3. Goals and Objectives
Goal: A target for achievement that
has a measure and a timeline
Objective: An outcome that will
be achieved when goals are met.
3
4. Cascading Goals
A well designed model of “Cascading
Goals” will work effectively.
A poorly designed model will waste
resources and the desired outcome will
not be met.
4
5. The path of cascading goals
Figure 5.2,
Cascading Goals
5
6. Grand Strategies,
the Foundation of Goals
Recall from chapter 4 that at the Grand
Strategy level, the SWOT analysis proposed
four possible strategic paths coming from
each of the cells in the SWOT analysis:
Cell “A”, Re-design Practices
Cell “B”, Be Aggressive
Cell “C”, Be Defensive
Cell “D”, Use Strengths in New Places
6
7. Goals and measures
Goals define in specific measurable
terms, what end result will be delivered
from efficient and effective operations.
7
8. Characteristics of all Goals,
Corporate or Functional
Goals must be S.M.A.R.T.
Specific
Measurable
Achievable
Result oriented
Time limited
Goals must also be understood
and remain flexible
8
9. Figure 5.4, Corporate Long-range
Strategic Goals
Strategic Objective Strategic Goal
issues
Maximize Maintain an average return on
financial returns investment of a minimum of
to stockholders 15% for the next five years.
Increasing the level of
Improve market awareness of our product in
share world markets by 15% over the
Financial next two years
Returns
Reduce unit
Reduce the % of cost to selling
manufacturing
price by 10% within 2 years.
costs
Improve product Reduce the reject rate by 5%
quality during the next year
9
10. Corporate Long-range
Strategic Goals
Maintain continuous employment for
Sustainability of Maximize the our 1,600 people for next five years.
the organization impact of the
In The Economic organization on the
Contribute 20% of the local Chamber
System regional economy
of Commerce operating budget for
the next five years
Minimize the
probability and Maintain an injury rate less than the
Safety Of the severity of national average for the next five
Public And employee and years.
Employees, public injury
(including the
Motivation and Maximize the Maintain a 90% satisfaction level of
Retention of motivation and employees and have a retention rate
employees) retention of 5% higher than the industry average
employees for the next five years.
10
11. Corporate Long-range
Strategic Goals
Minimize the
Stewardship Of impact of Reduce the level of solid
The Natural operations on the particulate emissions to the landfill
Environment natural to 3 parts per million by June 2007.
environment
Achieve and maintain a 90%
Maximize the
Satisfaction Of customer satisfaction level
satisfaction of
Customers At regarding service, product quality
customers at all
All Levels and perceived value by April 2004
levels
and for the next five years.
11
12. Functional level goals
(Cascaded)
Figure 5.5, Long range corporate financial
goal
Corporate Long-range Goal Measurement Concept
Maintaining an average return on
Maximize financial returns to
investment of a minimum of 15% for
stockholders
the next five years.
12
13. Figure 5.6 operating financial goal
Operating Short-range goals by department Measurement concept
Increase total sales by 5% this year
Sales Maximize by introducing a new pricing structure
Department revenues which includes quantity discounts and
an easy payment plan.
Reduce materials, labour and
Minimize overhead production costs per unit by
Production
production 5% this year by automating the
Department
costs packaging step in the manufacturing
process.
13
14. Another example… safety
Figure 5.7 long range corporate safety goal
Corporate Long-range Goal Measurement Concept
Minimize the probability and Maintaining an injury rate less
severity of employee and public than the national average for
injury the next five years.
14
15. Action plans … operating
departments
Figure 5.8, operating safety goal
Operating Short-range goals by
Measurement and tactic
department
by training all 150 shop personnel in the
Human Resource Increase awareness
effective use of safety equipment by
Department of safety procedures
November 15th, 2000.
by correcting the 17 shortfalls cited by the
Reduce the
Production recent Workers Compensation Board
probability of injury
Department safety audit by September 1, 2000, at the
on the assembly line
least possible cost.
15
16. Goals have three primary
elements:
The target for achievement,
The strategies or tactics to be used,
The Key result area where the benefits
of the activity will be felt.
16
17. For example, the corporate level
goal,
minimize the probability and by maintaining an injury rate
severity of employee and less than the national average
public injury for the next five years,
has the target, to “Minimize the probability and
severity”, the strategy or tactic “by maintaining
an injury rate less than the national average
for the next five years, and the results will be
felt by “employee and public”.
17
18. The Basics of Measuring
Goals
Those who develop effective measures
recite two major benefits.
show senior management that investment
is paying off, therefore acquiring more
investment becomes easier.
show everyone on the team that progress is
being made, therefore acquiring more effort
is easier
18
19. Why Measure Goals?
The “Key Result Area” defines where
results will be found, now we need to
know “how those results will be found?”.
Measurement is the only way you can
show evidence that progress is being
made, and evidence is the only way you
can justify continuing down a path of
trying to realize a goal.
19
20. The bottom line … deliver goods
and services:
when customers want them (speed),
the goods and services meet the customers quality
needs (accuracy),
do enough to satisfy all customers, (volume)
do it at the least possible cost, (investment),
then you have an efficient and effective system.
20
22. Competing goals and trade-
offs among goals
Figure 5.11, Primary Objectives of Business Divisions
Division Primary objectives
Make as much money as we can while making business risks of all types as
Finance and
low as possible.
Accounting Invest profits in improving the security and returns of stockholders
Create a massive awareness of the product and sell as many products as we
can to world wide markets by meeting every single customers needs by giving
Marketing them what they want, when they want it.
and sales Invest profits in expanding the market size, moving to new regions and
markets, developing new products and increasing customer awareness
through advertising and promotion.
Simplify the production process to maximize efficiency and reduce the risk of
Production warehousing inventories.
Standardize production to focus on a few products that are produced
and efficiently.
distribution Invest profits in improving the efficiency of the production process, reducing
distribution costs and improving product quality.
22
23. Figure 5.12, Operational goals in
Business Divisions
Operational Goals
Focus of
Finance and Production and
operational Marketing and sales
accounting distribution
goals
Order
Cheap Order processing Fast order processing Slow order processing
processing
Product Very frequent variants to Standardized production of
Reduced variants to reduce
variants and investment
meet changing customer one product to increase
new designs preferences efficiency
One warehouse at the
Huge regional warehouses
No warehousing because factory to take care of
serving local markets by
Warehousing there should be no
providing fast delivery to
production cycles,
inventory. customers can pick up from
local customers
there
Liberal credit and extended
Credit and Cash only, paid in advance,
payment terms to make N/A
collections to reduce business risk
buying easy
Pay down the debt, provide Alter the configuration of
Increase advertising and
a return to stockholders, the plant and replace worn
Use of financial promotion to maximize
invest in sound growth out assets so that product
returns product awareness in
opportunities by acquiring quality and cost efficiency
existing and new markets
risk free assets. is improved.
23
24. What information is needed
to set a goal?
Benchmarking the past practices of your
own organization.
Benchmarking the practices of
competing organizations.
Benchmarking the practices of all
organizations.
24
25. Linking Goals to Managing
Change
There are two basic strategies for
managing change:
25
26. Paradigm Shift
Figure 5.13, Performance Improvement
Through Paradigm Shift.
New performance
level
Old performance level
Time
26
27. Shaping
Figure 5.14 “Shaping” as a strategy for
change.
Target
performance
Early goals
with small
changes
Perfection goals
with small
changes
Intermediate
goals with big
Present changes
performance
Time
27
28. Summary of chapter 5
A goal is a contract between an
employee and their organization.
Stakeholders need Added Value from
their Investment
28
29. Summary of Section 1
The plans are set, the targets are identified,
and there are great expectations about what
the future will bring. Now it is time to do
something about it.
Goals are not realized by writing them. Goals
are realized my making decisions and then
doing something about the decisions that
have been made.
The next section of the book will deal with the
process used to make the necessary
decisions to ensure that goals are met.
29
