Many of my customers who run a business have specific goals, aims and objectives so why as soon as we start talking about objectives within the management system do business leaders switch off?
There must be some disconnect between the management system and the business when business leaders can’t see why they need to engage with the task of setting management system objectives. These objectives should be the business objectives. What the ISO management system standards are trying to do is get business leaders to engage with the management system objectives and think carefully about setting the business’ direction rather than just setting the next financial target or hoping to record a lower incident or accident rate.
Hone your objective setting skills here.
To establish objectives we first need to understand the difference between an aims, objectives, targets and goals. If you don’t already know, this article should clarify things (click here).
Hopefully you are now clear as to what an objective is and can see that it doesn’t have to be SMART itself providing it is supported by SMART targets and goals. The question is how do we establish targets and goals and more importantly how do we performance manage them?
1. Establishing Objectives
Establish business objectives that include elements of the key factors you are want to control or improve (i.e. financial, safety, quality, environmental performance, industrial relations, etc). Contrary to popular belief Objectives do not need to be SMART (Specific, Measureable, Attainable, Relevant, Time Bound), they can be aspirational. Objectives such as “To protect the health and safety of all persons impacted by the work” are perfectly reasonable in the management system context providing they are supported by SMART targets and goals.
2. Target and Goal setting
All objectives should be supported by at least one SMART goal or target, but with broad objectives multiple targets are likely to be required. The metric must be something meaningful which can be effectively measured. An established business is probably already monitoring and measuring many of the things which are important to it and these are often the things which targets can be established around. If you are currently recording metrics and they don’t serve an objective, then question whether you actually need to record them. Most companies have metrics around money and sales and these should be brought into the Management System. Many companies already monitor their costs such as utility bills and these are obvious candidates for an environmental objectives and targets. Many companies monitor complaints, defects or returns and these are ideal to establish Quality objectives and targets around. Many companies have to record lost time injuries and you might think it sensible to establish a safety target around this, but there may be better ones. Lost time injuries are an example of a lag indicator (they merely document a result). It’s better to establish targets around one or more lead indicators (things which can influence the likelihood of a lost time injury) such as the number of hazards raised and mitigated, the number of inspections conducted, etc. By keeping in mind the main focus of the business, which is usually to make money, it’s clear that the above examples could also have a positive impact on a company’s financial well-being.
3. Smarter Targets and Goals
We’ve taken the traditional SMART objectives which are a good starting place and added a level of detail all of our own.
|Specific||If you want the company to perform better are we talking about profitability, growth, reducing costs, using less electricity or coming to work smiling. Targets and goals need to be written down (the management system is the ideal location for them). It’s difficult to apportion responsibility, reinforce accountability and ensure your intentions aren’t misunderstood from a chat over a coffee.
|Measurable||Develop some limiting metric or test so you know if you have achieved your target or goal.
If you want to increase sales, are you talking about the number of units, the value of sales or the profit achieved from the sale. A good target often combines multiple limits such as:
Increase in sales consisting of a 2% increase in unit sales and sales value whilst maintaining current profit margins
|Attainable||It’s good to set targets that stretch people, but it’s demoralising to set targets which staff have no hope of achieving. Make sure your targets can be achieved (see 4 Testing your targets).
Make sure you consult with relevant stakeholders before setting targets as you may find what you want is not possible or will have an adverse impact you may not have considered.
|Relevant||It may seem obvious, but keep your targets and goals focussed on your Company mission. If they aren’t you’ll be taking resource away from what you know is important.|
|Time-bound||Being time-bound doesn’t necessarily mean setting a specific date. It may, but you could setting a rolling objective (one that expects to be reviewed on an ongoing basis. Objectives should also be prioritised. Not everything gets done, make sure you communicate the priorities so what is important gets done first.|
|Communicated||Objective related targets and goals are no good locked inside a Management System or a person’s personal performance review. They need to be actively communicated and reported against. It’s not only the person setting the target who should hold persons accountable for meeting objectives, targets or goals. If you want to improve efficiency make sure workers know your intention. The guy on the shop floor may provide the best efficiency saving initiative you’ve ever seen, but he is unlikely to if he is unware of the Company’s focus or their interest in his views.|
4. Test Targets
Once draft targets are established they should be tested to confirm the intended monitoring and measurement is able to provide meaningful and useful results. Only by testing the data gathering and analysis process can it be established that targets are effective. Testing ensures you don’t commit yourself to something you can’t achieve, something you have no control over or something you are unable to monitor or measure.
5. Run the Process
Once the process is properly established with firm targets and regular reporting it should be allowed to run for at least two or three reporting cycles before anything is altered. With a small amount of history the suitability of targets can be determined.
The data from the monitoring and measuring should be reviewed at the management review, but may also be reviewed periodically via additional management meetings or reports. If a review shows that you are failing to meet an objective raise it as an issue and take action. Too many companies shrug and say “try harder next time”. The action taken is often changing work processes to better align with the objective, but you may also want to consider whether the objective needs redefining.
This is likely to be the most common reason for leaving failing objectives as they are: For an objective to be amended a leader would have to admit they set a flawed objective. In my view a strong leader is one who is happy to accept this mistake and learn from it.
The company performance against objectives should be reported to all. How can you build a cohesive company with a clearly defined direction unless everyone is aware of what you are trying to achieve, how you intend to get there and what progress you are making. The more thought you put into developing good objectives, targets and goals and good progress reporting mechanisms the more likely it is that workers can engage directly with them and the more likely you are to achieve your mission.