The objectives of a company are results, situations or status that a company intends to achieve or to which it intends to reach, in a period of time and through the use of the resources with which it has or plans to dispose.
Setting objectives are essential for the success of a company. Because they establish a course to follow and serve as a source of motivation for the members of it.
Objectives of a company
But in addition to this, other advantages of establishing objectives of a company are:
- Allow focusing efforts towards the same direction.
- They serve as a guide for the formulation of strategies.
- They serve as a guide for the allocation of resources.
- They serve as the basis for carrying out tasks or activities.
they allow evaluating results when comparing the obtained results with the proposed objectives and, in this way, to measure the efficiency or productivity of the company, of each area, of each group or of each worker.
- They generate coordination, organization, and control.
- They generate participation, commitment and motivation and when they are achieved, they generate satisfaction.
- Reveal priorities.
- They produce synergy.
- Decrease uncertainty
Characteristics of the objectives
In order for the objectives of a company to achieve the benefits described above, they must have the following characteristics:
They must be measurable, that is, be quantitative and linked to a time limit. For example, unlike the objective “to increase sales”, a measurable objective would be “to increase sales by 20% for the next month”. However, it is possible to use general objectives such as “increase sales”, but as long as these are accompanied by measurable objectives that together can achieve the general objectives.
They must have a clear, understandable and precise definition. They should not be confused or leave too many margins of interpretation.
They must be feasible. They must be within the possibilities of the company, taking into account the capacity and resources (human, financial, technological, etc.) with which it has, as well as the availability of the time necessary to fulfill them.
They must be challenging (although realistic). They should not be something that will happen anyway, but something that means a challenge or a challenge. Unambitious objectives are not very useful nor provide more motivation, although easy objectives at the beginning can serve as a stimulus to not abandon the road as soon as it has been initiated.
They must be realistic and reasonable. They must take into account the conditions and circumstances of the environment in which they intend to comply, as well as the capacity and resources of the company. For example, unlike the objective “to increase from 10 to 1000 employees in a month”, a realistic goal would be “to increase from 10 to 20 employees in a month”.
They must be aligned and coherent with other objectives and with the vision, mission, policies, culture, and values of the company.
Types of objectives
There are different types of objectives in a company, which can be classified according to their nature, hierarchy and time scope.
According to their nature, the objectives are classified as:
Also known as generic objectives, they are objectives based on general or generic expressions. Some examples of general or generic objectives are:
- Be the market leader company
- Increase sales.
- Increase revenues
- Generate greater profits.
- Obtain greater profitability.
- Achieve greater participation in the market.
- To be a leading brand in the market.
- Be a recognized brand in the market.
- Increase the number of sellers.
- Increase the number of assets.
Within the general objectives is the vision of the company, which is the main overall objective pursued by a company.
They are concrete objectives expressed in terms of quantity and time. The specific objectives are necessary to achieve the general objectives. Some examples of specific objectives are:
- Increase monthly sales by 20%.
- Sell 10,000 products before the end of the year.
- Generate profits greater than the US $ 20,000 for the next period.
- Obtain an annual return of 25%.
- Achieve a market share of 20% for the second half of the year.
- Produce an annual return of 14% on investment.
- Increase the efficiency of production by 20% for next year.
- Tripling production before the end of the period.
- Increase the number of workers from 10 to 12 in a month.
- Reduce the level of absenteeism of workers by 5% before the end of the year.
- Acquire 2 new machines for the second semester.
- Open 3 new stores for the first quarter of next year.
Sometimes, the specific objectives are known as goals.
Also known as organizational objectives, are objectives that consider the company as a whole and that serve to define the course of this. They are formulated by the owners or senior managers of the company. They are usually general and long-term. Each strategic objective requires a series of tactical objectives.
Also known as departmental objectives, are objectives that are given at the level of areas or departments. They are formulated by managers or managers of the company. They are usually medium-term. They are established according to the strategic objectives. Each tactical objective requires a series of operational objectives.
They are objectives that are given at the operations level. They understand the tasks or activities of each area. They are formulated by area managers or administrators. They are usually specific and short-term. They are established according to the tactical objectives.
According to their time scope, the objectives are classified into:
- Long-term objectives
They are generally formulated for a period of five years and at least three.
- Medium-term objectives
They are usually formulated for a period of one to three years.
- Short-term objectives
They are usually formulated for a period of no more than one year.
- Recommendations on the use of objectives
Finally, let’s see some tips related to the use of objectives:
General objectives must be established, but only if they serve as a reference to establish specific objectives. Establishing only general objectives can generate confusion and lack of awareness of where you really want to go. It is always necessary to accompany them with specific objectives.
It is necessary to establish objectives for the company in general, for each area or department, and for each work team. The objectives for each team are established according to the objectives of each area, and the objectives of each area are formulated according to the objectives of the company.
The objectives of a company must be consistent with the objectives of other areas or departments. For example, it would not be consistent if production aims to increase the number of products manufactured if marketing does not have the necessary resources to sell the additional products.
The objectives must be communicated at all levels of the company. They should be communicated and be reminded permanently to whom it corresponds.
priorities must always be established when meeting objectives. The most important, relevant or urgent objectives must first be met, and priority must be given to strategic objectives rather than tactical objectives, and tactical rather than operational objectives.
The objectives should not be static. It must have enough flexibility to adapt to unexpected changes that could happen in the environment. Such as sudden changes in the tastes or preferences of consumers as a result of new fashions.
Once established, the objectives should be reviewed periodically to ensure that the results that the company intends to achieve continue to be consistent with the environmental conditions, and to change or modify them if necessary.