Objectives: meaning and nature

Meaning of objectives

Objectives are the ends towards which the activities of an organisation are directed: the results it seeks to achieve. They are the end-points of planning: once objectives are set, policies, strategies, programmes and budgets are designed to reach them. Objectives may be stated for the organisation as a whole (for example, to earn a 15 per cent return on capital or to become the market leader in a region) and for each department and individual (for example, to reduce rejection in a plant to 2 per cent).

Objectives are often arranged as follows:

• Purpose or mission: the basic reason the organisation exists;
• Long-term (strategic) objectives: results sought over several years;
• Short-term (operational) objectives: targets for the year or quarter;
• Departmental and individual objectives: derived from those above.

Nature of objectives

1. Hierarchy. Objectives form a hierarchy: the overall aims of top management are broken down into divisional, departmental, sectional and individual objectives. Each lower objective is a means to achieve the higher one.
2. Network. Objectives are interlinked. The objectives of production, marketing and finance support and limit one another and must be consistent; achieving one at the expense of another harms the whole.
3. Multiplicity. An organisation pursues several objectives at once, profit, growth, market share, quality, employee welfare, social responsibility, and must balance them.
4. Long-range and short-range. Some objectives take years to achieve, while others are immediate; short-term targets must lead towards long-term aims.
5. Measurable (verifiable) and qualitative. Good objectives are specific and, where possible, quantified, with a time limit, so that progress can be checked. Some, such as improving staff morale, are qualitative but can still be verified by indicators.
6. Clear and understood. Objectives must be stated simply and communicated so that people know what is expected.
7. Realistic yet challenging. They should be achievable with available resources but demanding enough to motivate.
8. Flexible. Objectives may need revision when the environment changes.
9. Socially acceptable. They must be consistent with law, ethics and the expectations of society.
10. Basis for other functions. Objectives give direction to planning, a basis for organising, a target for motivation and a standard for control. Because departmental objectives are linked to one another, they also coordinate the departments: each knows what the others are aiming at and can time its own work to fit, and at the end of the period the same linked objectives are the yardstick for judging each unit's performance.

Example. A dairy cooperative's mission is to give farmers a fair price; its five-year objective is to double milk procurement; this year's objective is to open twenty new collection centres; and each centre manager has a target for daily litres collected: a hierarchy and network of objectives.

Conclusion

Objectives give purpose and direction to every activity of an organisation. Their hierarchical, interlinked and multiple nature means that they must be set carefully and kept consistent, which is the basis of management by objectives.