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    The document discusses establishing annual objectives in organizations. It states that annual objectives (1) are the basis for allocating resources, (2) evaluate managers, (3) monitor progress toward long-term goals, and (4) set priorities. Annual objectives should be measurable, consistent with long-term goals, communicated throughout the organization, and tied to rewards and sanctions to motivate employees and managers. Clearly defined annual objectives increase the likelihood that an organization's strategies can be successfully implemented.

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    Annual Objective

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    The document discusses establishing annual objectives in organizations. It states that annual objectives (1) are the basis for allocating resources, (2) evaluate managers, (3) monitor progress toward long-term goals, and (4) set priorities. Annual objectives should be measurable, consistent with long-term goals, communicated throughout the organization, and tied to rewards and sanctions to motivate employees and managers. Clearly defined annual objectives increase the likelihood that an organization's strategies can be successfully implemented.

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    254 views1 page

    Annual Objectives

    Uploaded by

    Jan
    The document discusses establishing annual objectives in organizations. It states that annual objectives (1) are the basis for allocating resources, (2) evaluate managers, (3) monitor progress toward long-term goals, and (4) set priorities. Annual objectives should be measurable, consistent with long-term goals, communicated throughout the organization, and tied to rewards and sanctions to motivate employees and managers. Clearly defined annual objectives increase the likelihood that an organization's strategies can be successfully implemented.

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    Annual Objectives

    Establishing annual objectives is a decentralized activity that directly involves all managers
    in an organization. Active participation in establishing annual objectives can lead to acceptance
    and commitment. Annual objectives are essential for strategy implementation because
    they (1) represent the basis for allocating resources; (2) are a primary mechanism for evaluating
    managers; (3) are the major instrument for monitoring progress toward achieving
    long-term objectives; and (4) establish organizational, divisional, and departmental priorities.
    Considerable time and effort should be devoted to ensuring that annual objectives are
    well conceived, consistent with long-term objectives, and supportive of strategies to be
    implemented. Approving, revising, or rejecting annual objectives is much more than a
    rubber-stamp activity. The purpose of annual objectives can be summarized as follows:
    Annual objectives serve as guidelines for action, directing and channeling efforts and
    activities of organization members. They provide a source of legitimacy in an enterprise
    by justifying activities to stakeholders. They serve as standards of performance.
    They serve as an important source of employee motivation and identification. They
    give incentives for managers and employees to perform. They provide a basis for
    organizational design.2
    Clearly stated and communicated objectives are critical to success in all types and
    sizes of firms. Annual objectives, stated in terms of profitability, growth, and market share
    by business segment, geographic area, customer groups, and product, are common in
    organizations. Figure 7-2 illustrates how the Stamus Company could establish annual
    objectives based on long-term objectives. Table 7-2 reveals associated revenue figures that
    correspond to the objectives outlined in Figure 7-2. Note that, according to plan, the Stamus Company will slightly
    exceed its long-term objective of doubling company
    revenues between 2010 and 2012.
    Figure 7-2 also reflects how a hierarchy of annual objectives can be established based
    on an organization’s structure. Objectives should be consistent across hierarchical levels
    and form a network of supportive aims. Horizontal consistency of objectives is as important
    as vertical consistency of objectives. For instance, it would not be effective for manufacturing
    to achieve more than its annual objective of units produced if marketing could
    not sell the additional units.
    Annual objectives should be measurable, consistent, reasonable, challenging, clear,
    communicated throughout the organization, characterized by an appropriate time dimension,
    and accompanied by commensurate rewards and sanctions. Too often, objectives are
    stated in generalities, with little operational usefulness. Annual objectives, such as “to
    improve communication” or “to improve performance,” are not clear, specific, or measurable.
    Objectives should state quantity, quality, cost, and time—and also be verifiable.
    Terms and phrases such as maximize, minimize, as soon as possible, and adequate should
    be avoided.
    Annual objectives should be compatible with employees’ and managers’ values and
    should be supported by clearly stated policies. More of something is not always better.
    Improved quality or reduced cost may, for example, be more important than quantity. It is
    important to tie rewards and sanctions to annual objectives so that employees and
    managers understand that achieving objectives is critical to successful strategy implementation.
    Clear annual objectives do not guarantee successful strategy implementation, but
    they do increase the likelihood that personal and organizational aims can be accomplished.
    Overemphasis on achieving objectives can result in undesirable conduct, such as faking the
    numbers, distorting the records, and letting objectives become ends in themselves.
    Managers must be alert to these potential problems.

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