Criteria for Effective Goals

To ensure goal setting benefits for the organizations, guidelines should be adopted. The characteristics of both goals and the goal setting process are listed below. These characteristics pertain to organizational goals at the strategic, tactical and operational levels.
Specific and measurable: When ever possible goals should be expressed in quantitative terms, such as increasing profits by 2 per cent decreasing scrap by 1 per cent or increasing average teacher effectiveness ratings from 3.5 to 3.7 . A team at Sealed Air Corporation manufacturer of packaging materials was motivated by a goal to reduce by two hours the average time needed to change machine settings. Not all goals can be expressed in numerical terms but vague goals have little motivation power for employees. By necessity goals are quantitative as well quantitative especially at the top of the organization. The important point is that the goals be precisely defined and allow for measurable progress.
Cover key results area:
Goals cannot be set for every aspect of employee behaviour or organizational performance ; if they were, their sheer number would render them meaningless. Instead managers should identify a few result areas — perhaps up to four or five for any organizational department or job. Key result areas are those activities that contribute most to company performance. Most companies use a balanced approach for goal setting. For example Northern States Power Co. tracks measurements in four key areas financial performance, customer service, and satisfaction, internal process and innovation and learning.
Challenging but realistic:
Goals should be challenging but not unreasonable and difficult. One new manager discovered that his staff would have to work 100 hours per week to accomplish everything expected of them. When goals are un-realistic they set employees up for failure and lead to decreasing employee morale. However, if goals are too easy employees may not feel motivated. Stretch goals are extremely ambitious but realistic goals are those that challenge employees to meet high standards.
One example comes from 3M, where top managers set a goal that 30 per cent of sales must come from products introduced in the past four years, the old standard was 25 per cent. Setting ambitious goals helps to keep 3M churn out innovative new products – more than 500 in one recent year alone and has entrenched the company as a leader in some of today’s most dynamic markets. The key to effective stretch goals is ensuring that goals are set within the existing resource base, not beyond the department’s time, equipment, and financial resources.
Defined time period:
Goals should specify the time period over which they will be achieved. A time period is a deadline starting on the date on which goal attainment will be measured. A goal of implementing new customer relationships management system for instance might have a deadline such as June 30, 2005. If a strategic goal involves a two to three year time horizon specific dates for achieving parts of it can be set up. For example, strategic sales goals could be established on a three year time horizon with a $100 million target in year one, a $165 million target in year three.
Linked to rewards:
The ultimate impact of goals depends on the extent to which salary increases, promotions, and awards are based on goal achievement. People who attain goals should be rewarded. Rewards give meaning and significance to goals and help commit employees to achieving goals. Failure to attain goals often is due to factors outside employees’ control. For example, failure to achieve a goal may be associated with a market demand due to industry recession. Thus, employees could not be expected to reach it. A reward might still be appropriate if the employees partially achieved goals under difficult circumstances.
Source: New Era Management