Strategic Planning in the Small Business

Unit 4

HO A-1 (continued)

Effective goal statements are challenging,

yet realistic. Challenging goals are essential

for growth-oriented businesses and growth-oriented people.

Goals are too simplistic or too eas­

ily reached cheat the business of its full potential. Further, they often

cause employees to feel

under utilized in their jobs, contributing to declines in worker morale

and job satisfaction. On

the other hand, goals that are too

lofty may quickly be perceived as being unreasonable or unrea­

listic, thus minimizing motivation and stifling output potential.

Finally, goals must

be communicated throughout the organization. Regardless of how

impressive a goal statement may be in meeting the

first three criteria noted above, its potential

to influence behavior is lost without proper communication

to employees. Many managers find

that this concept of communication can be even

more broadly interpreted to include employees

in the goal-setting process. Such emplo';ee involvement

not only meaningfully enhances the

goals, it also offers employees

a key motivational perspective. The characteristics of good goals

are presented in Table 1.

Table 1 Characteristics

of Good Goals

1. Goals
   should be phrased in terms of outcomes rather than actions.


2. Goals should be measurable.


3. Goals should be challenging, yet realistic.


4. Goals should be communicated.

HOW GOALS ARE CREATED

Aithough setting viable goals is largely a process

based on individual judgement, it is not

a seat-of-the-pants process. In part, it is based on historical

data. To a greater extend, how­

ever, it is based

on the analysis discussed in Part 1.

The focus of goals may change from time to time. Suppose,

for example, that sales have

increased as planned over the past several years, but costs have risen
dramatically. The goal

for the next period may have cost containment as the major focus. Sales

increases may still be

encouraged, but the prime emphasis will be on reduction of expenses
per sales dollar.

The actual numerical goal will often be a compromise

by key management personnel.

The marketing manager may suggest a target
increase in sales of, say, ten percent. The con­

troller may be
more pessimistic and feel that six percent is the most that could be expected.
The

production
manager may submit that seven to eight percent is the maximum
increase that could

be obtainable without a substantial outlay of capital. The president
must then take the input of

the managers, coupled with each
person's economic forecast for the coming year, and determine

the final goal for
the year. Incidentally, it is useful to have each department manager make
an

independent forecast
of next year's sales. This gives several different perspectives which
can

then be meshed into a single goal.

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