Let me start backwards, can I run my business without goals? A company without objectives is like a ship adrift; it moves at the mercy of the wind, the tides and the waves without a fixed course, with which it can run aground or sink at any time. It does not direct its destiny.
I am sure this is not the image you want of your company. You have to grab the rudder, consult the map, the compass, check that you have enough fuel and supplies and mark a destination to reach in a certain time. In other words, it is necessary to establish objectives and allocate the necessary means to achieve them.
It is necessary to define objectives since many companies and people are more concerned with working than with producing results.
It is worth remembering that when you don't have a goal, work can take up all the available time. Parkinson's Law states that "work expands to fill the time available for completion"
What is a target?
It is a commitment in order to obtain a specific result at a certain time.
What should the objectives be like?
Goals must be SMART
- S: Specific (M) Measurable (Measurable) A: Achievable (R) Realistic (Realistic) T: Timed (with a lead time) (Time-related)
Furthermore, they should be: Relevant, Motivating, Understandable and Compromising.
In other words, an objective would NOT be: "sell more" but "During 2013 sell 10% more than in 2012, keeping profitability per customer above 10%"
When setting a goal, we must answer, among others, the following questions: What should be done? How will I measure the results? What is the date to achieve the objectives?
Goals must be challenging and innovative. There must be an incentive system linked to the objectives. In order to track each objective must have at least one indicator. The objectives are a fundamental element for people's commitment to the organization and let's not forget that the result is guaranteed through people's commitment.
Both quantitative and qualitative aspects must be defined in the objectives. Ethics must be ahead of the prize. In other words, the objective should not be an end in itself. You have to consider the means used to achieve the end.
What is a Management By Objectives (APO) system?
APO is a results-oriented activity planning and management system. It forces us to reflect on where we are going and how we are going to achieve the established goals, in the short, medium and long term. More importantly, it forces us to specify numerically the steps to be taken to reach the goal. It manages to improve the efficiency of the organization since it eliminates duplications and channels all efforts in the same direction. APO makes the organization coherent and acts as an instrument of motivation and participation.
APO aims to improve the company's objectives by aligning personal objectives with the general objectives of the organization. The commitment of the Management is essential and that the company has a well-organized structure of responsibilities.
APO aims to improve the performance of the organization through the alignment of all efforts. It must be controlled that the incentive system does not corrupt the business culture, nor does it promote the deterioration of interpersonal relationships, nor promote unethical behavior.
Like any incentive system, its perversion must be controlled. The life cycle of any incentive system is directly related to the degree of control over it. You have to find the right balance and keep in mind that no incentive system remains uncorrupted for long.
Keep in mind that APO is a management system, not a remuneration system. The remuneration system must be an APO tool, not an end.
APO scheme
With the crisis, APO is more necessary than ever since companies must focus on specific priorities and align all their resources on them.
APO scheme
- The Directorate defines long and short term strategic objectives. She transmits them to the other departments. It also defines the rules of the game. That is, how the objectives will be controlled, how the resources will be allocated, how the incidents will be managed, how the results will be rewarded or penalized, etc. Each Department defines and agrees on its objectives, which must be aligned with the General Objectives. deviations are controlled and managed, deciding the measures to be taken. It must be borne in mind that the objectives must not be set in stone.
According to Peter Drucker, creator of APO in the mid-20th century, a Management by Objectives system must measure:
- The position of the company in the market, depending on the potential market it has. The innovation of products, services and processes. Productivity. Profitability. Performance and attitude of workers. Social responsibility of the company.
If we do not use APO, the organization repeats efforts, stops reaching objectives and resources are diverted in activities and tasks not related to the purpose of the system.
I hope this article has served to reflect on the importance of goals in the success of your business.
