Examples of Poor Objective Setting: Some organisations do not define their objectives as sharply as above statements suggest. Their objective setting is quite poor and may not provide clear direction. Following are some examples of such objective setting:
1. ‘Our objective is to maximise our profit. This statement of objective is not subject to measurement because it does not provide any vardstick for that. Therefore, the organisation cannot know whether it is achieving its objective or not. Further it does not spell out the way in which the objective can be achieved. Therefore, it does not spell out commitment on
the part of the management.
2. ‘Our objective is to offer best and cheapest product. This statement does not provide yardstick for measuring cheapest and best product, hence fails to provide direction.
3. ‘We will go to great length to develop new ideas. This is not very precise and clear, hence
fails to provide direction.
Q.5. Discuss the areas of objective setting.
Ans. Areas of Objective Setting: As discussed earlier, organisatonal objectives are of multiple character. Even major objectives are multiple in nature. Thus, an organisation has to set objectives in many areas. However, what objectives should be selected must meet three criteria:
(a) They must be consistent with the values of the management in the organisation.
(b) They must pinpoint the organisational strengths and weaknesses.
(C) They must satisfy the external environmental forces. From these points of view, the
organisation will set its objectives in several areas. For example, Peter Drucker has emphasised the areas which an organisation must emphasis as its objectives. These are:
Market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and public responsibility.
Some research studies also indicate that companies set objectives in different areas. A research study on setting objectives in 65 companies shows that organisations set objectives in terms of corporate growth, maximisation of profit or returns, supply of quality products, employee satisfaction, and other objectives-strengthening of manufacturing base, maintaining market leadership, change in product mix, technological leadership, growing returns to shareholders, social obligations, interest of consumers and labour, maintaining organisational assets as national assets, export development, and funds management. In another study of 28 companies, it has been found that the companies emphasise objectives in five broad areas in varying proportions-profit, marketing, growth, emplovee and social environment. In a study of 72 companies, conducted later, it has been found that the companies have emphasised their objectives in the areas of growth through expansion in the same line of business, diversification in related product lines, manufacturing products requiring high technology, development of product base, and cooperative existence with rival companies. It can be emphasized here that objectives are intertwined and interrelated. For example, growth of the company may result into profitability, consequently shareholders higher returns either in terms of higher dividend or in terms of bonus and consequently higher dividend. However, the emphasis on the strategic management may differ in these two case.
Various objectives identified above are more in the form of common denominators rather than a true reflection of the objectives that the companies actually set for themselves. In the case of individual companies, there may be wide variations in the objectives that they set. The examples of two companies-Bharat Heavy Electricals Limited (BHEL) and Associated Cement Companies (ACC) Limited illustrate what objectives have been set by these companies