1 These notes on objectives aim to (a) Encourage Readers to give more attention to setting objectives and (b) Help them produce wiser and more specific objectives.
2 Part 1 of these notes defined objectives and introduced the details of the Hierarchy of Objectives and various relationships between objectives.
3 These notes (Part 2) discuss the inevitable conflict between four classes of objectives and the need to try to ensure that all objectives contribute towards the Organisation’s objectives. The notes discuss priorities between objectives and some examples of broad organisational objectives.
4 After discussing some points on the impermanence of objectives at different levels, the notes conclude with some principles to help set objectives.
5 Within any organisation difficulties always exist in deciding the importance of various objectives. However, some objectives specifically conflict one with another and a decision to try to achieve one automatically makes a decision against another. Many decisions result from a compromise between two conflicting objectives.
6 The following paragraphs identify four broad classes of competing objectives.
|(a) Objectives with different time aspects. This conflict occurs where the long-term needs of an organisation conflict with the short-term needs.||Long-term profits versus short-term profits.|
|(b) Different Levels within an organisation. This situation most often occurs between the total organisation as compared with one of its parts||. “Why doesn’t Head Office let Branches make decisions which relate to the local market?”|
|(c) One part of the organisation versus another part.Often the conflict occurs between different specialist functions||“Why can’t Production become more Sales-minded?”|
|(d) The Organisation (or one of its parts) versus the personal objectives of one or more members of the Organisation.||“I must leave early tonight; I promised to attend a meeting”|
7 The following paragraphs examine the above conflicting objectives in more detail.
Conflict between Objectives that cover Different Time Periods
8 A Company has the following two objectives; (a) Pay a reasonable dividend to its Shareholders and (b) Spend money on research and development (to keep abreast of its Competitors). These objectives compete against each other. A dividend paid now will help to keep the Company’s standing (and share price) high. However if the Company invests no money in research it may find itself in a very unsatisfactory position in five or ten years time.
9 On the personal level, objectives also compete with respect to the time element: Should Sales Representatives always spend sometime looking for new business or give good service to their present Customers? Managers have to balance the advantages of (a) having someone else trained to do a particular job with (b) the disadvantage of having it done more slowly by people when learning to do the new job.
Conflict between Objectives at different Levels of an Organisation
10 Most (probably all) Organisations have situations where a higher-level Executive (e.g. someone at Head Office) makes a decision which causes one of the parts of the Organisation to spend money and/or lose income. However, people may make such a decision because the gain in Section A will exceed the loss in Section B. People will recognise the point provided they have all the information. However sometimes people disagree on the overall benefit to the total Organisation as compared with a definite loss to one or more of the parts.
11 Even with the best of communications and goodwill among the people in the different parts, people often become more interested in success for their own smaller group as compared with a larger group’s success. The people feel closer to their smaller group.
12 Business organisations often encourage this feeling by evaluating and regarding people based on the results of their own particular Sections. This attitude of Management, demonstrated by practical rewards (e.g. bonuses on section profits) help to emphasise conflict between different sections. Sometimes the approach leads to some very bad objectives – as the following shows.
13 Conflict between the objectives of different levels often occurs with respect to some limitation of authority placed on a lower level.
14 Example. Tom has a problem that he can solve by two different methods. The less-expensive method does not lie within his authority. Thus, Tom chooses to use the more-expensive method.
15 This situation often occurs because of a classification of types of expenditure – capital items versus current expenditure.
16 Example. Pat, a Supervisor, wants to repair a piece of faulty equipment. He has the position authority to get it repaired but not to buy a replacement part. The Company would benefit overall by the buying of a replacement but because Pat can achieve his objectives within his own authority by authorising a repair, a strong temptation exists to make a decision to repair it.
17 Each level of a business and each particular specialised section often see their overall Organisation from different viewpoints. Thus the objectives of each will differ. The above example only shows one type: in other cases, a less-obvious conflict between objectives exists. Sometimes rules and procedures encourage people to do something that will rate as good when viewed narrowly, but bad from a broader overall viewpoint.
18 When Managers become aware of such conflicting objectives, they should have a greater chance to avoid framing rules and procedures that will make such poor situations. Their awareness will not solve problems but it will help Managers to realise that such problems probably exist.
Conflict between Objectives of Different Departments
19 Managers group people with common objectives together but one group’s objectives often conflict with the objectives of another group
20 Example. The Sales Department would like to have a large variety of its products in varying colours available for sale at points close to their Customers. The Production Department would like long production runs of a few products in very few colours. The Finance Department wants a low amount of stock since it ties up less money. However, this approach competes against the Sales Department who do not want to run out of stock and the Production Department want to stockpile since this objective allows longer production runs.
21 An important objective of General Managers involves ensuring that the objectives of each Department complement the objectives of the whole Organisation. However, too often Organisations exist which foster the view that Employees work for one section of the Organisation rather than the Organisation as a whole. In these cases, the departmental objectives become more important to departmental personnel than organisational objectives.
22 A variation of the conflict between a total Organisation and one of its parts often occurs with respect to (a) personal objectives of various specialist personnel and functions and (b) organisational objectives.
23 Some Engineers and Accountants want to do perfect work when the cost of perfection far outweighs the benefits obtained for the Organisation as a whole.
24 Example. An Accountant spends $1 to collect a debt of five cents. A typist “must” lay out a letter or memo with great care when both Sender and Receiver would prefer the Typist to get the letter done quickly even if not laid out “perfectly”.
All Objectives should contribute towards the Organisation’s Objectives
25 Conflicting objectives always exist when trying to (a) balance the long-term with the short-term and (b) make the best allocation of the limited resources available. Thus, any decision between conflicting objectives represents a compromise. However Managers can (and should) aim to remove conflict between specialised departments and different levels.
26 Nevertheless many cases still exist where Managers will only achieve a compromise, i.e. each Section will never achieve completely their narrow objectives.
27 Example Senior Managers cannot let (a) Production do long runs with few product types or (b) Sales have many types with plenty in stock so that they never run out of any colour or type. Both departments will sacrifice some aspects of their objectives but the whole Organisation will have a better chance to reach its overall objective
28 Objectives of each part of the total Organisation should contribute towards achieving the objectives of the overall Organisation. Managers will find this objective a clear aiming point but hard to achieve in practice, especially with large and complex Organisations. Where someone can quantify the advantages and disadvantages of different objectives (i.e. place a value on them) Managers can make better decisions. However, this situation rarely occurs because of the difficulty of evaluating many factors e.g. the value of – training courses, high morale, gardens around a factory, safety programs, carpet on the floor, an office to oneself.
Conflict between Company and Personal Objectives
29 People have various needs that they try to satisfy and not all of these needs relate directly to their work. Quite often conflict exists between (a) a person’s personal needs and (b) the needs of the Organisation. The satisfaction of some personal needs will help the Organisation for which the person works; in other cases, it will not.
30 Example. While working on the job Harry, a footballer, saves his strength and thinks about tactics for the next match and so contributes less to his work. Mary has a strong personal need to succeed in her job and such a need probably will help her Organisation.
31 Even if people give full attention to work problems, their own personal objectives may harm the Organisation.
32 Examples. The following phrases suggest situations where peoples’ needs get more importance than the Organisation’s needs: “Empire building”, “status seeking”, “passing the buck”, “playing it safe”.
33 All Managers have to deal with these types of problems. The best approach to reducing conflict involves finding ways of providing Organisational objectives that will harmonise with personal objectives. If Subordinates can obtain personal satisfaction by reaching Organisational objectives, few problems exist. Sometimes Managers can link together the things which a person needs (higher pay, a bonus, praise, greater security, recognition, a more-challenging job, etc.) with the objectives of the Organisation or one of its parts.
34 However, in practice, Managers often find this objective difficult to achieve. Often they do not even find (or seek to find) the needs of each person. In other cases, Managers may not discover for some time that some people have personal objectives that will harm the Organisation. Further, people always have some personal objectives at some times, which they rate as more important than satisfying Organisational objectives.
35 Managers should realise that they can never obtain a perfect situation in which Subordinates always work toward the Organisation’s and Section’s objectives. They should understand the factors involved and aim to achieve the best-possible compromise.
Priority of Objectives
36 Whenever a number of conflicting objectives exist, someone can establish an order of importance from the viewpoint of -
(a) the whole Organisation,
(b) each Section, and
(c) each Member of the Organisation.
37 Probably an Organisation will achieve more useful objectives if the priority given to objectives by the whole Organisation, its subdivisions, and its Members all have much the same order – provided some other factors do not outweigh the ones mentioned.
38 Examples. Harry has as his objective “steal from the company”. He gives it a much higher priority than “do his job”. In this case, the Organisation will function less well if Harry achieves the personal objectives or gives it much attention.
39 Mary has charge of a section involved in the development of a new product. To carry out the new-product development, Mary’s people need to use plant and machinery controlled by another section. This situation leads to conflict under the following circumstances.
(a) the plant and machinery spends nearly all of its time producing the very-profitable lines or,
(b) the company decides to sell the plant because it has decided to stop making the products which the machinery produces (NOT the possible new product) or,
(c) Market Research discovers the product under development will not find a market. The Section Head, Mary, knew of the plan to carry out market research but would not wait for the results.
40 The problem of what to do next always exists. If people choose the objective that will most help their Section and the whole Organisation, and, if it also helps to satisfy their own important needs, then harmony and efficiency exist. However, Managers often find it hard to choose between various objectives. Sometimes they favour objectives which they suspect will not help the overall Organisation but which will satisfy their own personal needs.
41 All Managers should seek to achieve this state of harmony. However, in addition, they must make wise decisions, i.e. select the correct objectives for the Organisation as a whole.
Some Examples of broad organisational Objectives.
42 There exists a variety of broad or major objectives which an Organisation might decide to adopt. The following section gives some examples.
The Profit Objective
43 Some people tend to believe that “financial profit” represents the objective of all enterprises. However, consideration of such organisations as churches, schools, hospitals, and charities disproves that idea. The latter organisations aim to provide useful and socially-desirable services. Sometimes they rely on donations, contributions, and endowments for sufficient funds to keep the organisation going.
44 Many people claim the objectives: make a profit represents the objective of all business enterprises. This phrase provides a true answer – but only to a very limited extent. Unless an organisation makes a profit, it quickly reaches a stage where it cannot operate. Businesses must provide sufficient profits to (a) pay reasonable returns to their Owners, (b) improve and develop their facilities, and (c) provide reserves for bad times in the future.
45 However Managers who adopt making profits as the sole primary objective of their Organisation may have the wrong emphasis in their objective setting (= planning). As with other broad objectives, sub-objectives must exist which will help achieve the profit.
46 The pursuit of financial profits as the sole basic goal provides very little guidance to Managers. They all have to make profits. Managers want to know what activities they should carry out to make a profit since profits can only occur through some activity. Thus, businesses need to offer competitively-priced goods or services of appropriate quality to the public. However, the objectives of an Organisation have an important effect on the thinking attitude of its Members. If the Members accept profit as their main target, immediate moneymaking consideration may tend to take the place of long-range, forward-looking efforts that will also ensure profits in the future.
47 Many people use the phrase “maximise profits” as a “good” objective. However, when Managers apply this guideline to their problems, they find the phrase helps them very little. It does not tell how to “maximise profits. It does not tell them how to (a) balance long-term and short-term profits or (b) the period over which to try to “maximise profits”. They will find many activities where they will NOT know their cost and how much they contribute to the profits, e.g. labour turnover, training courses, time spend in promoting higher morale, etc.).
48 Managers should not place primary stress on making profits, but they should not under-rate the importance of making a profit. Some people avoid placing any stress on the need to make profits – in the belief that it may offend some people. If followed to a logical conclusion this idea means the end of a business. People will not invest their money unless they get a return (dividend) from out of profits. People will not donate to organisations that do not provide a socially-desirable service.
49 A business organisation must give consideration to making profits if it wants to prosper. However, Managers should emphasise the means of making a profit rather than the making of profit itself.
50 Many Organisations conduct themselves as though they aim to maintain their present position. Such Organisations generally do not have objectives set out in any formal way – the activities of its Managers allow the observer to deduce their objectives. These organisations tend to: a) avoid even moderate degrees of risk, (b) plan conservatively, and (c) follow well-established procedures. This status-quo- type objectives exist in Organisations where the Owners consider present operations satisfactory, where Managers have little incentive to make progress, or where failure of a project might lead to Managers losing their position.
51 Managers should realise the dangers of the status-quo objective. In the changing world of today, Managers will find it difficult to hold their Organisations in the same place when other Organisations continually change their positions. Satisfaction with the present can breed satisfaction with the Organisation’s products and its services. However, if other Organisations change and/or the demands of the public change, an Organisation may find itself well below its desired position very quickly. Often the realisation that an Organisation has slipped comes too late for it to catch up. Status-Quo objectives breed a dangerous complacency.
52 Some Organisations have among their objectives the goal of becoming the largest of their kind. They aim at (a) ever-increasing sales levels and (b) becoming the first to develop something. The idea of achieving bigness dominates their thinking. They make short-term sacrifices for long-term benefits.
53 Objectives of this kind, if achieved, solve many problems. The Organisation hires staff and promotes them rather than dismissing them or frustrating them by making promotion dependent on the death of Superiors. Work exists for all and people can obtain satisfaction from seeing their organisation grow.
54 However expansion often involves taking risks. If the expansion produces losses, the Organisation can go out of existence.
55 Some business Organisations adopt the improvement of social conditions as their objectives. They do not aim at profit, security, or bigness but dedicate themselves to improving industrial relations, creating jobs for people, serving the community, and helping Employees in their social adjustments.
56 Thus some people believe Organisations should devote some of their resources to these social objectives. However, if a profit-seeking Organisation spends much time and money achieving social objectives; it will have less time and money to spend on other objectives.
57 This approach might mean that an Organisation would grow less quickly if it uses money on social objectives as compared with say development work on new products. Probably the key lies in finding the means to carry out social objectives and make a profit. Some Governments encourage this type of activity by the use of taxation concessions, rebates, etc.
58 An Organisation with perfectionist objectives uses many of its energies to achieve high standards – sometimes without really helping achievement of profit.
59 Examples. The ABC Company tries to (a) achieve a very high standard of finish” on all products even where no-one really sees the finish, (b) maintain smaller tolerances on production work than those normally accepted, or (c) service only highly-selected and discriminating Customers.
60 Scope exists for this type of Organisation because some part of the market will generally pay a higher price for a better article. However to concentrate too much on perfection (particularly where perfection does not improve the utility or appearance or effectiveness of the article) will restrict the growth possibilities of the Organisation because of the limited market. It may even result in the Organisation going out of business through failure to receive sufficient revenue to meet costs. It may find its selling price will not recover the cost of achieving perfection.
61 Every Organisation should probably include SOME elements of the perfectionist objectives in its objectives. However, every Organisation has the problem of finding the right balance between the cost involved in achieving high standards and the money obtainable from Customers for such a standard.
Objectives for Parts of the Organisation
62 Many objectives exist for parts of an Organisation. Readers will obtain no special value if these notes try to list them since they will vary with the level within the Organisation and the Organisations objectives as a whole.
The Impermanence of Objectives
The Impermanence of Broad Organisational Objectives
63 An Organisation must have an objective or a number of objectives (even if vague and unwritten) Once it has achieved these objectives the organisation has no further need to exist. A similar situation occurs where an Organisation cannot achieve its objectives. Thus, an organisation that keeps the same objective for too long may go out of business. To achieve continuity, business organisations probably need new objectives.
64 For many Organisations. continuity of survival becomes an objective of its own. Members have a personal interest in keeping the organisation alive even though from other viewpoints e.g. the nation or the creditors), it should cease to exist.
65 The following list shows a number of factors that often cause an Organisation to change its objectives.
F a c t o r
E x a m p l e s
|(a) Changed economic conditions||A Depression.|
|(h) Changed conditions of competition||A large Company enters the field.|
|(c) Change in size of business||The objective of selling only in city areas may need alteration|
|(d) New methods of distribution.||Sales by vending machines|
|(e) New markets.||Two cars per family, the teen-age market.|
|(f) Changes in Government.||The opposition party wins the election|
|(g) Changes in Law.||Introduction of laws covering restrictive trade practices.|
|(h) Technical innovation.||Invention of the motorcar, transistors, computers.|
|(i) Changes in ownership.||The new owner wants to emphasis a different approach.|
66 Organisations that do not regularly review their overall objective(s) run the risk of finding themselves with objectives that will make it impossible for them to operate profitably.
67 Examples. The makers of horse carriages and buggies gradually found themselves without business after the introduction of the motor car. The makers of the films overcame the problem of television once they decided to take as their objective the provision of moving picture entertainment shown through both picture theatres and television sets.
The Impermanence of Lower-Level Objectives
68 Objectives of the Members and Sections of an Organisation (at the lower levels) change more than objectives of the Organisation as a whole or its major Divisions. The objectives will have a much shorter time span.
69 Examples Fix the pump, Prepare October’s monthly statements, Call on customer “Y”; Dictate an answer to the complaint from a Customer.
70 Problems will arise which will cause Managers to give objectives a different order of importance: they will change some, discard others; some will become impossible, others much more important. Sometimes changed objectives at a higher level will cause the change. More often specific problems on the job will cause the change.
71 Examples Someone stays away from work, a machine breaks down, the new procedure does not work, an accounting report “refuses” to balance the quality of the product does not reach the standard required.
72 The very nature of the work of lower-level Managers (and the Operators whom they manage) brings with it impermanence of objectives. Managers who do well will see the need to review continually sub objectives against the background of ever-changing circumstances of the work environment.
73 Objectives that have a short-time span often change.
74 Examples A machine breakdown changes the objective as regards finishing time but the objective of producing 1000 articles remains the same. A Supervisor (usually) gives more attention to fixing a machine as opposed to such matters as looking after a new employee or planning next month’s operations.
75 The very nature of the day-to-day problems of people at lower levels in any Organisation means most lower-level Managers give too much attention to the short-term objectives as opposed to longer-term ones. Probably this tendency occurs because Managers find it easier to evaluate a short-term objective as having relevance to their Section’s Objectives.
76 Example Mary judges fixing a machine to get production going as more relevant than careful training of an Operator.
77 Managers often find that, if they had given more time to planning, some of their problems would never have arisen. The problem of competing objectives faces individual Managers at all levels but especially ones closest to the actual operation of the Organisation. Managers who can select the right objective to tackle next will do a great deal towards managing effectively.
Difficulties in providing Principles to help set Objectives
78 Managers usually accept the difficulty of setting sound and well-integrated objectives. These notes suggest they need guiding principles to help them set objectives and use them effectively in an Organisation.
79 Management Writers have written little on specific rules for setting objectives. This situation probably occurs because of the wide variety of situations in which people set objectives and the many different types of objectives set.
80 The following principles relate mostly to objectives applicable to more than one person and which cover more than a short period (longer than one day or week). The notes discuss the matter briefly. They do not present an exhaustive treatment of the topic of – principles for setting objectives.
A broad Classification of the Principles discussed
81. The following paragraphs group the principles listed into the following classes:
(a) Areas in which Managers should set objectives,
(b) Some desirable objectives to use when setting objectives
(c) How to keep objectives in mind in order to minimise competition between them, and
(d) Who should set objectives?
Identifying the Areas in which Managers should set Objectives
82 Managers cannot set objectives for a particular activity unless they consider the activity.
83 Example. Dick does not think about longer-term planning or research into selecting personnel or the need for more specific and measurable standards and therefore does not set objectives in these areas.
84 In his book, Practice of Management, Peter Drucker lists eight major areas. He believes that Managers should set objectives for these areas. They should decide what to measure in each areas and the yardsticks or standards) for these factors. However, he comments – only “shaky’ measuring devices and yardsticks exist for many factors,
85 Drucker suggests the following eight areas:
(a) Market Standing
(d) Physical and Financial Resources
(f) Manager Performance and Development
(g) Worker Performance and Attitude
(h) Public Responsibility
86 Readers should read Chapter 7 of Drucker’s book, followed by Chapter 11 on Management by Objectives and Staff Control. This latter chapter makes many points about the topic of objectives.
Some desirable Characteristics in Objectives
Put Objectives in writing
87 While many unwritten objectives exist, the very act of writing down something often forces a person to think more about the subject. Sometimes just writing objectives shows up illogical and/or unclear ideas. Further, other people can review written objectives and help identify the unclear and/or inconsistent ones.
88 However Managers should not apply this technique to short-term objectives of a minor nature.
Set Specific and Measurable Objectives
89 Usually Managers will get more value from objectives if they can decide if someone has achieved them – and the extent of their achievement. Someone can evaluate performance with respect to “reduce labour turnover” better than “Obtain better cooperation among the sales office staff”. Specific measurable objectives reduce the chance that people will misunderstand the objectives.
Set Objectives in areas where Managers will find it difficult to set Measurable Objectives
90 The call for specific and measurable objectives should not blind Managers to the need to set objectives in areas of their operations that do not lend themselves to specific objectives. (Example. Managers should give attention to changing attitudes, but they will find it difficult to set measurable objectives for this area.) Intangible and unclear areas of Managing require attention. However, the difficulty of setting specific objectives for these areas should NOT encourage Managers to give little, or no, attention to them.
Use Objectives that emphasise teamwork
91 Since the objectives of all the parts should contribute to the achievement of objectives of the whole, Managers should stress the interdependence and the need for teamwork and cooperation to everyone involved. Most, if not all, Sections should have as one of their objectives the aim of assisting other Sections in specific ways. Managers should write down these particular aims and communicate them to other interested parties.
92 The atmosphere of the Organisation and the way Managers act should help Section Managers to realise the importance of viewing each Section as a part of the whole. The total Organisation depends on each particular part achieving its objectives.
Realise the likelihood of conflicting Objectives and consider methods of eliminating this conflict
93 Managers will accept the inevitability of conflicting objectives. However too often Managers forget the danger and forget to do something about overcoming it. In coaching and training Managers, this point needs attention.
94 It follows that any Organisation should establish procedures to compare objectives of different parts of the Organisation. The greater the number of levels in an Organisation, the greater the chance that conflicting objectives will exist – simply because of the greater difficulties of communicating everyone’s objective to each other.
95 Managers can use a variety of approaches. One approach involves two different levels writing down their objectives and comparing them. Supervisors write down the objective of their Subordinates’ positions and the Subordinates write down the objective of their own positions. Organisations that have not previously used this approach may find the results disturbing – but better a disturbance now than continuing conflicting objectives, with resulting inefficiencies.
96 (Organisations may extend this approach by having the people involved list other matters beside objectives, e.g. the things which their Supervisors do which annoy them and/or decrease their Section’s efficiency.)
106 Two-way communications will help to ensure that the objectives of the various parts (sub-objectives) will assist in attaining the objectives of the larger part or whole.If a higher-level Manager determines and issues objectives to a Manager on a lower level the lower-level Manager usually accepts them – at least on the surface. The lower-level Manager may not feel encouraged to dispute the objectives or discuss them, Such handing down of objectives will tend to reduce two-way discussion of the objectives.
107 When subordinate Managers set their own objectives a greater chance exists that their Superiors will review their objectives in a less-dominating way and see how they contribute toward the objectives of the larger unit. The Superiors will not have undue influence over their Subordinates – at least not until they get their Subordinates ideas.
108 Managers who set their own objectives obtain useful practice in managingPractice in decision-making should help to develop better Managers. They should get practice in making the decisions involved in recommendingobjectives for their particular Section of the Organisation.
109 A consideration of the above points will show good reason for following the principle that Managers should set objectives for the parts of the Organisation that they control. However in turn they should encourage their Subordinates to set their own objectives. This point means that objective setting, in a narrow sense, comes from the bottom level of the organisation upwards. However, Managers should set objectives after higher Managers have communicated downwards the knowledge of broader higher-level objectives.
110 All levels must set objectives. People should set more wise objectives if an Organisation can achieve free and open communication between the people involved.
111 The element of participation rates as important but it will mean little unless Managers feel they must achieve the Organisations sub-objectives (i.e. the sub-objectives of their Sections) these objectives will help to achieve the objectives of larger parts of the Organisation.
112 Management Researchers and Managers still have much to do to make objective setting an easier and more-logical process. Managers should realise the great importance of objectives and the widespread applicability to most aspects of their daily work. Clear objectives, wisely set, and well understood throughout an Organisation will make solving many other problems a much-easier task.
113 The notes – ‘How to set wiser and more-specific Objectives” provide a specific procedure for helping people set better objectives.
 In the case of not-for-profit organisations, their income has to exceed their expenditure. If not, these Organisations will have to reduce the services they offer or go out of existence.
 Many Writers use “Specific” in common with objectives without clearly defining what they mean. The notes on “A Classification for Objectives” provide a definition of “specific” objectives.