in the next 5 years, might be to make 100 outreach calls to clients each week.
As per your company’s needs, you may focus on a single prime objective, or choose several key objectives.
The Final Word
The advantages of establishing an organizational objective are plenty. They not only guide employee efforts, but also define performance standards, and provide constraints for pursuing unnecessary and unrealistic goals.
Measuring and achieving objectives is much more difficult than putting them in place. One thing that might help with this is the continuous channel of communication for assessment and evaluation and assessment, and maintaining workers’ commitment to the company’s vision and objectives. Ultimately, it is a caring workforce that can lead to the success of your business!
We hope you have understood everything about what is objective, the components of objectives, levels of objectives, and types of objectives. If you still have any questions regarding this guide please feel free to let us know in the comments section below. We will definitely help you.
