Organization Goal

Organisations Goals
Desired state of affairs which the organizations attempts to realizes / future state of

affairs which the organisation as collectively trying to bring out.

Organisations are structural devices for accomplishing specific goals and that to understand them fully one must understand their goals.

Warner defines Organisation goal as a state of affairs or situation which does not
exist at present but is intended to be brought into existence in the future by the activities of the organization

Thus: Goals should be predetermined, that is, stated in advance

Goals describe future desired results towards which present efforts are directed.

Official Goals Vs Operative Goals

Official Goals are the general aims of an organization as expressed in its corporate

character, annual reports and the pubic statement of its top managers.
Operative goals reflect the actual intention of an organisation as disclosed by its operative policies, and they may not correspond with the organisations officially

perceived aims.

Eg: prison (instead of rehabilitate delinquent they provide custodial care) Community service , hospitals etc., Though official goals are not revealing the fact, it performs a necessary role by giving an organisation a favorable public image.

Reason for difference in Official Goals and Operative Goals

Perceptions about how best to accomplish official goals may differ. Eg: University Official goals may be unrealistic for financial or other reasons. The organisations official goals may remain unchanged whereas the operative goals may vary over time because of bargaining among groups (competitors) The operative goals (true goals) cannot be determined by reading its

corporate character , but by examining its resource-allocation process.

Benefits of Organizational Goals

Guidelines for action
Source of Legitimacy

Source of motivation
Goals

Constraints
Standards of performance
Rationalize for organizing

Benefits of Organisational Goals

Guidelines for action (keeping on track) : directing and channeling employee efforts what should be done. It provides parameters for strategic

planning, allocating resources, and identifying new product development

opportunities. They tell employee how and where to direct their strongest efforts.

Constraints: it also describes what should not be done. Thus by nature goals
also functions to constraint employee activity. Source of Legitimacy: by justifying organizations activities among stake holders. to prove that the organisation have legitimate right to continue eg: hospitals and universities.

Benefits of Organisational Goals

Source of Legitimacy: an organsation whose goals are deemed legitimate
enjoys ability to obtain resources and other support from its environment. Standards of performance: offer direct standards for evaluating the

organisational performance. Goals pertaining to sales, market share and profit

are more measurable. Sources of Motivation: in a very real sense organisational goals are the incentives for the employees. Eg: Dominos Pizza wide range of incentive program. This also creates job satisfaction. Rationale for Organizing: basis for organisation design. Helps to design the communicating pattern, control mechanisms, departmental structure etc.,

Key Result Areas

Peter Drucker says organisation should establish goals in each area vital for its existence. He designed eight key result areas which are not only relevant to profit oriented organisation but also to non profit organisation. Druckers eight key result areas are:
Market Share Innovation Productivity Physical and Financial Resources Profitability Manager Performance and development Employee Performance and attitude Social Responsibility

KRAs

Market Share

Every organization should have goals related to their competition.

Sales figures are meaningless until they are compared with market potential. Eg: Kelloggs (holds 41% of market share and has its long range goal to reach 50% of

market share)
The business with holds less than certain share becomes marginal supplier. In this case the price for the product depends upon the large competitors. And in a market

downturn it has chance of being squeezed out all together.

When competition becomes intense distributors tend to favor most popular products. Further more if a business market share becomes too low, it may be squeezed out .

The companies having large market share is focusing on brand loyalty.

Market Share
Market share goal might include:
Increasing market share from 15% to 25% within 5 years

Increasing sales 12% over next 12 months

Achieving total sales of 50,000 units by the year 2015

Increasing overall company sales 7% per annum and for each

product a least 5 % per annum.

Innovation
Innovate or evaporate message of todays technological era.
In an analysis of Americas best company excellent companies

are always innovating. Eg: 3M which adds 100 new products

every year to already existing 60, 000 products. 3Ms one of the goal is 25% of profit should be from the products which are less than 5 years old. This requirement clearly shows that 3Ms continued existence depends on its ability to develop innovation.

Innovation
Innovation goals might include
Being the leading contributor to the technology of the plastic Industry Achieving technological leadership in digital transmission and switching systems for ordering voice communications by a certain year. By decades end , developing a fail-safe means for moving a gene from one living organism to another

Productivity
It is the measure of organisations ability to produce more
goods and services with less input (people, materials, money, information) and thus less cost. Eg: General Electric, General Motors productivity is their main goal. General electric calculates that single percent increase in productivity increases 300 dollar profit. The higher the production, the lesser the cost and higher the market share most important management function.

Productivity
Productivity goals might include:
Increasing sales per sales representative from 75,000 rupees to 1 lakh rupees within next 18 months. Decreasing production cost per unit of output by 5% in the next year. Increasing quarterly output per hour by 5% with a less than 5% increases in expenses.

Physical and Financial Resources

An organisation should establish goals for the use of all
resources equipment, building, inventory and funds Every organisation needs physical and financial resources to produce the goods / services. The cost of using obsolete equipment and patching up old buildings are often hidden indeed such old building and equipment may appear very profitable

Physical and Financial Resources

Physical and Financial Resources goals include:
Increasing plant floor space by 50,000 square feet by 2015. Maintaining equipments and tools at existing levels of readiness until further notice Increasing monthly cash flow by 6% over the next 9 months

Maintaining a minimum working capital balance of 1 lakh at all times.

Profitability
A minimum acceptance goal for profitability should be specified. Profit can be interpreted as the gain resulting from an activity and is thus universal to all managerial situations. Profit is always not only the money that is left over after bills are paid. Eg: Charity

art gallary, university etc.

Profit goals might include Achieving an 18% pre tax rate of return on investment in the next three years Increasing profit from an annual rate of 8% to 14% in next two years. Increasing annual student scholastic achievement test scores to the national mean.

Manager Performance and Development

Good management is a key to organization success and to accomplish its goals in an organization, it particularly depends on its managers. Thus goal dealing with continued development of managerial talent, for the future as well as present are essential. Eg: Walt Disney Production, Mc. Donalds, IBM are investing heavily on training. Manager performance and development goals might include:
Establishing a career counseling office within 2 years to assist every manager in designing a

personal career plan.

Annually sponsoring atleast four separate in-house training programs for each levels of management.

Initiating a Fast Track top- management training program by the end of 2015.

Employee Performance and Attitude

Employees are most important assets for an organization Many companies respect every employee by calling them as crew members Mc. Donalds, Hosts at Disney Production, associates at J. C. Penney, at Delta Airlines The Family Feelings etc. Employee Performance and Attitude goal might include: Maintaining current level of employee satisfaction through 2015 Decreasing time lost due to accidents by 50% over the next 12 months Establishing an apprenticeship training program by years end. Reducing absenteeism to a steady level of no more than 3% a year.

Social Responsibility
The ideas of social responsibility is that in addition to an organisations economic and legal obligations, it must respond to society in general. The social responsibility goals might include Hiring and training at least 10 handicapped persons every year Sponsoring an annual Junior Olympics for local handicapped children Adopting a economically backward school and educating the students.

Points regarding Key Result Areas

Conceptions of organisations as having one or two goals do not reflect the real world. For long term survival an organisation should have multiplicity of goals. Avoid potentially conflicting goals. Eg: common pair of goals for a business

are (a) increase market share (b) increase profit. These 2 are conflicting. Here
one goal is achieved at the cost of other. this can be resolved by fixing different goals at different time (may be one after the other). Organisational goals are not mutually exclusive. Eg: increasing minority and no. of. Women in top management what goal it is?

Goal Formulation Cyert March Approach

Individual Preferences and Organisational Goals:

How goals are selected.

Organizational common purpose and individual motive should be identical. In family organisations the organizational purpose itself become a major individual motive. Thus the organisational goals has to be developed accordingly which was explained clearly by Cyert and March.

Coalitions and Organizational Goals

Coalition alliance of individual or groups (either internal or external to organizational boundaries) Coalition agent for formulating the organizational goals. It says the organisational goal is a sum total of the individual members.

Rather it suggest that organisation adopt goals that are the results of
negotiation among internal and external interest groups making competing claims on organisational resources. This sophisticated approach gained greater importance.

Coalitions and Organizational Goals

The impact of coalition is of course not equal. Coalition and its subgroups position and power in the bargaining process (one dept bargaining with other dept for resources) largely depends upon nonsustainability of its activity and the centrality of its workforce.

Sustainability is the function of the replaceability of a groups activities.

Centrality refers to groups importance or degree of connectivity of its assigned task. The greater the groups non-substitutability and centrality the more secure its political position and power. Thus these two influence a group to a greater

extent.

Coalitions and Organizational Goals

Eg: historical development of General Hospitals over 74 years period. In this hospital the goals has shifted over time from financial through technical, training and research to stability goals) through relative bargaining of trustees, Physicians and administrators. Based on the findings of the hospital it was concluded that over a long run an organisation will be controlled by those individuals who perform the most difficult (non substitutable) and critical (central) tasks. Establishing boundaries for coalitions once for all is impossible. Changing interest will give rise to changing coalitions. Eg: staff and client form coalilion in opposition of administration, admin and staff join to oppose the interest of clients, admistrators and clients join coalitions against staff in work evaluation.

Side Payment
Throughout the tug and pull of coalitions the side payments are employed by coalitions to induce other groups to join with them. Side payments can take any number of forms money, private commitments, authority, position and so on. They are , in a sense the price participants require for their cooperation with the demands of other participants or group of participants. The goal for one participant is the side payment for other participant and vice versa.

Eg:

Participant Entreprenuer Employee Customer

Inducement Revenue Wages Goods

Contribution Production cost Labour Purchase price

Side Payment
Open system orgn can survive and grow only as long as they are able to distribute enough inducements, produced out of the contributions they receive to maintain a reciprocal flow of contribution. The ideas of inducement and contribution can also be expanded to incorporate significant outsiders or special groups who influence the goals of the organization. Eg: Suppliers, tax collectors, regulatory agencies, political parties.

Organizational Slack
Under favorable conditions, organisations sometimes accumulate resources in excess to meet their side payments. Total Resources total side payment = Organizational Slack Organisational Slack is cushion resource maintained to meet internal or external contingencies in organisations. Eg: Liquid Financial assets. Some degree of slack should be maintained unquestionable to meet good and bad times of the organisation.

Slack provides time and resource to develop product innovation, initiating changes and
testing new goals.

The more the slack / resources the easier the bargaining by coalitions.

Means End Hierarchy

Organisation have multiple goals and there should be a logical relationship between them. In most organisation goals exist in hierarchy. Objectives at one hierarchical level are goals at other hierarchical level. The organisations overall goal can be achieved by dividing it into 2nd, 3rd and nth order goals what is called Means end Hierarchy By dividing the goals into sub goals for lower level employees the means-end hierarchy

directs the activities of each employee and each department towards the
accomplishment of an organizations overall goal. Broad organisational goals specific task assignments.

Means End Hierarchy

Board of Directors- Goals VP Goals
To remain a leader in developing and applying technological innovations

Means
Conduct devlp Research Means conduct applied research Means use tech improve existing products

Middle Mgmt

Goals

Create second maintain an translate and future active patent tech into Generation f ling program new prod Technologies Means Means

Operating Mgmt

Goals

Pioneer in Poineer in Use imagination know the Semi con research & to bridge the gap market ductor res develop from sci discovery arch & and invention to Developmenyt products

Goal Adaption and Change

Goal (Operative) Changes = environmental and integral change 2 basic forms of goal change:
Goal Succession Goal Displacement.

Goal Succession:

Replacement of Orgns achieved primary goal with a new goal.

Special significance of goal succession = sometimes goal achievement and orgn survival changes

Eg: Cystiv Fibrosis Foundation (Drugs for fatal genetic disease) In such case, the Orgn after achieving the primary goal will either disband or develop new goals.

Goal Displacement
Substituting orgns one goal with other goal. Many organization have intangible goals. Three principal causes of goal displacement can be cited. And the most frequent causes is the substitution of means (the methods of doing work) for ends (output) is called as Means-end inversion.

The second principle cause is over measurement and number magic. It refers to the tendency to attach artificial importance to goals that are easy to quantify and hence readily measurable.

Thus more qualitative a goal, the more likely it is to be displaced. Eg: emphasizing production output with little regard for product quality.

Looking at a profit rather than customer goodwill

Goal Displacement
The third principle cause for goal displacement is sub optimization

of complex organisation or to function at less than an optimum level

because subunits goals take on an importance greater than that of overall organisational goal. Eg: production people had wanted to build cars but they did not care if they are sold. The engineering people wanted to design state-of-art automobiles and were unconcerned if the marketing people were able to sell it.