The most effective objectives are SMART

The most effective objectives are SMART.

SMART objectives. To be effective, objectives should be SMART. SMART objectives must be: S – Specific: Objectives should focus on what the business does and should apply directly to that business. A hotel business might set the objective of a 15% return on capital in each of its hotels. This objective is specific to this business. M – Measurable: Objectives that have a quantitative value are likely to prove to be more effective targets for directors and staff to work towards. An example would be to increase sales in the south-east region by 15% this year..

SMART objectives. A – Achievable: Setting objectives that are almost impossible in the time frame given will be pointless. They will demotivate the staff who have the task of trying to reach these targets. So, objectives should be achievable. R – Realistic and relevant: Objectives should be realistic when compared with the resources of the company and should be expressed in terms that are relevant to the people who have to carry out the objectives. Realistic If the objectives are unrealistic (for example,they are too ambitious), people may not even bother to try and achieve them. To motivate people, the targets must be seen as attainable..

SMART objectives. T – Time-limited: A time limit should be set when an objective is established. Without a time limit, it will be impossible to assess whether the objective has actually been met. An example would be to increase profits by 5% over the next three years..

factors that determine business objectives. Various factors determine business objectives, as summarised in the Figure below.

factors that determine business objectives. Business culture Culture is a way of doing things that is shared by all those within an organisation. The culture of a business and its senior managers impacts greatly on the decisions made. If senior managers aggressively pursue only the profit objective, their decisions will be different to those of the managers of a business with a people-centred or society-centred culture..

factors that determine business objectives. The size and legal form of the business Owners of small businesses may solely be concerned with a satisfactory level of profit (called satisficing). Larger businesses, perhaps controlled by directors rather than owners – such as most public limited companies – might be more concerned with rapid business growth in order to increase the directors’ status and power.

factors that determine business objectives. Sector: Private sector business owners expect rewards for their risks so profits must feature to a greater or lesser extent in their objectives. Many public sector businesses are expected to put service before profits. So, for example, a government-owned school is expected to provide a good education rather than make a profit..

factors that determine business objectives. The number of years the business has been operating. Newly formed businesses are likely to be driven by the desire to survive at all costs, as the failure rate of new firms in the first year of operation is very high. Later, once well established, the business may pursue other objectives such as growth and profit..