Introduction

As part of the way we manage and govern our organization, we often talk about setting objectives or goals. However, the setting of those objectives or goals is not always as easy as it initially appears. Picking objectives that help support the organization’s direction, have the commitment of the staff and board, are simple to measure, and provide meaningful and timely information that support decision-making can be difficult at times. This article provides some information and ideas on how to build objectives that achieve these, what sometimes seem like, mutually exclusive constraints.

What is an objective?

An objective is a specific end that is desired to be achieved at some time in the future. Objectives are often defined as needing to be SMART, which is an acronym for Specific, Measurable, Achievable, Realistic and Time-limited.

If that is the definition of an objective, what is the definition of a goal? Besides the commonly known definition used in sports, the definition of an objective and a goal are the same. The words are interchangeable. As such, whether your organization calls them goals or objectives is not as important as having everyone agree and use the same terminology.

The framework for objective setting

Objectives are inextricably tied to thinking about the future. When we discuss an objective, we are always talking about the future. As such, objectives are often tied to planning.

When we think of objectives they are rarely in an isolated environment. Usually there is a hierarchy of objectives that could include (depending on the size of your organization) organizational, departmental, divisional, or individual objectives.

Whether you’re involved in setting objectives at all or just one of these levels, you are usually aware of the others. A hierarchy of objectives is beneficial to your organization as it provides:

• A stronger and better alignment between objectives within the organization.
• A basis for decision-making.
• A method for setting performance standards across the organization.
• A method to avoid “robbing Peter to pay Paul”, i.e. reduce the probability of having one area accomplish its objectives at the expense of another area in the organization.
• Ensures that the focus remains on the end and not on the means. Objectives are the ends.

Setting objectives

Objectives can achieve two primary purposes:

• To set a measurable goal that everyone can understand.
• To measure success of activities in moving the organization towards that desired end state.

If the process in setting the objective is participatory then it can also have the benefit of building commitment to achieving that desired state.

Building commitment

Any objective that is set should be both a top-down and bottom-up process.

The senior management team and/or board should set the initial organizational objectives. These should be restricted to three or four that are really critical to your overall success.

Once established, the senior management team should break them down into the key components that need to be measured. Using these key components, those individuals that would have the greatest ability to influence the outcomes should then to asked to set realistic but stretch objectives for the desired time period. This needs to be done with each individual until all the components have been covered. The sum of these component objectives should meet or exceed the measure set by the senior management team. If it does, you’re fine and you need to communicate them and confirm with component objectives to the appropriate staff member and tie it to his or her annual performance review.

If the sum of the components does not meet or exceed the organizational objective, then a discussion with each staff member needs to happen to challenge them to think how they could raise their objective. If during this process, there remains a gap between the organizational objective and the sum of the component objectives a discussion regarding the underlying assumptions needs to take place. At this stage, either the senior management team becomes convinced that the organizational objective(s) is too high, the staff member becomes convinced that their component objective is too low, or some combination of the two.

While this process can be time consuming, (especially if there is a large gap between the organizational objective and the sum of the component objectives) it is worth investing the effort, as it is critical to buy-in.

Measuring Results

When setting objectives it is important that you focus first on finding ways to measure what’s important to the organization and not what’s easy to measure. Having said that, the focus should not be on recreating your management information system to accommodate the ideal measures. Sometimes you get to measure the desired component directly, but this is the exception. More often the measurement falls into one of the following categories (listed from best to worst):

• Causal – directly affects the component.
• Positively correlated – the measure moves in the same way as the desired component and is a direct function.
• Negatively correlated – the measure moves in the opposite direction to the desired component and is a direct function.
• Spurious – the measure moves in some way that relates to the desired component and does so in a consistent and predictable manner but is not directly related to the desired component.

There is the old adage that “what’s measured gets done.” While not always true, when the measure is tied to the individual’s performance, reported on a periodic basis, and aligned with established and communicated organizational objective(s) then the old adage would ring true.

Key points when setting objectives

When setting objectives there are basically two different styles or perspectives individuals take. These are referred to as creation or projection. Those that use creation basically start with the premise that the objective should be set first and then you determine what needs to be done to achieve that objective. Those that use projection start with the resources available or expected to be available and project what type of results could be obtained. In the end, the agreed upon objective is usually somewhere in between these two perspectives.

Objectives can be set against an activity or a result. Monitoring activity usually results in tighter management and more frequent measurement (although high frequency can also be attributed to result-focused objectives).

It is better to have fewer objectives than many – the purpose of setting objectives is to align activities to a common purpose and not to spend all your resources measuring.

There is a cascade effect associated with objectives that are set at the organizational level. For example, one of the organizational objectives is to decrease the cost of funds raised by 15% over the next 3 years. This objective can be achieved by setting both a fund development objective and an objective for cost control. Each of these objectives can be further subdivided into objectives that are more specific. For example, fund development objectives can be set for the type of fund development program, specific campaign, geographic region, etc. or all of them. Consequently, what started off as a single objective at the organizational level has been cascaded into multiple objectives at other levels within the organization (i.e. the hierarchy of objectives). As each objective takes time to measure and report, it is important to keep the number of organizational objectives to only those that are truly necessary.

Reporting is also tied to objectives. Reporting refers to “what” information is reported, how the information is reported (e.g. verbal, written, email, etc.), format (predetermined template, qualitative and/or quantitative), frequency (how often is the information reported), and who the information is reported to. The more critical the objective is to the success of your organization, the greater the frequency of reporting, greater the need for both quantitative and qualitative information in written form, and the higher up the organizational ladder the information is reported.

The simpler the objective the better. If it takes more than a sentence or two to explain the objective, try to determine a better way of communicating it or find another way to set an objective for what you need. The simpler the objective the easier it is to remember.

Ron Robinson is the president of ABARIS Consulting Inc. He can be reached at (519) 472-9788 or rrobinson@abarisconsulting.com. This article is provided free of charge, for information purposes only and is not intended, represented or to be inferred as providing advice. ABARIS Consulting Inc. makes no warranty, express or implied, or assumes any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.

ABARIS Consulting Inc. is credited as the source on all copies, reproductions and distributions, and CharityVillage.com is credited as the original publisher.