Organizational Objectives in Management
CORPORATE OBJECTIVES SETTING
Definition: Objectives as used in management refer t the aims, goals or the “Hoped for Result” that organizations seek to accomplished. The primary, overall objective of an organization; its expressed reason for existence is refer to as its mission.
IMPORTANCE OF MISSION OR OBJECTIVE:
The importance of a suitable mission that is formally expressed and effectively communicated to the people cannot be overemphasized. The mission and the objectives derived from an organization serves as criteria for all subsequent managerial decision making. If managers do not know what their organization’s basic purpose was, they would have no logical reference point for deciding which alternative is best.
Without a mission to serve as guiding light, individual managers would have nothing but their own values on which to base a decision? The result would be enormous diffusion of effort, rather than the unity of purpose so critical to organization success.
Many managers never bother to systematically select and formally state their organization’s mission. One such is that the mission often seems obvious. For example, if one asked a typical small business person what his mission was, the reply probably would be, “to make a profit, of course, ”But if one thinks through the matter, the inadequacy of profit, of as the oval mission becomes apparent, even though it is, indeed, an essential . Profit is wholly internal to the enterprises, because an organization is an open-system, it can only survive in the long run by meeting some need outside of itself. To earn the profit it needs to survive, the firm clearly must look to the environment in which it operates for a customer. The environment therefore is where management seeks the oval objectives of the organization. Management in order to select a suitable mission, has to successfully answer the questions, who are our customer in this context, is whoever uses the output of the organization. The “customer” of non profit organization are those who use it services and provide it with resources. The need for a mission was recognized by exceptional managers long before the development of system theory. Henry ford a very profit – conscious manager, definite ford’s mission as providing the public with low – cost transportation. He correctively observed that if one does this. One hardly gets away from profit. By defining its mission in terms of fundamental needs of customers and meeting them effectively, management in effect creates customers who will support the organization in the future.
MULTIPLE OBJECTIVES: selecting a mission based on the fundamental needs of customers makes a major contribution toward channeling effect within the organization. However, according to system and contingency theory, many other factors may have determining influence on organizations effectiveness and success. In addition because sub-unit of the organization also require quire objectives, most organizations and multiple, interrelated objectives that contribute to attainment of their mission.
CHARACTERISTICS OF EFFECTIVE OBJECTIVES:
In order to make a genuine contribution to organizational success, objectives nee to possess several character tics:
1. Measurable and specific: for instance, view for a marketing objectives was to increase commercial sales to 85% and reduce military sales to 15% over the next two years. Compare this to such possible phrasing of the same idea as “to achieve a well – balance proportion of sales in the near future” . the former tells people exactly what top management considers to be a wee – balance proportion of sales. By stating its objectives in specific, measurable terms whenever possible, management provides a clear reference point of subsequent decisions and for evaluation of progress. Middle managers will have little difficulty in deciding whether to allocate more money to commercial advertising or to military marketing.
2. Specific time horizon:
A specific time horizon is another characteristic of effectives. It gives not only exactly what the organization wants to accomplish but also when the result is to be attained.
3. Attainable objective:
Seemingly obvious, but not adhered to in practice, is that an objective must be attainable if it is to facilitate organizational effectiveness. Trying to attain an objective beyond the organization’s capabilities, either due to insufficient resources or external factors, can have disastrous consequences. As stated by stenner and miner, objectives “are important motivators of people in organizations because generally, people like to try to achieve the objective set for the organization” . if objectives are not attainable, the employee’s need for achievement is likely to be frustrated and compensation and promotions to goal attainment . Therefore unattainable objectives may also impede the effectiveness of other means the organization use to motivate its people.
4. Mutually supportive:
To be effective, the organization multiple objective must be mutually supportive. That is action and decisions required to attain one objective should not detract from the attainment of others. For example, an objective of maintaining inventory at a level of one percent of sales would not for most firms support an objective of fulfilling all order within two weeks, failure to make objective mutually supportive tends to cause conflict between the units of the organization responsible for attaining the inconsistent objectives.
LONG RANGE VS SHORT RANGE OBJECTIVE:
An important characteristics of objective is their time horizon, the amount of time in which the organization hopes to attain them. Objectives typically are formulated for time spans ranging from long to short. A long – range objective, according to Steiner, is one with a time horizon of roughly 5 years, sometimes longer for technically advanced companies. A short- range objective, in most cases, is one the organization plans to attain within a year. Medium-range objectives have up to 5 year’s time horizon. Long-range objective, typically are broad in scope, and the organization formulates them first. Medium and short range objectives are then formulated to support the attainment of long – range objective to which they are related. Usually, the shorter the time horizon of the objective, the narrower its focus. For example, a long-range productivity objective may be to increase over all productivity by 25% within 5 years” consistent with this, management would get a medium- range objective of increasing productivity by 10% within 2 years. It would also established short-range objective in such specific areas as inventory cost, employee training, plant improvement, more efficient uses of existing facilities management development, union negotiations, and so forth. These must support both long-range objective, to which they are directly related, and other objectives of the organization. Again, to negotiate a union contract within one year that provides an appropriate bonus if an individual’s productivity increases by 10% a year” would be a short range objective and human resources objectives.
OBJECTIVE OF ORGANIZATION SUB-UNIT:
A large organization is composed of many different subunits. Each of these is an organization itself and therefore needs objectives function effectively. Typically, management formulates objectives of broader scope and longer range range for higher levels of the organization. These serve as a foundation for setting objectives on lower levels. In many organization for their work unit, provided these objectives are consistent with those of the level above them; for example, top management would have an objective of increasing overall sales by 75% within five years. The sales manager of each major division in the company would set a consistent short- range objective for each sales- person in their territory, based on pass performance, that would lead to the overall increase of 20%. The achievement of this purpose can be a powerful force for co-ordination and unity of purpose. Each person in the organization knows what he or she is expected to accomplish. If each performs as planned, the organization will meet its overall long-range objectives and attain its mission
CRITERIA FOR EFFECTIVE OBJECTIVE:
Before setting forth the characteristics of organization objectives, criteria for establishing effective ones must be understood.
1. Individuals responsible for carrying out the objectives should have a role in setting them, since they are closest to the situation and generally have the best information concerning what is achievable. In addition, if they have help formulate the objectives, their commitment to achieving them will probably be much stronger.
2. Top managers. Who have participated in setting overall objectives have a responsibility for derivative of lower- level objectives.
3. The objective should be reasonable and represent a challenge for organization members.
4. Objectives for the realistic in light of internal and external environmental constraints as well as future trend.
5. Objectives for the company’s functional areas should be examined to see if they are mutually consistent.
6. Management must update and revise objective ones a year, at a minimum, at least as far a strategies and supporting programmes are concerned.
7. Key objectives should be stated simply so that they can be remembered by personnel responsible for carrying them out.
8. Some objectives should be innovated, same pattern, but into days rapidly changing environment objectives which show no innovation could be a danger signal for the organization.
ADVANTAGE OF OBJECTIVES:
1. Objectives sometimes serve as measuring rods. It is easier for mangers to establish whether they are succeeding or failing if their goals are precise. For instance, if they have an aim of making a profit of N12milion over the next two years, they can check their progress as better position to take whatever corrective action may be necessary to help them to meet their goal.
2. Objectives help in purposely direction of a concern. Without a specific objective an organization may not know where to go.
3. Objective may help motivate workers. Clearly stated organizational objectives will make workers aware of where the organization is heading towards and contribute effectively to increase productivity.
OVERALL ORGANIZATION OBJECTIVES:
To be really effective in accomplishing its task. Management must recognize that the firm ha multiple objective. These include the following.
1. Profit maximization objective: before any organization can fulfill the many objective set forth by management, it must first answer one basic question. Is the first founded to make profit; satisfy a customer need, or satisfy some other criterion? In answer to this question one executive stated: the purpose of a business in profits. Profits must be the goal, the justification for corporate existence, and not viewed as a result. Primarily, profits are necessary to attract capital for investment opportunities which create expansion, which in turn provides more jobs. Large investment in plants and machinery will reduce the cost of manufacture thereby making goods more competitive and cheap. In turn, higher profits mean more fat revenues for financing needed government programmes. And in the final analysis, profit is essential in meeting the real purpose of business satisfying customer needs.
2. Economic service objective: society needs certain economic values and the criterion of these values constitutes the primary purpose of companies. Instead of reviewing customer needs from a seller’s view point, management view these needs from a buyer’s view point, I.e. gives the customer the product or service he or she wants.
3. Survival objective:
The importance of staying in business and rowing is an objective that is common to all business firms. Whether a firm is providing a product or service deemed necessary by society seems secondary, quite often, to just surviving. The firm needs to operate above break even point, the at which income exceeds variable and fixed costs. During economic prosperity, the matter of survival is taken for granted. However, during recession or depression survival cannot be assumed.
4. Growth objective:
A firm wants more than just to stay in business. It want to grow an d prosper. However, there is a word of caution; the cause of growth does not lie exclusively in product improvement. It Is dependent on profits, economic conditions, depth and type of management to mention a few.
5. Personal group objectives:
Within and outside the firm, there are several personal groups which often have conflicting personal objectives. Even though each group has its own personal goals, it plans to achieve them through some form of organization activity. Company members who do not have their personal objectives achieved within and acceptable limit will leave the firm and seek employment elsewhere. The opportunity to advance, desire for association with other people, and the need for security and common personal objectives that must be met by the firm to gain the co-operative of its members. Thus, goals of individuals become organization goals which can work for the betterment or detriment of the firm.