Business goals Importance of goals (1) nA goal is a desired out come (target) that an individual or business intends to achieve within a certain time frame. nSuccess in achieving your goals is often determined by the amount of planning you undertake. n nServing as targets. With goals, managers at all levels would find it easier to make coordinated decisions because they understand what the business is trying to achieve. nMeasuring sticks - Specifi c goals act as a benchmark against which the business can measure its performance — that is, the actual outcome is compared with the planned goal. nMotivation - Good quality goals represent a challenge — something to aim for. They act as a motivating force. Employees will gain satisfaction when they successfully achieve a challenging goal. Goals also provide managers with a basis for rewarding performance, which in turn acts as a motivator. n n nCommitment - Getting an employee to agree to achieve a goal — or better still, having the employee participate in the goal-setting process — gives that employee a personal stake in the success of the business SMART technique (1,3) nThe best method of writing effective goals is by using the S.M.A.R.T. technique nSpecific. Goals should be straightforward and emphasise what the business wants to happen. ( 5W) n nWhen drafting your goal, try to answer the five "W" questions: nWhat do I want to accomplish? nWhy is this goal important? nWho is involved? nWhere is it located? nWhich resources or limits are involved? n nMeasurable. Decide on goals whose progress can be measured so the business owner can see the change occur. This helps the business stay on track. nMeasurable goal should address questions such as: nHow much? nHow many? nHow will I know when it is accomplished? n nAchievable. Goals need to be challenging but not be too far out of the business’s reach, otherwise the business owner and employees will become unmotivated due to the lack of success. nAn achievable goal will usually answer questions such as: nHow can I accomplish this goal? nHow realistic is the goal, based on other constraints, such as financial factors? n n nRealistic, relevant The goals must represent something that the business owner and employees are both willing and able to work towards. n n nA realistic or relevant goal can answer "yes" to these questions: nDoes this seem worthwhile? nIs this the right time? nDoes this match our other efforts/needs? nAm I the right person to reach this goal? nIs it applicable in the current socio-economic environment? n nTimebound. The goals must have deadlines and sub-deadlines attached to them otherwise the commitment is too vague. nA time-bound goal will usually answer these questions: nWhen? nWhat can I do six months from now? nWhat can I do six weeks from now? nWhat can I do today? n n Financial and non-financial goals (1) nIn operating business, the owner is generally striving to achieve 4 financial goals: nMaximase profit nIncrease market share nMaximase growth nImprove share price Non financial goals nSocial goals: nCommunity service – sponsorship, supporting educational, cultural and sporting activities nProvision of employment – family business ( members) nSocial justice – fair trade nEnvironmental goals: awerness of environmental issues. nSustainable development – balance between economic and environmental concerns Goals of owner and manager (4) nFreeman stakeholders theory: nShareholder (Owner) vs stakeholder nRisk aversion nIn the traditional view of the firm, the shareholder view, the shareholders or stockholders are the owners of the company, and the firm has a binding fiduciary duty to put their needs first, to increase value for them. However, stakeholder theory argues that there are other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers. Sometimes even competitors are counted as stakeholders - their status being derived from their capacity to affect the firm and its other morally legitimate stakeholders. (R. Edward Freeman in the 1980s.) System of goals in an organization, management tools and principles nTypology of goals in an organization nRelationships between goals, breakdown of goals nConflicts between goals nManagement tools nManagerial techniques • nGoals of an organization are the desired states that an organization strive towards. nThe ultimate goal of an enterprise in a market economy is to maximize profits in the long run. nGoals in public administration organizations are generally different (eg providing a specific service to the population) • •Typology of goals in an organization (5) nThe most commonly pursued goals in an entreprise are(5): • ensuring profit or profitability • reaching the highest turnover possible • dominating the market, market position • long-term entreprise security – saving of property, source of earnings • creating jobs – social responsibility • focus on the independence of an entreprise • enviromental protection n n nMultiple goals = volume of goals = goal system= goal function n nBasic breakdown of goals: • monetary • non-monetary – economic n – non-economic n • Schematic representation of the goal system • • Main goal • • • Inter-goal I. Inter-goal II. • • • • Partial goal I. Partial goal II. Partial goal III. Partial goal IV. Partial goal V. • • There are four basic types of relationships: •complementarity •competition •contradictory •indifference When there is a competitive relationship between goals, it is necessary to determine the order, respectively. the severity of the goals. •Relationships between goals, breakdown of goals (5) nThe main goals are derived from an ideal picture. nSecondary objectives usually have the form of ancillary conditions. nBreakdown of tracked goals from time perspective: •short, medium and long-term goals •static and dynamic goals n Enterprise goals represent a compromise between the visions of leading and satellite groups contributing to the setting of goals. Satellite groups: •employees •providers of foreign capital •suppliers •customers •unions •government institutions Conflicts between goals in the organization may arise in the case of competing goals. They can be broken down into: •individual conflicts between goals •hierarchical conflicts between goals •conflicts between goals within the organization •Conflicts between goals (5) •Management tools are used by management to influence work behavior of employees. • •Optimal use of management tools by corporate governance takes place when •there is an agreement between the organization's goals and the personal goals of the workers. •Management tools (5) • Management tools • Objectively evaluable Purely motivational • Materially Materially Non-materially Non-materially •direct indirect indirect direct • Reward for labor Work Information Work •(including profit conditions and communication comfort •participation) • Staff Education Management style selection •Entreprise Regulation of •social conflicts •experiences • Integration and acknowleding of • personality • • Management neutralization •Management tools (5) • •Management principles should: • release managers for key management tasks and get rid of routine tasks • bring subordinate workers more autonomy in executive activities to enable the use of their creative powers • optimize business performance and adaptability to changing environmental conditions while meeting long-term business goals • •The management techniques include: nmanagement by objectives nmanagement by exception nmanagement by delegation nOthers: nmanagement by….( process, system etc.) •Managerial techniques (5) • Management by objectives (Drucker, P. 2007) nManagement by objectives at its core is the process of employers/supervisors attempting to manage their subordinates by introducing a set of specific goals that both the employee and the company strive to achieve in the near future, and working to meet those goals accordingly. nFive steps: nReview organizational goal nSet worker objective nMonitor progress nEvaluation nGive reward n+/- Mng by exceptions (6) nfocuses on identifying and handling cases that deviate from the norm nMBE use variance analysis n+/- Mng by delegation (6) ninvolves giving the people who work for you responsibility for particular jobs, projects, etc. so that you do not have to do them: nManagement by delegation recognizes that all the members of a team can and should be self-starters. n+/- n Mng by …….system, process nOther types of management n a process of setting goals, planning and/or controlling the organizing and leading the execution of any type of activity, use the tools Balanced scorecard etc. References n1. Chapman, S. Devenish, N., ( 2011) Business studies in action, John Willey and sons n2. Drucker, P., (2007) The Practice of Management, Harper, New York, revised edn, Butterworth-Heinemann n3.https://www.mindtools.com/pages/article/smart-goals.htm n4. Miles, Samantha (2012). "Stakeholders: essentially contested or just confused?". Journal of Business Ethics. 108 (3): 285–298. doi:10.1007/s10551-011-1090-8. n5.Suchánek, P., Špaček, D. (2010)Ekonomika organizací, Brno: MU přeloženo ( M.Štěrba) n6. Anon (2014). "Management by exception". Cambridge Dictionaries Online. Cambridge: Cambridge. n7.