wisdom to win

 Wisdom to Win
search bar left
search bar right

Organizational objectivesOrganizational objectives


Organizational objectives are...

What an organization wants to do.

Objectives are:


1. Primary

The main objectives for the whole organization like profit and customer satisfaction.


2. Secondary

Objectives to achieve the primary objectives (e.g. to increase production or decrease costs).


Here is an example:


Primary objective 

To increase profits p.a. by 10% by delighting customers.


Secondary objectives:


1. Marketing 

To increase customer satisfaction by 10% p.a. through fewer complaints and better after-sales service.


2. Production 

To improve production and product quality by 10% p.a.


3. Innovation

To have at least one new product a year.


4. Employees

To increase their productivity (output per employee) by 10% p.a.


How to be successful with objectives



The best objectives are described by the acronym, SMART:

  • Specific– related to something worthwhile like satisfying customers.
  • Measurable - measuring how well the objective has been achieved.
  • Achievable – objectives must be challenging (so people are stretched) but achievable.
  • Realistic – having the resources (money, (wo)men, materials and machines) to achieve the objectives.
  • Time-related – objectives can be short-term (up to a year as in budgets – see budgeting and cost control), medium-term (one year to five years) and long-term (over five years).


2. Think about your stakeholders

Objectives should aim to satisfy the organization’s stakeholders – groups who are directly affected by what the organization does.

Organizational objectives

These are in order of importance (with their needs/aims in brackets):

  • Customers (quality and innovation).
  • Employees (motivation and empowerment).
  • Suppliers (delivering quality supplies at the lowest possible cost).
  • Creditors (cash for repayment of debts).
  • Society including government, pressure groups and the local community (socially responsible and ethical strategy).


3. Mission statement

This should clearly state the organization’s purpose with reference to:

  • The business it’s in.
  • The customers it’s aiming at.

It should also be short enough to inspire employees.

Examples are:

  • Wal-Mart stores – “To give ordinary folk the chance to buy the same things as rich people”.
  • Merck (the American drug company) – “To preserve and improve human life”.
  • British Airways – “To be the world’s favourite airline”.
  • A school – “To provide the best possible education and career opportunities for our students”.


4. Vision

Top managers must have a vision (a future ideal) for the organization and communicate it effectively to every employee.

It may be as vague as a dream, or the same as a mission statement.

Organizational objectives

Examples are:

  • Walt Disney (pictured right)  – “To bring happiness to millions”.
  • Honda – “Quality for the world from our hands and minds”.
  • Save The Children – “The future of the world rests with the child”.
  • Wikipedia - Imagine a world in which every single person on the planet is given free access to the sum of all human knowledge. That’s what we’re doing.


Organizational objectives

5. Management by objectives (MbO)

This is Peter Drucker’s (pictured right)  term for setting complementary objectives at all levels of the organization from the individual to the organization as a whole.



6. Inspiration

Objectives mustOrganizational objectives

  • inspire people to do great things, so objectives must satisfy their needs.
  • be consistent with their values (e.g. love and honesty).

People must believe in what the organization is doing and its vision and mission.


Key quotes explained


Organizational objectives

“The purpose of a business is to create and keep a customer”

- Theodore Levitt  , American marketing professor (pictured right)

Levitt also added that bad work in the pursuit of customer satisfaction is better than good work on the wrong objectives.

"If you don't know where you're going, any road will take you there", wrote Lewis Carroll  in Alice in Wonderland



Organizational objectives

“Our strength is our unity of purpose”

- Franklin D. Roosevelt  ,American president (pictured right)

In the best organizations everyone works together to achieve customer satisfaction.



Organizational objectives

“To pursue the unattainable is insanity”

- Marcus Aurelius ,Roman emperor and philosopher (pictured right).

Impossible aims will turn people off, because they can’t achieve them.

But visionary aims (challenging with some hope of achievement) can inspire people to do great things.

“It is not because things are difficult that we do not dare, it is because we do not dare that they are difficult”, the Greek philosopher, Seneca, said.



Organizational objectives

“Keep your eyes on the stars, and your feet on the ground”

- Theodore Roosevelt  , American president (pictured right)

Idealistic ambition must be mixed with practical realism.



Best books


Peter Drucker, The Practice of Management (1954)

An organization’s main objective is creating customers and so the whole business must be seen from their point of view.

Profit is the result of achieving your objectives in marketing (i.e. customer satisfaction), innovation and productivity.

Management by objectives (MBO) is vital (see point 5 above).

(For more detail see The Practice of Management in the Business Books section).


Organizational objectives


Jim Collins (pictured right) and Jerry Porras (pictured right below) , Built to Last (1995)

The best companies have challenging, visionary, customer oriented objectives – Big Hairy Audacious Goals (BHAG’s).Organizational objectives

(For more detail see Built to Last  in the Business Books section).




Organizational objectives

Gary Hamel (pictured right) and C.K. Prahalad (pictured right below) , Competing for the Future (1994)

The best companies have:

  • strategic intent (challenging, customer oriented objectives). Organizational objectives 
  • stretch (stretching employees to work incredibly hard to satisfy customers).

 (For more detail see Competing for the Future in the Business Books section).



Organizational objectives

Andrew Campbell (pictured right) , Marion Devine and David Young, A Sense of Mission (1990)

Like the Bible, mission statements are useful only if they are believed and people are totally dedicated to carrying them out.



Organizational objectives

Alan Fox (pictured right) , Industrial Sociology and Industrial Relations (1966 article)

There are two ways of looking at the relationship between management and employees (called “frames of reference”):

  • Unitary – views the organization as a team unified by a common purpose and allegiance towards it( i.e. the interests of management and employees coincide).
  • Pluralistic – views the organization as a coalition of different interests leading to areas of conflict in organizations e.g. higher profits leading to lower wages.


Organizational objectives

Richard Cyert (pictured right) and James March(pictured right below), A Behavioural Theory of the Firm  (1963)

Decisions  in organizations are based on

  • the interests of different groups (owners, employees, managers, suppliers, etc). Organizatonal objectives

  • aiming for satisfactory performance (satisficing) not the best possible (maximizing)

Satisficing was first proposed by Herbert Simon's Administrative Behaviour (1947)


Free Newsletter
Enter your name and e-mail address to receive our free newsletter with analysis of business issues and new business books