Aims and Objectives, Importance of Aims & Objectives
What is an objective
An objective is a goal or a target that the managers or the organization’s owners have set to try and achieve over some time.
These targets might often be quantifiable, so they might want to achieve a numeric target as one of their goals so that they can measure whether or not they have achieved it at the end of the period of time that they have set that objective for.
We can generally split their kind of goals or aims and objectives that managers and owners have set for their organization into two different categories in business.
Business Aims and Objectives
Some of the aims and objectives that the manager set might be to do with the organization’s financial performance. In contrast, other aims and objectives are more closely associated with non-financial performance matters.
Getting and Staying Profitable
There are different financial performance objectives that managers and owners might have set for their business. If it’s a new organization, particularly if it’s a shorter ownership time, so just perhaps a sole trader or a partnership, the most fundamental objective for those business owners might be the mere survival of the business that they run.
Many new business organizations that start up fail within the 1st 12 weeks, never mind the 1st 12 months.
It makes sense that owners might go into starting a new business venture with the realistic ambition of just still being in business at the end of an agreed period of time.
To make sure that the business breaks even on that business can pay all of its financial commitments on then, once that business has become a bit more established, they might start to set more ambitious financial targets, such as achieving a certain profit level.
Profit Making Goals
Perhaps the most common aim and objective for all business organizations are to achieve on an agreed level of profit during a time period, so these objectives might actually be to do with achieving a certain level of profit in terms of pounds and pence, so a business might set itself the target of achieving $50,000 profit, or it might be an objective to do with improving profits by a certain percentage.
By the end of the financial year, we want to improve profit by 8%.
Grow Sales Goals
Other businesses might not focus exclusively on profits, but might just try and develop their business and attract more customers by setting targets to do with sales figures. This can be a numeric like; targets to attract 10,000 customers in its first year;
It could be a percentage of improvement, aim, or objective. Like; to grow sales by 20% during the next 12 months.
More established businesses may be focusing on competing with rivals; their business’s sales are compared to other firms in the market by setting themselves market share objective. Market share is the percentage of sales in a market that your business has achieved compared with rivals.
A business that’s currently selling 10% of the country’s cars might set a target of improving that percentage by the end of the next year or two years. May be selling 15% of the cars in the automobile market.
Establishing a market share or increasing grow market share is a widespread objective because the managers of businesses know that if their business increases their share of the market, they’re taking away competitors’ share. This can be a very competitive aim or objective for the business to pursue.
Maintaining a Healthy Cash Flow
The other financial objective that managers and owners might just be striving towards is financial stability; for smaller organizations, maybe sole traders and partnerships, financial security might relate to how much they come withdrawal from the business.
They might set themselves the objective of being able to earn enough from the business that they started to be more financially secure for larger organizations; financial security aims, objectives might relate to the business being able to pay all of its financial commitments.
Larger businesses that may have experienced cashew and shortages and not honor all of their financial commitments might decide to set themselves a target for the next period of time to make sure that their business is a little bit more financially secure.
That business is a little bit more solvent and can always meet its financial commitments.
Non-Financial Aims & Objectives
However, businesses don’t just exclusively focus on financial aims on objectives. There are some non-financial matters, so matters that don’t involve the cold, hard facts of money and sales and profit that businesses might set themselves as targets.
Social Aims & Objectives
A lot of businesses, particularly more established in larger organizations, may also set some social objectives as well.
These could be to do with serving a particular stakeholder in the community or making sure that the business donates some of its profits to a particular good cause.
Often, businesses are setting a social objective to do with the environment and trying to make sure that their business reduces its impact on the local area where the business operates in or its broader impact on the global environment.
The productivity of People and Resources
Again, it can be motivational for people as well. When measuring the set objectives, it can be very motivational for employees to see how the business is performing compared to the objectives or measure that own personal performance at work on seeing how much they are contributing to the organization’s objectives.
But businesses might have personal objectives as well. This is particularly true for new organizations run by sole traders or partnerships.
They might have some more personal goals that they would like to achieve from their business. For example, they might have a particular challenge to try and accomplish by starting their business.
- Maybe it’s just to see that idea come to fruition.
- Maybe it’s just a help, a specific group in society.
But they have this personal goal, this personal challenge has caused them to leave their job and not seek a place in employment anymore, but instead want to run their organization.
Many people who are starting businesses also do so because they are happy with the kind of working life they have when they have a job.
They set themselves objectives to do with their own working life, grabbing greater independence over their working life, or have greater control over decision making on what goes on in their organization.
There are also personal goals for smaller businesses that they might be striving towards alongside, perhaps trying to survive or trying to make a certain profit level.
Why Managers Aims and Objectives
Crucially, it’s important to know why owners and managers even set goals and aims and objectives for the businesses.
Goals and objectives and aims are crucial because they provide people in the organization with a target.
It’s a way for the owners or the business managers to communicate over people in the organization that these are our priorities.
This is what we want you to make the focus of or the work that you do for us. These other things that these business values the most now when it comes to social objectives; these objectives are also useful for communicating with other stakeholder groups that these are the business’s values.
Suppose a business has an objective to do an environmental goal or help a specific group in society. In that case, it helps communicate to people outside of the business that this is what we stand for; this is what we value and try to achieve over the next time period.
The other big advantage of aims and objectives is that they can be used by managers on the owners to assess the performance of the business that the old all rotten.
If they set objectives for a 12- or 24-month period enduring that time span, they can monitor the business’s performance against the objectives they’ve set.
They can measure whether the business is on track to set the targets they have laid out for the business to achieve.
Setting and objectives and aims for an organization can be a crucial way of measuring the business’s ongoing success and performance.