Establishing Strategic Goals, Objectives and Performance Targets
Goals are the broad, primary results that management seeks to achieve in the plan.
Objectives are the specification and quantification of those goals.
The result of Objectives, Performance targets cannot be set on the basis of whatever management decides would be “nice.” If goals and objectives are to be something other than “pie-in-the-sky wishful thinking,” and if, at the same time, they are to serve as a tool for stretching the enterprise to achieve its full potential, then they must meet the criterion of being challenging but achievable. Satisfying this criterion means setting objectives in the light of several important “inside-outside” considerations.
Criteria of Performance.
Achieving the Set Goals. Obviously the primary criterion is to achieve the goals set by the organisation. Profitability is usually the most important area of performance, however in Not for Profit organisations it is replaced by “positive margins”. Both guarantee the flow of capital necessary for new value offering development and expansion.
Effectiveness. The degree to which our strategies are working. Includes Competitiveness and Efficiency
Competitiveness. Competitive strength is really a substitute measure of long-run success in achieving goals.
Efficiency. To ensure long-term profitability, organisations must maintain certain kinds of short-term efficiencies -usually in terms of cost savings.
Flexibility. Because organisations operate in a very uncertain environment, well-managed organisations should try to protect themselves from significant negative events by remaining flexible, both externally and internally.
Corporate objectives should be developed and performance evaluated in each of these areas. Accordingly, assessing the organisation’s strengths and weaknesses for purposes of strategic planning should identify strengths and weaknesses in each of these areas.