Setting Standards and Objectives

Organizational standards and objectives are important elements in any plan, because they guide managerial decision making. Performance standards and objectives may be stated in monetary terms—such as revenue, costs, or profits—but they may also be set in other terms, such as units produced, number of defective products, levels of quality, or degree of customer satisfaction.

Peter Drucker suggests that operational objectives should be SMART, which means specific, measurable, achievable, realistic, and time constrained. An operational objective should be:

• Specific. Focused, well defined, and clear enough that employees know what is expected. A specific objective should identify the expected actions and outcomes. This helps employees stay on track and work toward appropriate goals.
• Measurable and quantifiable so people can assess whether it has been met or not. For example, “increase annual sales revenue by 10 percent” is a measurable objective.
• Achievable. It’s important for all the stakeholders—especially the employees doing the work—to agree that the objective can be met. Unachievable objectives can be damaging to employee trust and morale.
• Realistic as well as ambitious. It should take into account the available resources and time.
• Time constrained. Having a deadline can help increase productivity and prevent the work from dragging on.

It’s important to get employee input during the process of developing operational objectives, as it may be challenging for employees to understand or accept them after they’re set. After determining appropriate operational objectives for each department, plans can be made to achieve them.

You can view the transcript for “Utilizing SMART Goals for Career Planning” here (opens in new window).
You can view the transcript for “Setting S.M.A.R.T. Goals” here (opens in new window).
You can view the transcript for “S.M.A.R.T. GOALS – Wellness Wednesday, Feb. 10” here (opens in new window).