Every business is established to achieve a certain goal. Suppose you go to college, and your goal is scoring good grades and getting a good job, maybe. Similarly, organizations are established to achieve their desired goals which are known as organizational goals.
Here we will discuss what the organizational goal is, its features, objectives, principles, approaches, types, examples, and importance.
What is Organizational Goals?
An organizational goal is the desired outcome of an organization that is set strategically. It is the desired output or final destination in which all the activities of the organization are directed.
Organizational goals are means to guide the employees and the whole organization’s efforts. It tells every organizational member where the organization is heading and how it is going to achieve the desired outcome.
Setting an organizational goal is the primary task of a business by which every other activity is designed. Setting an effective goal is a necessary task managers have to accept. The goal should be acceptable to all members and it should act as a motivation and inspiration for people associated with it.
The organizational goals may be different based on the business’s nature and type. As such, for business organizations, the goal is to profit optimization whereas for service or government organizations the goal is to achieve social welfare.
Every organization strives to achieve its desired outcome i.e. organizational goal, for this, it is necessary to set an appealing goal that everyone accepts and organize the activities that ensure effective and efficient achievement.
What is the Objective of Organizational Goals?
An organizational goal is the means to control and direct all the efforts of organizational members in a way that ensures timely goal achievement. The following are the main objectives of organizational goals.
- To provide guidance and unified direction to employees.
- To motivate and inspire employees to work willingly.
- To facilitate effective planning.
- Provide the organization with an effective mechanism for evaluation and control.
- To provide a distinct image and identity.
Characteristics of Organizational Goals
The following are the common features of an effective organizational goal.
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Reflect Purpose of Existence
The goals of any organization reflect for what purpose the organization is established. The operations of organizational organisms are guided by goals.
The effectiveness of organizational goals validates the rationale behind the organization’s formation. This also shows how long the firm can continue to fulfill its mission.
Goals are future-oriented. A goal gives an organization its destination. The organization’s goals define where it wishes to be at a given period. The main objective of setting goals is to set activities, priorities, and efforts to attain the end target. As a result, goals are created for potential future actions.
Multiple Goals At A Time
Organizations may formulate many goals at a time. Profit maximization, value creation, product diversification, etc. are multiple goals that can be fixed by the organization at a time. But to be specific, the organization should prioritize its goals on the basis of its strengths, weaknesses, opportunities, and threats.
In accordance with an organization’s hierarchical structure, goals may have a distinct hierarchy. According to their functional tasks, different organizational levels set their goals.
Related: Management Hierarchy
Organizational goals are established at the top level, departmental goals are created by management at the departmental level, and operational goals are created at the operating level.
Organizations set goals across different time frames. According to the time horizon of goals, they can be classified into short-term goals, intermediate goals, and long-term goals.
Types of Organizational Goals
The organizational goal can be categorized based on the level of hierarchy and time horizon. These include:
Based on Hierarchy
On the basis of organizational hierarchy i.e. level of management, different types of goals with different influence and importance can be formulated. They are:
- Mission Goal – The Mission statement of the organization is the mission goal. It reflects the vision of top management about the organization’s business. It focuses on the image, philosophy, and aspirations of the organization.
- Strategic Goal – It is the formal statement of the purpose made by top management to attain the mission. Strategic goals are also set by top management with a discussion of middle and lower management.
- Tactical Goal – These goals are set by middle-level managers for departmental purposes. These goals are made to achieve the strategic goal and have shorter time spans than strategic goals.
- Operational Goal – These goals are set for lower-level managers. The main objective of setting operational goals is to operate day-to-day operations efficiently.
Related: What is Organizational Structure?
Based on Time Horizon
Organizations also need to set different goals for different time spans. Some goals must be set for a short period of time whereas others must be longer based on the time required to attain the desired goals. Based on the time horizon the organizational goal can also be of three types.
- Long-Term Goals – Goals having a long-run impact are called long-term goals. These goals are formulated for the long run, especially for more than five years.
- Middle-Term Goals – To attain long-term goals organization needs to break down the goals into departmental goals. Each department formulates its goals according to its functional area. These goals are called middle-term goals. Such a goal’s time spans the range from 3 to 5 years.
- Short-Term Goals – Short-term goals are formulated to conduct regular activities more effectively for less than one year. These goals are established by unit managers or supervisors.
Principles of Organizational Goals
An organizational goal to be achieved by the best manager should be effective. You should best align the organizational strengths and weaknesses and environmental threats opportunities while setting the goals.
To be effective an organizational goal should include these five principles also referred to as a SMART goal.
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The goals must be stated clearly. They should not be vague and over-ambitious. Most of the employees can not understand the vague goals. The goals of each unit and department should be specific and linked to overall organizational goals.
As far as possible the organizational goal should be measurable in terms of number i.e. quantity. However, the measurement can be in terms of quantity, quality, cost, and time. Measurable goals help to evaluate the progress of goal achievement and employee performance.
The attainable principle of organizational goals is sometimes also called acceptable. The goal should be attainable i.e. feasible. This means only the feasible goals that can be attained motivate everyone in the organization.
Managers and employees or every member of the organization should believe in the goal and trust in their efforts so that their efforts can be enough to attain the desired goals.
The organizational goal should be realistic, sensible, and rational. Goals should be based on fact but not hypothetical or imaginary. Goals should be balanced and have reasons for their formulation.
Every goal must have a specific time frame for its achievement. There should be a starting date and an ending date for goals. Time must be allocated to complete a particular goal. Goals without a time frame can not motivate employees in the organization.
Approaches To Setting Organizational Goals
Setting an organizational goal is an essential task for managers. Managers can choose any of the following approaches while setting the organizational goal.
This approach assumes top-level managers should determine overall goals, departmental goals, and goals for subordinates. Top-level managers or chief executives set the desired goals. They formulate goals with the help of experts.
They do not participate with the middle and lower-level managers in the meetings and discussions. The formulated goals rather approached and circulated to middle and lower-level managers.
The bottom-up approach begins with lower-level management. Here, middle-level managers receive the required goals from lower-level managers once they have been set. The goals are revised by the intermediate managers, who subsequently submit them to senior management for final approval after any required modifications.
This strategy assumes that in order to define practical managerial goals, top-level management needs assistance from below.
MBO i.e. management by objectives approach assumes all levels of managers are required to set effective organizational goals. It is also called participative management.
Read Next: What is MBO?
It states top, middle, and lower levels should jointly set the desired goals. The MBO approach of goal setting emphasizes cooperation and mutual discussion between managers and employees in the goal-setting process.
Importance of Organizational Goals
Organizational goals help companies define their purpose, it assist them in designing all other activities that are necessary to ensure effective and efficient goal realization. Following are some of the reasons why the organizational goal is important.
- Provides Guidance and Direction – Organizational goals provide guidance and unified direction to employees. It states what the organization wants and shows where it is going and how it achieves the desired destination.
- Source of Motivation – Goals also help organizations motivate and inspire employees. For this, it should be SMART and additionally, some incentive measures to effectively implement the goals.
- Ensures Effective Planning – Effective goals also support making effective plans. A SMART goal also provides the necessary direction and insights for managers to develop effective plans that ensure the right implementation.
- Basis of Control – Managers can measure the performance of employees based on the set goals. He can evaluate and control the employee’s progress by comparing the standard goals and actual performance.
- Helps in Organizing – Based on the desired goal organizing activities like division of work, rules, regulations, working procedures, authority-responsibility relationship, etc. are designed.
- Proper Use of Resources – It also ensures the proper use of organizational resources. Managers need to give proper instruction and direction to employees to effectively utilize the resources for desired goals.
- Assist in Staffing – Goals assist the organization to keep the right person in the right job. It also aims to increase employee efficiency by delivering different efficiency-enhancing programs.
Examples of Organizational Goals
It is obvious that in every organization there is one thing in common that is they all have some goals for which they are established. The goals can be different kinds, some examples of the organization’s goal include:
- Profit Maximization.
- Social Welfare.
- Employee Satisfaction.
- Better Customer Service.
- Market Expansion.
- Product Diversification.
- Providing naturally healthy products.
- Provide quality products at a reasonable price.
- An educational institution may set goals such as “To be the center for learning for the students who aspire to be globally competitive.”
- The goal may be to increase by 5% in sales within the next two years.
Hence, there can be as many examples of organizational goals since every organization is different.
The organizational goal is what an organization is established for. And, every manager should strive to design the SMART goal to ensure the effective and efficient attainment of desired ones.
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