Organizational Goals | Commerce & Accountancy Optional Notes for UPSC PDF Download

Introduction

• The concept of 'goal' is central to the definition of an organization, which emphasizes that the purpose of an organization is to achieve its goals. Goals and objectives are crucial elements of an organization, as they help in achieving the mission, realizing the vision, and setting the course for the organization. Goals are the large steps towards achieving the mission/vision, and they should be in line with the organization's principles and values. When achieved, goals should bring the organization closer to its vision. On the other hand, organizational objectives are the smaller steps that the organization takes to achieve the goals.
• A goal can be defined as a specific desired accomplishment over a defined period of time. While the desire to be the best is commendable, it is not a goal but rather a wish or a dream of the organization. 

To turn any desirable idea into a goal, the organization must subject it to five criteria, known as SMART:

• Specific
• Measurable
• Attainable
• Relevant
• Time-bound

SMART is a goal-setting method popularized by Zig Ziglar and is commonly used to realize individual or organizational goals. This method serves as an effective tool in formulating well-established organizational goals.

• Sometimes, goals and objectives of an organization are confused and used interchangeably. However, there are significant differences between the two terms. Goals are outcome statements that define what an organization is trying to achieve programmatically and organizationally. They are usually a collection of related programs, reflecting the major actions of the organization, and provide rallying points for managers. On the other hand, objectives are very precise, time-based, measurable actions that support the completion of a goal. They are directly related to the goal and are expressed in a clear, concise, and understandable form.
• For an organization to be effective, it must state its goals and objectives in written form. If they are not in written form, they are merely ideas with no real power. It must be understood that only written goals and objectives provide motivational power among employees or anyone else involved in achieving them. Clearly and specifically written goals prevent confusion and misunderstanding. Furthermore, well-written goals and objectives facilitate easy assessment of organizational performance, as the results can be measured against the time frame for achieving the goals.

Goal-Setting Approach

• The Goal-Setting approach, which is the oldest and most widely used approach, is a method used to define and measure the effectiveness of organizations. It assumes that organizations exist to achieve goals that reflect purpose, rationality, and achievement. Many management practices, such as Management by Objectives (MBO), are based on the goal approach. However, there are shortcomings to this approach, which are as follows:
  • Intangible outcomes may be difficult to measure.
  • Goal conflict frequently occurs as organizations strive to achieve many goals.
  • Goal achievement does not guarantee organizational effectiveness.
• When choosing goals and objectives, emphasis should also be given to the type of approaches to be used – either top-down, bottom-up, or interactive. Management by Objectives (MBO) is a common example of a top-down approach. This approach focuses on coordinating goal setting, incentives, and feedback. Here, the top-level management (CEO or managers) establishes the organizational mission and determines strategic goals. The strategic goals determine the tactical goals and objectives as they are passed down to the next level of management. The tactical goals in each department guide the operational goals and objectives for individual employees. The supervisor and employee then agree upon performance objectives and how goal attainment will be measured. This helps the supervisor understand the employee's concerns and their ability to achieve the set goals. During the next evaluation, the supervisor and subordinate meet to assess the extent to which performance objectives have been met.
• The top-down approach has several advantages. It guarantees that the organization's goals and objectives are directly tied to and support the mission statement. It helps break down the goals set by the top level to the lower level in the organization, ensuring ambitious goals are set for everyone. However, the top-down approach also has disadvantages. Upper-level management employees may be unaware of the day-to-day activities, making the goals overly ambitious and unrealistic. Additionally, goals set at the top of the organization may take time to percolate down to the lower levels, and the approach may not always involve employee participation in the goal-setting process, resulting in a lack of employee ownership.
• The bottom-up approach works at the lower levels of the organization. Personnel at the bottom level set goals and objectives for the employees directly above them. Here, operational goals and objectives determine the tactical objectives, which then determine the strategic goals and objectives. Finally, the organizational mission is defined according to the guidelines set by the employees. Goals determined by bottom-up goal setting are likely to be more realistic than those set at the top of the organization. They are more flexible, realistic, and reflect the current situation of the organization. However, goals formulated by bottom-up goal setting are not always in line with the organization's mission, and organizations using this approach may lack clear direction and focus.
• The interactive approach to goal setting involves employees at different levels of the organization participating together in forming goals and objectives. Senior-level or top management employees start by developing a mission statement. Managers from different levels and departments then come together, contribute their expertise, and determine strategic goals. These goals are then discussed with lower-level managers and supervisors, and employees at the individual level contribute their inputs by defining their own personal goals and objectives. Interactive goal setting involves discussion and cooperation among management and employees at all levels, making the goals more realistic and current. However, this approach is time-consuming, difficult to manage and maintain, and requires active involvement from managers.

Values and Benefits of Goal Setting

• Goal setting and achievement play a crucial role in organizational success and can fundamentally change the way organizations operate. Whether it's a private or public entity, for-profit or non-profit, well-planned goals can often be the deciding factor between success and failure. Goals provide direction to all parts of an organization and motivate employees by holding them accountable for their actions.
• There are several benefits to goal setting. Goals serve as a measure of success and help organizations and individuals gauge their performance and make necessary corrections. Regular performance checks allow organizations to identify and address issues promptly, improving overall performance. Goals also offer guidance in decision-making, especially during critical situations. Achieving goals provides a sense of satisfaction and motivates employees to perform better.

Organizational goals serve several functions, according to Barney and Griffin:

• They provide guidance and direction.
• They facilitate planning.
• They motivate and inspire employees.
• They help organizations evaluate and control performance.

According to Locke and Latham, goals influence individual performance through four mechanisms:

• They direct action and effort toward goal-related activities.
• They energize employees, with challenging goals leading to higher effort.
• They affect persistence, as employees exert more effort to achieve high goals.
• They motivate employees to use existing knowledge or acquire new knowledge to achieve goals.

Overall, goal setting is influenced by individual needs and values. Needs refer to a lack of something desirable or useful, while values are attitudes about a concept that contain a moral quality of like or dislike. Values determine whether a particular outcome is rewarding. If an employee is dissatisfied with the current situation, goal setting becomes a way to achieve what they desire.