Setting clear objectives for a company or a department is a key factor for its success. However, given that you have clear objectives in place for your company or department, how can you be sure that these objectives are the right ones?

The objective of this article is to illustrate to CEOs and Department Heads the importance of having objectives in place and whether they are the right ones or not will determine the success or failure of the company or department. The article will also provide a brief guideline on how to determine the right objectives for your company and department.

According to a survey that was conducted about how strategies are implemented in companies (http://www.slideshare.net/SpeculandRobin/strategy-implementation-survey-results-2012), it was determined that 9 out of 10 companies fail to implement their strategy and achieve their objectives. I have read a number of articles, books, and surveys on the subject and they all agree that the number one reason for failure of these companies is having the wrong objectives; either at the company level or the department level. According to the survey, the reason why companies have wrong objectives is that the management do not understand the importance of setting objectives and developing strategies and it was determined that around 70% of CEOs spend less than a day each month to discuss and review strategies.

The below image illustrates this further by describing two types of companies:

• Company A: in this type of companies, the management understand the importance of planning and dedicate significant amount of their time to set the right objectives for the company and ensure these are cascaded properly to each department. Accordingly, each Department Head understands the Company Objectives and cascades those into departmental objectives which upon implementation shall succeed in achieving the Company Objectives.
• Company B: in this type of companies, the management focuses significantly on operations rather than strategies. They may or may not have the right Company Objectives in place. Additionally, Department Heads are managing their departments based on objectives they have set in isolation from the Company Objectives leading their department into an unknown direction that has the minimum chances of supporting the company in achieving their objectives.

I have worked throughout my career with a good number of CEOs in local businesses as well as in international companies and below are clear examples of CEOs managing companies similar to Company B type:

• CEOs with micromanagement style where they try to focus on day to day operations rather than focusing on bigger pictures and strategy planning.
• CEOs who are more reactive than proactive. They develop strategies to address issues after they occur instead of forecasting these situations and developing the strategies in advance.
• CEOs who request their Department Heads to develop strategies for their department from scratch without providing information on the company’s objectives or direction.
• CEOs who may develop internally or request external consultants to develop excellent strategies. However, once these strategies are developed they end up on the shelf and they do not ensure their proper implementation.

To illustrate this further with a practical example, in one of the projects where I was brought in by a client as a consultant, the company had clear objectives for the company, for each department and for each individual. However, the CEO of the company realized that there is a big issue in the HR Department and he literally said “we feel that all other departments are moving forward towards our goals except for the HR Department where it is significantly falling behind”. Once I heard this statement, it was very obvious that something went wrong with the strategy of the HR Department. I then requested for a copy of the strategy for the company as well as the HR Department. I even went one further step and requested for the Individual Objectives of the HR team. When the three objectives were put next to each other, the below image illustrates what was identified.

The below were the findings of the analysis of these objectives:

• the Company Objectives were not cascaded properly to the HR Department Objectives and it is very clear that there is no relation between both objectives.
• the HR Department Objectives were also not cascaded properly to Individual Objectives. Resulting in the department and HR individuals working in different directions and not supporting the company in any way.
• the objectives placed for the company were more sales related and were not covering other areas in the company. These objectives are more of Sales Department objectives rather than company level objectives.

Now that we understand clearly the result of not having the right objectives in place, let’s move on to your guideline on how to develop proper and clear objectives.

Step 1: Choosing a Strategic Planning Tool

There are various tools and systems on Strategic Planning. You can read further about the different tools at this link (https://en.wikipedia.org/wiki/Strategic_planning#Tools_and_approaches).

My favorite approach for strategic planning is the Balanced Scorecard tool. The Balanced Scorecard tool is nowadays being used widely across many global corporations as well as in SME companies and it has proven its effectiveness in successful Strategic Planning. I will try to explain this tool as simple as possible as there are so many details on the subject which I don’t intend to address in this article. You can read further about it at (www.balancedscorecard.org). The tool helps you in making your objectives and strategies more focused around the following 4 aspects:

• Financial aspect: this area of your strategy is focused on the financial aspects in terms of your planned profits, revenues, spending plans, budgeting, etc.
• Customer aspect: this area of your strategy is focused on your plans to address all customer related efforts in terms of increasing customer satisfaction, expanding to new markets, sale strategies, etc.
• Operational aspect: this area of your strategy is focused on your plans to improve the internal processes of your operations.
• People aspect: this area of your strategy is focused on your plans which are related to your people in terms of improving performance, training and development, rewards and incentives, etc.

Now each company which implements the Balanced Scorecard approach may have different definition for each of these aspects and they may add more aspects in addition to the ones listed above. It is a customizable approach but once you define your desired aspects you must comply to them as if you keep changing them along the way your life and strategy may end up with disastrous outcomes.

Below is a simple table that I have developed that will simplify your life when coming up with your objectives and strategy.

It looks very easy to implement and doesn’t need further explanation. However, we will later look at a practical example on how to fill such table to come up with excellent and aligned objectives. I will just provide few guidelines on how to fill the table above:

• under the Company Objectives column, always try to set generic objectives at the Company level and go into further details at the Departmental level.
• under the Company Objectives column, try to limit the objectives to one or two under each aspect to keep it simple.
• once you complete the Company Objectives under each aspect, cascade each Company Objective to one or many Departmental Objectives and the same thing with Individual Objectives.

Step 2: Understanding the inputs to your objectives/strategy

Before starting to develop your strategic objectives, you need to understand the key inputs to your strategy which will strongly help you in determining suitable objectives to be filled in the previously discussed table. These key inputs are as below:

• Current State Capabilities: this is basically the SWOT analysis of your company or department. You need to understand where does your company/department currently stand so that you can determine the objectives required to move your company/department from its current state to the desired state.
• Company Objectives: this is more applicable to departments where the identified Company Objectives are a critical input to identify the department objectives. Each Department Objective must be linked to a Company Objective.
• Other Departments’ Objectives and Plans: this is also applicable to departments especially support and back-office departments such as IT, HR, Finance, Legal, etc. These departments need to understand the objectives of the other departments and their plans in order to determine how they can support them achieve their objectives and accordingly identify suitable Department Objectives for this purpose.
• Last Year’s Uncompleted Objectives/Projects: if you had uncompleted objectives or projects from your last plan and you determined that these objectives or projects need to continue in the new plan then you need to make sure suitable objectives are identified to address them.
• New Legislation and Compliance Requirements: new legislation, laws, and regulations in the countries in which you operate will always arise and you need to make sure that you develop proper objectives and strategies to address such changes.

Now that we understand the two key steps to having clear and right objectives, let’s have a look at a practical example. If you recall the example that we discussed earlier about the company who had wrong cascading of objectives for its HR Department; the below table reflects how the Balanced Scorecard approach was applied to identify new Company Objectives focusing on the four aspects and how these were cascaded into Departmental and Individual Objectives. Having a quick look at the table you can immediately conclude the following:

• Company Objectives were revised to be more generic and applicable to all departments.
• the HR Department is now linked to the Financial aspect which in many companies is surprisingly ignored although the HR Department is one of the key cost centers of companies.
• each Company Objective is cascaded to one or more HR Department Objectives and these were then cascaded into one or more Individual Objectives.
• all objectives are now aligned and together shall drive the company to success upon proper implementation.

Although the example given was specifically on the HR Department, however, you can apply the same concept and principles to all other departments.

I sincerely hope that this article has provided you with beneficial guideline towards transforming your department into a true strategic partner to your company and wish you and your company continuous success.