What are Organizational Goals?
Organizational goals are defined as strategically designed objectives towards which all activities of business organization are targeted. It is simply the desired state of affair where organization want to reach via directing all of its effort towards it. Organizational goals can also be referred to as destination of business that need to be achieved shortly. These goals give meaning or purpose to the organization and form the basis for deciding the scope of future business activities. Goals of business enterprise communicate its members about where their organization wish to go so that they can accordingly plan their activities on desired goal attainment in future.
Deciding the organizational goals is the initial and primary function played by management that provides the reason behind the existence of every business. Managers while deciding business goals takes into consideration the resource availability, mission, target and purpose in order to come up with clear and realistic goals. Setting up of specific, achievable, measurable and timely goals assist business enterprise in deciding clear path and realizing their vision easily. Every organization carries the distinct type of goals based on the scope and nature of business activities. It is must that manager from all levels within business get involved in deciding goals thereby ensuring optimum utilisation of all available resources.
Types of Organizational Goals
Organizational goals are classified into distinct types on different bases. These bases are defined along with their types in points mentioned below:
On the basis of organizational nature
Every organization differs from one another in terms of the nature of business activities. They have distinct goals that are explained as follows: –
a). Profit earning: Earning profit is a key goal of every business enterprise. It is needed for bearing up expenses, market survival, and financing of growth and expansion of business. A business making losses cannot continue for long in the market.
b). Service/welfare providing: Service organizations are one that provides social and welfare services to communities at large. These organizations raise funds as donation from public in offering services to specific clients. They also obtain government funds for financing the welfare activities of the general people around them.
c). Preserving and promoting interest: Mutual benefit organizations are established and carry out their activities for protecting as well as promoting the interest of members. A group of people having common goals comes together, thereby forming an association for serving their own needs.
On the basis of organization
There are three types of goals categorized on the basis of organizational level.
a). Corporate or strategic goal: Strategic goals are goals set by top management of business organization. The top managers decide strategic goals by considering the changes and effect of organization. Strategic goals are long-term goals meant to be achieved within five years or more period of time. These goals assist in formulating the vision and mission statement of a business enterprise. Vision describes the philosophy of business and mission on another hand and specifies the reason behind organization existence.
Formulation of strategic goals, in short, require the following key features: Involvement of top managers, deciding mission and vision statement, analysing the changes within environment and finding out their effects, and deciding strategy and setting goals for minimum of five years.
b). Tactical goals: These goals are decided by managers at the middle level such as the finance manager, marketing manager, production manager, and human resource manager for their own respective departments. Tactical goals are also called departmental goals as are specific to particular department within business organization. The strategic goals serve as a basis for the formulation of tactical goals. Therefore, in one or another manner, tactical goals support the achievement of strategic goals due to their nature of focusing on operationalizing actions needed for tactical goals accomplishment.
c). Operational goals: Goals set up by operational managers of a business organization are defined as operational goals. The operational managers involve supervisors and unit heads who take into account the tactical goals for formulating these goals. They are used for deciding work targets on daily, weekly, monthly and quarterly basis. Operational goals form the basis of preparing a work schedule, allotment of work, and resources to individuals, groups, and teams.
On the basis of time
On the basis of times, organizational goals are classified into long-term, medium-term and short-term goals.
a). Long-term goals: Long-term goals are organizational goals meant to be achieved in the long-run such as within a time span of five years or even more than that. These goals define the vision, mission, and targets of a business enterprise. Managers at the top level determine and formulate such goals along with strategies to attain them within the required time with better efficiency.
b). Medium-term goals: Medium-term goals are goals decided by business for one year and more. These goals are set-up by managers at middle level and are even classified as departmental goals. The mid-term goals are specific to departments within an organization like production, marketing, finance, and human resource management.
c). Short-term goals: Short-term goals are meant for a short period of time like for at most a one-year period of time. The unit heads and supervisors formulate short-term goals on the basis of mid-term goals.
Features of Organizational Goals
The goals, in order to be effective, should necessarily consist of the following important features: –
Organizational goals should be clear, precise and well-understandable by all concerned peoples. They should not be unclear, vague, and abstract as would otherwise lead to difficulty in proper understanding. Proper understanding of goals among team members helps in easy attainment within the specified period of time. For instance, goal of attaining 10% return is quite clear, whereas goal of attaining higher return is unclear and vague.
An effective goal is one that is measurable in quantitative terms such as time, cost, quantity, standard quality level, distance etc. Measurable goals are easy to evaluate and control thereby assisting in avoiding any deviations. These also help in the easy assessment of the work-in-progress of people and organizations. For example, the goal of getting 25% profit is easily measurable whereas, the goal of getting a higher level of profit is non-measurable.
The goals should be linked with time or in other words, must be bound by a time frame. A clear estimation of time needs to be done for accomplishing the goals in the future. Attaching factor of time-bound with goals helps in recognizing the necessities of promptness and also acts as a standard for organizational activities. Like, a goal of reaching 20% profit level in 3 years has well-specified period of time to achieve.
Organization goals must be acceptable to related parties who would be working on achieving them. An active participation of both higher and lower management should be their in goal setting-up process for reaching better understandability. Employees may not perform in an efficient manner towards attaining the unacceptable goals. Suppose, employer determines the goal of cost reduction that results in reducing employee’s facilities, so here employee may not accept goal and do not go into implementation.
Goals should be realistic in nature, suited to the ground the reality of the organization. Availability of required resources need to be considered while formulating the organizational goals. Setting up of unrealistic and unachievable goals only adds expenses and may even leads to collapse of company.
Objectives of Organizational Goals
The objectives of organizational goals are summarized in points given below: –
Providing guidance and unified direction
Organization goals form the basis of future performance for business enterprises. It offers guidelines for accomplishing task in future as well as demonstrates the direction where organization is willing to go. It serves as the basis for evaluating the performance of the business. Moreover, these goals instruct employees/workers on how to perform the activities
Promotion of good planning
Plans serve as a roadmap to attain the goals of company within stipulated time frame. Formulation of plan is done on the basis of goals; every goal needs distinct and well-designed plan created by considering the requirements in order to have timely accomplishment. In presence of adequate and specific goals, it is quite easier to do the right decision making and resource allocation.
Act as a source of employee motivation
The motivation of employees is a key factor required for attaining organizational success. Organizational goals have an important role to play in motivating employees. Acceptable, realistic, specific and challenging goals carries ability of motivating highly-skilled and capable employees. The goals that are realistic can be easily attained within a defined time frame thereby providing rewards to employees.
Offering an effective mechanism for evaluation and control
Goals act as effective means of evaluating and controlling the performance of employees. Companies can easily track progress via goals and also managers can know the effectiveness of employees in reaching goals. The performance is considered to be efficient only if standard goals are attained. In case, if performance lies below the standard level, then it becomes necessary to take corrective measures for enhancing performance in future.
Providing distinct image and identity
Sound and realistic goals add distinct image and identity to business enterprise among the public. The right image helps companies in attracting competent and efficient employees to the organization. Organizations are easily able to raise their productivity and enhance quality level by involving skilled employees within their areas of operations.
Deciding the organizational structure
The goals and structure are intimately linked with one another. Relationship among people in the form of authority and responsibility or positions to be formed at distinct levels within the organization needs to be decided on basis of organizational goals. The organizational set-up will only determine the purpose of organization. Therefore, in one way or another, goals will also be influenced by the structure of the business organization.