Many of our clients have specific business goals, aims and objectives. So why, as soon as we start talking about management system objectives, do business leaders switch off?
Management system objectives should include the business objectives. The ISO management system standards aim to get leaders to engage with the management system and carefully consider the business’ direction rather than just setting the next financial or growth target.
This workshop article aims to help you hone your objective setting skills.
To establish objectives we must first understand the difference between an aims, objectives, targets and goals. If you don’t already know, this article will clarify things (click here).
Hopefully, you are now clear as to what an objective is. This article shows that objectives don’t have to be SMART (Specific, Measureable, Attainable, Relevant, Time-Bound) providing they have the support of 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 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, 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 targets and goals.
2. Target and Goal setting
All objectives should be supported by at least one SMART goal or target. When objectives are broad they typically need more supporting targets and goals. Targets and goals must measurable and meaningful. If not, part of the objective must include establishing a measurement capability. An established business is likely to already be monitoring and measuring many of the things which are important to it. These are often the things to which should apply targets. That way you focus on doing the important things. If you are currently recording metrics and they don’t serve an objective, then question whether you need them at all.
Most companies have metrics around money and sales and these can become part of the Management System. Many companies already monitor their costs such as utility and fuel bills and these are obvious candidates for environmental objectives and targets. Some companies also monitor complaints, defects or returns and these are ideal for establishing quality objectives and targets around.
Lagging and Lead indicators
Some companies have to record lost-time injuries and you might think it sensible to establish a safety target around this, but there are better ones. Lost-time injuries are an example of a lag indicator: they just document what happened. It’s better to establish targets around one or more lead indicators: things that promote positive performance. An example is the number of hazards raised and mitigated or the number of inspections conducted, etc.
Knowing that most businesses want to make money, it is clear that establishing targets around the sales pipeline or production efficiency (lead indicators) would be more beneficial than one focused on turnover (a lag indicator or profit).
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.
|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.Consider:|
|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:|
5% increase in unit sales whilst not reducing current profit margins by more than 1%
As part of measuring progress an objective must be reviewed so you can avert a failure to achieve it. Most management systems standards mandate at least an annual review, but if objectives are important to you, waiting a whole year to look at them is risky. Something like a rolling live analysis may be more appropriate.
|It’s good to set targets that stretch people, but it is demoralising to set targets which staff have no hope of achieving. Make sure your targets can be achieved (see Section 4 Test 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.|
|It may seem obvious, but keep your targets and goals focused on your Company mission. If they are not aligned you will be taking resources away from what you know is important.|
|Being time-bound doesn’t necessarily mean setting a specific date. It may, but you could instead set a rolling objective (one that expects to be reviewed on an ongoing basis). Objectives should also be prioritised. Typically not everything gets done, so make sure you clearly communicate the priorities so what is most important doesn’t get left behind.|
|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 person on the shop floor may provide the best efficiency saving initiative you’ve ever seen, but he is unlikely to if he is unaware 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 you prove 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. It doesn’t take much history to work out whether targets are really suitable.
The data from the monitoring and measuring should be reviewed at the management review. It 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”. Unfortunately, if you missed it once, it is almost certain you will miss it again unless you have taken some correcting action. 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.
To amend an objective management have to admit it was not a good objective in the first place. This is why management often persist with poor objectives. Strong leaders will accept this mistake, learn from it and alter an objective or the priorities accordingly.
The organisation’s performance against objectives should be reported to relevant stakeholders. How can you build a cohesive company with a clearly defined direction unless all the relevant stakeholders are aware of what you are trying to achieve? They need to understand 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. The better they are the easier they flow down into individual targets and KPIs and the more likely the Company is to achieve its mission.
Don’t be afraid to set objectives around confidential company metrics. You don’t have to publish figures. A line can show progress and will still provide stakeholders with an indicator of how the organisation is tracking against an objective.
If you liked this article you may want to read the difference between objectives aims targets and goals