Organizational goals are strategies and objectives that guide a company’s efforts and intentions. Essentially, they’re goals for an organization to follow. A forward-thinking company should always have some of these in place to help guide and shape the future of the company as it grows.
Without organizational goals, a company has no direction to work towards. While a company may be able to function for a number of years without forming new organizational goals, if the company refuses to grow and evolve with the times, they will eventually stagnate and get left behind.
The same goes for their organizational goals. If a business cannot update their organizational goals as times change, they will eventually fall out of style or favor with their audience. As times change, different practices and ideas become obsolete or uncool.
For example, the testing of products on animals was considered a necessary evil for a long time, but now, more and more people are calling for the abolishment of this practice. “Cruelty-free” products are gaining popularity over products from businesses who refuse to adopt this practice.
In this guide, we hope to teach you about the different types of organizational goals, how they shape the future of a company or business, and what sorts of benefits and drawbacks they can provide.
Types of Organizational Goals
Organizational goals come in a few different varieties and models, depending on which business or organization is defining them. They’re usually labeled based on which area of the business they affect. There are two main models of organizational goals that we’ll cover in this guide: the Official-Operative model, and the Strategic-Tactical-Operational model.
Official vs. Operative
Businesses will usually set two different types of organizational goals: official goals and operative goals. The two types serve very different purposes for the business, though both are important for their own reasons.
Official goals are the vague, hard-to-measure goals that usually outline a business’ public intentions. For example, a service concerned with helping rescue animals will often choose community service, animal welfare, and fighting against animal abuse as their official objectives. However, the way that they’ll fulfill these goals isn’t usually made quite as clear with official goals.
The business’ operative goals are where these goals are truly defined. There’s a catch, though: for many companies, their official and operative goals don’t necessarily line up. While a company’s mission statement might be community service, their immediate goals might be more concerned with fundraising so that they can afford to spend time on community service.
Of course, the business still always intends to enact its official goals eventually, but operative goals often take precedence. Operative goals align more with how the business is run, what it needs to do to achieve its purposes, and how to get from point A to point B. They also tend to be short-term, while official goals can often stretch several years into the future.
In short, a company’s official goals are more of a mission statement, while operative goals are what the company intends to do right away to achieve its broader organizational goals.
Strategic, Tactical, and Operational
The STO model is a different way of looking at organizational goal distribution within a company or business. It’s functionally the same as the Official vs. Operative model, but goals are distributed based more on company level than by purpose. The model works as follows:
- Strategic Goals are set by the highest levels of the organization. They’re similar to official goals in that they’re more like a mission statement than a true goal, and they tend to be vague. They’re often concerned with long-term vocations and impact, and they focus on a broad range of issues.
- Tactical Goals turn the company’s broad strategic goals into better-defined, narrower goals. This is usually done by middle-level managers and overseers from various departments, with upper management setting these goals for the managers below them. Tactical goals lie between official goals and operative goals.
- Operational Goals refer to short-term issues and problems and are usually dealt with by low-level management. Operational goals further turn tactical goals into even smaller goals and help create a “game plan” of sorts to address them. Operational goals are functionally similar to operative goals.
The three goal-tiers in the STO model, when used together, create a chain that helps bring a company’s goals from conception to action. While it has one more step than the Official vs. Operative model does, it’s not particularly suitable for small businesses with one or two levels of management.
The STO model is more suited to large corporations and organizations, while small businesses and self-employed individuals can also utilize the Official-Operative model.
Importance of Organizational Goals
Corporations wouldn’t take the time to set organizational goals if they weren’t important or didn’t benefit the corporation in some way. Goals, as a rule, are meant to help an entity direct their efforts toward achieving a specific, desired result, and organizational goals are no different.
Organizational goals also help give employees direction. For example, if the company’s main organizational goal is to increase the quality of its product, the actions the employee would want to take would be very different than a company whose goal is to increase revenue. It’s extremely important for employees to know what these goals are, lest they end up working without direction and wasting their efforts.
Organizational goals are useful to corporations and businesses for many reasons, in addition to those listed above. We’ll touch on a few more of these benefits and principles below.
Guidance and Direction
As we mentioned briefly above, organizational goals help guide a company’s efforts and priorities, just like normal goals do for people. This is both important for those on top who directly control the organization and those on the bottom who might never make contact with those in charge. When a company sets a goal to decrease their cost per item, for example, everyone in the company will understand that goal.
However, this can go both ways, and this is the benefit of having both large, vague goals and smaller, more defined goals. If the company’s larger goal is to branch into a related area of business, they will need to first build up enough revenue to buy out target businesses, they’ll need to train staff on associated aspects of the new business, and optionally set up a new sector to handle their acquisitions.
It’s essential to have goals in place that will guide all sectors of the business, which is the STO model’s strength. The upper management level needs to direct the vision of the business as a whole with broader goals, while at the same time helping to direct lower levels with more defined goals.
The job of middle management is to work on putting these middle goals into action by further breaking them into smaller goals for lower management and workers. From there, the lowest sections of the business become the building blocks for how the business’ broadest goals are realized. You can visualize this as something like a pyramid; the vaguest goals start at the top, breaking into smaller and more defined goals as they travel down it.
Planning and Action
Planning and goal-setting go hand in hand. If you’d like to visit another country within the next year, for example, you’ll need to plan to save up enough money to do so. You should also expect to do enough research to make the trip as painless as possible. If you do these things, when the time for the trip rolls around, you will be as prepared as possible for it.
The same concepts apply in business. If a company aims to increase profits, for example, then they should plan out everything they need to do in advance to make it possible. Once they’ve planned thoroughly, they’ll be ready to put their plans into action, and hopefully, they’ll be able to turn a higher profit!
Planning can be useful in many more ways that we’ve touched on already, such as:
- Plans laid out by management provide clear courses of action for employees to follow
- Advanced planning helps pin down directions that the business may want to move in
- Planning can help identify or mitigate complications before they happen
- Careful research and planning can help identify market trends and let businesses prepare accordingly
- A thorough review of plans will help companies to make sure they’ve set the right types of goals for the business
Planning should always take precedence before action is taken. Although it’s always tempting to jump into a new idea quickly, taking the time to plan, research, and review everything beforehand can identify issues, alternatives, and potential benefits before you even begin. What’s more, in a large business setting, the massive number of people working together makes for many unique ideas and thoughts.
Motivation
Having a goal to work towards motivates employees, especially if a reward is offered for attaining those goals. Think employee of the month, a pay raise, or a promotion here. When employees are working towards a common goal, they’re already more motivated than usual to achieve it, but with the addition of a rewards system, productivity can see a truly amazing boost depending on the reward offered.
Additionally, friendly rivalry between employees as they all work towards the same rewards can increase productivity further. As long as a civil environment is maintained, the competition for who does the best job, and thus who receives the rewards, will inspire coworkers to work harder and better.
Moreover, remember that it’s difficult to put a lot of work towards one purpose when you don’t have a goal or objective in mind. If an employee doesn’t have anything to work towards, if they don’t have anything at which to direct their efforts and energies, a lot of it will be wasted. The presence of a goal alone helps to corral productivity in the right direction.
We’re going to give a special mention to the varying difficulty of goals here, and how those difficulties can affect employees and employers alike. When you set goals that are too easy or too lenient for employees, laziness often results. This situation arises because employees don’t feel like they’re challenged; they feel like they can get their work done anytime without much effort.
In this way, it’s more harmful than helpful for a caring employer to go easy on their employees. However, the same is true in the opposite direction, too.
If an employer pushes their employees too hard, they may feel stressed, discouraged, or unjustly punished, all of which you should try to avoid whenever possible. The productivity of stressed and discouraged employees suffers, and if it gets bad enough, they may even search for alternative employment elsewhere.
However, it actually is helpful to push your employees a little bit. By rewarding hard work, employees will be tempted to do just a little more with each cycle, gradually increasing their confidence, productivity, and ability. As long as managers walk the line between too much and just enough, motivation in employees can benefit greatly.
Control
In a lesser way, goals serve as a means to control all those employees who work under only the highest levels of management. While creativity to fulfill one’s goals in whatever way they want within set parameters is helpful and good for creativity, having the confinement of that goal serves to aim the employee’s efforts towards what the business is trying to achieve.
However, employers need to be careful not to be too constricting with the goals they set. Even if they’d rather their business get somewhere in a very specific way, allowing employees to express their creativity lets them grow and blossom as individuals. If you leave the method that they use to achieve their goals open to interpretation, they may even come up with an idea that’s superior to yours.
The control aspect of setting goals can also be used for evaluative purposes. If an employee does an exceptional or insufficient job on completing one goal, that performance can be used in the future to evaluate how that employee works toward other goals. It’s not always a good idea to judge one employee based on the performance of another, but good performances can be used as motivators for other employees instead.
Resource Allocation
When goals are set in specific areas for a company to fulfill, these denote regions where the company should be investing additional resources. For example, the most important goals that a company sets should benefit from the most allocated resources, descending onward from there.
Employees will know how to allocate their resources better, too. When you give employees something to work on that’s labeled as a priority, that means they should spend as much of their available time as possible on that assignment. The same goes for any other member of the organization who’s given assignments or goals in the same way.
When planning to achieve a particular goal, project managers should always use resource planning and allocation to better prepare for the time, manpower, and money investments that the project may require. There is an abundance of tools available for these managers to use to handle their resource allocations better, too, most of them being software programs that are usable with a subscription.
To keep things running smoothly, resource managers need to be able to keep track of the following:
- Employee timesheets and availability
- Allocation of funds and spending
- Project “roadmap” or steps
- Employee contributions
- Work divisions and teams
Definition of Standards
Experience working on various projects gives a business a certain amount of experience. When they’ve worked on one type of project before, it allows them to predict what they’ll need the next time around more accurately. Additionally, they’ll be able to evaluate the performance of different employees better when they’ve seen how previous employees work on the project.
Barring projects, setting specific organizational goals helps a business learn how their employees should be performing in general, too. If one employee does not measure up to the benchmarks of previous employees, the company will know right away when they have that experience. Additionally, having this prior knowledge allows them to push their employees just for what they can handle each time.
As far as projects go, having several completed projects of a certain quality will help employers define what they expect of their employees down the line. Exemplary projects can be used to guide employees to do better work, in addition to showing them what sorts of results their employers are looking for.
Key Areas
Since businesses create organizational goals, they tend to fall into several business-related areas that can influence how the business performs. Predictably, these categories line up with things like profits, customer service, employee performance, and similar areas. In this section, we’ll be going over a few of these areas, why they’re essential, and what types of goals businesses set in each area.
Productivity
Productivity refers to the amount of quality work that an employee can accomplish in a set amount of time. A productive employee is one who spends the majority of their time focusing on the work that they’re assigned. An unproductive employee is one who’s easily distracted by social media, coworkers, or other things and does not get as much work done in a day as they should.
Having productive employees is essential for a business to run properly (and profitably). If a company or organization’s employees are unproductive, the business is essentially throwing money away. When an employee enters into a contract with a business, they’re expected to work hard every day in order to further the interests of the company. If an employee is unproductive, that’s not happening.
There are many reasons why an employee might be unproductive, and most of them are the fault of the business. Check out these examples of why productivity might suffer:
- An employee’s work must be sent back because they didn’t receive adequate instruction on how to complete the task
- An employee takes time to slack off at work because management is not enforcing workplace etiquette among employees
- An employee doesn’t know the company’s goal or mission statement, so they’re not aware of the purpose they’re working for
- The chain of management is broken, so the employee doesn’t get new assignments and duties on a regular basis
Profitability
Profitability refers to how much money a company can make for each unit of a product sold. If a company is selling very high-quality products that cost a lot of money to manufacture, the product may only be marginally profitable after expenses are calculated. However, if the product is cheap to manufacture and cheap to sell, the same situation arises.
It’s the goal of every business to create or manufacture a high-quality product for as little investment as possible, then sell it for a high price. This results in the highest possible profit per unit.
However, profitability doesn’t rely on manufacturing alone. A company can create the ultimate product in terms of theoretical profitability, but when they go to sell it, none will sell. This happens when companies neglect other areas necessary to sell an excellent product, such as marketing, business reputation, and customer service.
Consider a business that hasn’t put any money into marketing. In the days before radio and television, this is how all businesses operated; companies catered mainly to local buyers, and the product was spread by word of mouth. However, nowadays, relying on word of mouth alone is extremely inefficient. If a business expects to sell enough product, they need to keep in mind several things:
- Creating a bad reputation for themselves will result in lower sales
- Bad customer service will result in lower sales and a bad reputation
- Unless your product becomes the “next big thing,” you’ll need to invest money into marketing for anyone to hear about it
- Your product needs to have some advantage over similar products on the market (if any exist)
Innovation
The last bullet point we mentioned above leads us to the importance of innovation. Innovation should always be an organizational goal of any business because, when an organization creates a product that’s entirely new, several things happen. For one, if the new product is extremely convenient or useful, it will gain a following among buyers, resulting in free advertising.
Additionally, when a company releases an entirely new product, they face no competition from others on the market. For new goods or service, this doesn’t usually last a very long time, and knock-off or similar products will hit the market quickly, but if your product is high-quality, it will stand out from the imitators.
Resource Management
Resource management is another huge concern for companies and organizations. When a business gets very large, especially, it can be difficult to track where all the money, manpower, and time are going. This is important for any business because if any of those three resources aren’t going where they should be, it means profit is being lost.
Workforce management relates almost entirely to employees. If employees aren’t properly managed, they may become lazy, might not know the full extent of their jobs, or could be wasting time on incorrect work. We covered this in the “Productivity” section, so we’ll only touch on it here.
Money management is often something that’s handled by its own area of the company, usually headed by a CFO or similar manager. This branch is concerned with making sure items that are purchased are bought for the best price, employees are getting paid the proper amount of money, and money theft isn’t an issue for the company.
Time management is the job of every member of the company. The lowest-levels of employees should be taught how to manage their working time if they don’t know already, and any escalating levels of management are responsible for managing both their own time and that of the areas below them.
Social Responsibility
The final key organizational goal for these companies is social responsibilities. Companies may not start out with socially responsible goals, or they may be concerned with them from the start. However, as a company grows in size, it becomes more and more expected that the company should partake in social preservation of some kind.
Think of the largest companies you know of. Many of these companies regularly partake in social preservation “campaigns” to help promote their own products, even if they weren’t originally concerned with such things. Some companies, like TOMS, have been promoting social preservation from the day they were conceived. TOMS donates one pair of their shoes to someone in need for every pair that a customer purchases.
Coca-Cola didn’t start from a social responsibility policy as TOMS did, but they give back one percent of their annual profits to charity, and several other large companies follow the same example. Companies will also open donation programs when disaster strikes in various corners of the world, as Wal-Mart and many others did for Katrina relief efforts in 2005.
