Setting goals starts with top managers. The overall planning process begins with a mission statement and strategic goals for the organization as a whole.
At the top of the goal hierarchy is the mission – the organization’s reason for existence. The mission describes the organization’s values, aspirations and reason for being. A well-defined mission is the basis for development of all subsequent goals and plans. Without a clear mission goals and plans may be developed haphazardly and not take the organization in the direction it needs to go.
The formal mission statement is a broadly stated definition of purposes that distinguishes the organization from others of similar types. A well designed mission statement can enhance employees’ motivation and organizational performance. The content of a mission statement often focuses on the market and customers and identifies desired fields of endeavour. Some mission statements describe company characteristics such as corporate values, product quality, location of facilities and attitude toward employees. Mission statements often reveal the company’s philosophy as well as purpose. One example is the mission statements for Bristol-Myers Squibb Company, which presented such short straight forward mission statements describing basic business activities and purposes as well as the values that guide the company. Another example of this type of mission statement is that of State Farm Insurance:
State farm’s mission is to help people manage the risks of everyday life, recover from the unexpected and realize their dreams.
We are people who make it our business to be like a good neighbour who built a premier company by selling and keeping promises through marketing partnerships which brings diverse talents and experience to our work of serving the State Farm, customer.
Our success built on a foundation of shared values – quality service and relationships, mutual trust, integrity and financial strength.
Because of mission statements such as those of Bristol – Myers Squibb and State Farm, employees as well as customers, suppliers and stock holders know the company’s stated purpose and values.
Goals and plans:
Broad statements describing where the organization wants to be in the future are called strategic goals. They pertain to the organization as a whole rather than to specific division or department. Strategic goals are often called official goals, because they are the intentions of what the organization wants to achieve. For example five years after he started Physician Sales and Service, Pat Kelly set a strategic goal for PSS to become the first national physician supply chain, a goal he soon reached. Now, Kelly wants the company to become a global distributor of medical products. A strategic goal for the new chief executive of the New York Stock Exchange is to restore the credibility of the exchange with government regulators and the public.
Strategic plans define the action steps by which the company intends to attain strategic goals. The strategic plan is the blueprint that defines the organizational activities and resources, allocations in the form of cash, personnel, space, and facilities required for meeting these targets. Strategic planning tends to be long term and may define organizational action steps from two to five years in the future. The purpose of strategic plans is to turn organizational goals into reality within that time period.
As an example, a small company wanted to improve its market share from 15 per cent to 20 per cent over the next three years. This strategic goal was pursued through the following strategic plans (1) allocate resources for the development of new competitive products with high growth potential (2) improve production methods to achieve higher output at lower costs and (3) conduct research to develop alternative uses for current products and services.
Source: New Era Management