Objective Setting

The process of setting objectives is not simple but quite complicated. The objectives must be realistic and attainable and at the same time, they should represent a high level of efficiency. The objectives should neither be too high nor too low. If they are too high, they cannot be achieved and the managers and workers would become frustrated and if they are too low, they serve no purpose. Further, the objectives must be defined clearly so that the concerned persons can understand them correctly. According to L. Gulick, "a clear statement of purpose universally understood is the outstanding guarantee of effective communication."

The process of setting objectives involves the following:

(a) Classifying of objectives into major and derivative goals and long-range and short-range objectives.

(b) The objectives that are set must be reasonable, realistic and they should have consistency. In other words, the objectives must be attainable with reasonable ease and they should be set in realistic terms and not in idealistic terms. Only when they are reasonably attainable, they can provide incentive and job satisfaction for high performance. In addition, they must be consistent.

(c) Most enterprises have multiple goals and objectives at a time, covering different areas. As has already been stated, according to Peter F. Drucker, there are eight areas for which objectives have to be set. The areas consist of market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude and public responsibilities.

The management should consider the various areas for setting the objective and also specific objectives for different areas and they must be deduced from the broader and overall objectives of enterprise.

(d) Adequate thought should also be given for balancing of the various objectives and for removing their conflicts. Short-range objectives and minor objectives should not conflict with the long-range and major objectives of the concern and they should be recognised as a distinct step in the realisation of long-term and major objectives. Further, although objectives are more stable than other plans, the management has to recognise the fact that business is functioning in a dynamic business environment which necessitates the company to make periodic adjustments of objectives to keep pace with the progress of time and changes in environment.

Approaches to Objective Setting (or Goal Setting)

Two approaches of objective setting can be identified. They are (a) Traditional approach and (b) Management by objectives. The important features of these two approaches are as follows:

(a) Traditional Approach: In this approach, the objectives are set by the people at the top of the organisation for those at the lower levels. This approach is essentially one-way and it is called an authoritarian approach. This approach is likely to reduce their motivation, sense of commitment and responsibility.

(b) Management by Objectives: MBO is a technique and philosophy of management based on converting an organisational objective into a personal objective on the presumption that establishing personal objectives makes an employee committed, which leads to a better performance. The objective setting in MBO creates an integrated hierarchy of objectives throughout the entire organisation. In the process of objective setting in MBO, superiors and subordinates jointly identify common objectives, set the result that should be achieved by the subordinates, assess the contribution of each individual and integrate individuals with the organisation so that the resources of the organisation are put to their best use. Thus, we find, in MBO, the process of objective setting involves participation and collaboration among the various levels of organisation with the intention of achieving organisational objectives.