7. Organizational objectives can be changed, old objectives may be replaced by new ones. It
is possible because organizations are free to set their objectives within the overall social norms. Since objectives are formulated keeping in view the environmental factors and internal conditions, any change in these may result into change in objectives. For example, in response to various changes in the social environment, the objectives of YMCA have been transformed from religion and spirituality to recreation and physical exercise. Similarly, the Red Cross which was originally formed to hold itself in readiness in the war or any calamity to help the people found itself underemployed after Word War I and lost members contributions, and public esteem. The Red Cross subsequently added another objective that of preserving and improving public health.
Q.3. What is the concept of hierarchy of objectives? Discuss top-down and bottom-up approaches of objective setting.
Ans. Hierarchy of Objectives: Organisational objectives form a hierarchy ranging from the broad aim to specific individual objectives. The process of assigning a part of a mission to a particular department and then further subdividing the assignment among sections and individuals creates a hierarchy of objectives. The objectives of each subunit contribute to the objectives of the larger unit of which it is a part. In fact, the organisation itself can be thought of as a social unit and, as such, its objectives are the extension of the objectives of the society. This can be explained in terms of an end-means chain which suggests that what is a means for one unit may be an end for another unit. For example, if accomplishment of the overall objectives is the responsibility of top management in the organisation, acquisition of the requisite means may be an end for the next lower level, in order to achieve this sub-objective, sub-means are necessary. Obtaining these sub-means then becomes the responsibility and consequently the objective of still lower level. This process goes on till a decision can be drawn on the existing product or programme available in the organisations environment. This is presented in figure below:
Top-down Approach and Bottom-up-Approach: Hierarchy of objectives can be explained in two approaches: top-down approach and bottom-up approach. Understanding of this phenomenon is essential because a question arises whether objectives should be set at the top and communicated lower down the line or it is in reverse direction. In the top-down approach, at the extreme top of the hierarchy is the purpose which has two dimensions. First, there is the purpose of the society such as requiring the organisation to contribute to the welfare of the people by providing goods and services at the reasonable cost. Second, there is the purpose of the business which may be the ultimate objective of the business such as what an organisation would like to be. For example, mission might be described as the basic philosophy of the organisation. However, the distinction between purpose and mission is not very obvious and is often used synonymously.
At the next level of the hierarchy, overall organisational objectives as specified by various strategies and policies are defined. These lead to specify overall objectives in terms of quantitative standards. These objectives are further carried into divisional, departmental, and individual objectives. At individual level, two types of objectives exist: performance of individuals which
contributes to the achievement of organisational objectives and personal objectives of individuals which they want to satisfy while working in the organisation. At each level of objectives, managers of different levels are involved. For example, overall objectives are formulated by top management. It also sets objectives for all key-result areas where performance is necessary to achieve organisational objectives. Middle-level managers are involved in the setting of key-result area objectives, divisional objectives, as well as departmental objectives. The primary concern of lower-level managers is the setting of objectives on the departmental and unit level as well as the objectives of their subordinates. Although in the hierarchy of objectives, individual performance and objectives have been shown at the bottom level managers at the higher levels also should set objectives for their performance and development. Thus, in top-down approach, upper-level managers determine the objectives for their subordinates, while in bottom-up approach, subordinates initiate the setting of objectives for their position and present them to their superiors.
There is a controversy whether an organisation should use the top-down approach for setting the objectives or it should use bottom-up approach. Proponents of top-down approach suggest that the total organisation needs direction through organisational objectives provided by the top management which may include owners of the organisation. Proponents of the bottom-up approach, on the other hand, argue that top management needs to have information from lower levels in the form of objectives. Subordinates are more likely to be motivated and committed by the objectives which they initiate. While both approaches have certain positive and negative aspects, in order to take the advantages of both, a combination of the two is followed. To what extent both will be combined depends on situations such as size of the organisation, organisational culture, leadership style of managers etc.