Improving Efficiency to Achieve the Global Goals
By +SocialGood Connector Emmanuel Nyame
The Sustainable Development Goals (SDGs), created in partnership with individuals around the world and adopted by world leaders at the United Nations, present a bold vision for the future: a world without poverty or hunger, in which all people have access to healthcare, education, and economic opportunity, and where thriving ecosystems are protected. The 17 goals are integrated and interdependent, spanning economic, social, and environmental imperatives.
Often times, we tend to think that goals and objectives are easy to set, and yet, this intuition is often wrong in the organizational context. Goals and objectives are difficult to set because we might not know what they should cover or because we lay out too many of them with the hope that we are covering all the bases. Similarly, goals and objectives can proliferate in organizations because new ones are set, while old ones are not discarded. Below are a few indicators of exceptional organisational goals and exceptions.
- Fewer are better. Concentrate on measuring the vital few key variables rather than the trivial many.
- Measures should be linked to the factors needed for success — key business drivers.
- Measures should be a mix of past, present, and future to ensure the organization is concerned with all three perspectives.
- Measures should be based around the needs of customers, shareholders, and other key stakeholders.
- Measures should start at the top and flow down to all levels of employees in the organization.
- Multiple indices can be combined into a single index to give a better overall assessment of performance.
- Measures should be changed or at least adjusted as the environment and your strategy changes.
- Measures need to have targets or objectives established that are based on research rather than arbitrary numbers.
Let’s walk through each of these criteria to gain a better understanding of these desirable characteristics of organizational goals and objectives. It is useful here to start by recognizing that goals, objectives, and measures are different animals. As explained at the beginning of this article, goals tend to be general statements, whereas objectives are specific and time bound.
Measures are the indicators used to assess achievement of the objective. In some cases, a goal, an objective, and a measure can be the same thing, but more often you will set a goal, have a few objectives underlying that goal, and then one or more measures for each of the objectives. Below are a few ways through which organisations can include the Global Goals in their activities and plans:
Less Is More
Less is more, fewer is better, and simple rules are the common mantra here. It’s very essential that organizations adopt two to seven key goals, or rules. Such goals guide how the firm operates, identify which opportunities to pursue, set priorities, manage timing of actions, and even inform business exit decisions.
If an organization adopts between two and seven key goals, what happens to objectives and measures? Here’s the clue: managers should not try to follow any more than 20 measures of performance in terms of performance on objectives. Thus, with two to seven goals, and 20 performance measures, this means that you will likely have a number of objectives somewhere between the number of set goals and the number of measures. Why this limit? “No individual can monitor and control more than twenty variables on a regular basis.”
Tie Measures to Drivers of Success
One of the key litmus tests for setting goals, objectives, and measures is whether they are linked in some way to the key factors driving an organization’s success or competitive advantage. This means that they must provide a verified path to the achievement of a firm’s strategy, mission, and vision. This characteristic of effective goals, objectives, and measures is one reason that many managers use some form of Balanced Scorecard in their businesses.
The Balanced Scorecard process provides a framework for evaluating the overall measurement system in terms of what strategic objectives it contributes to. The big challenge, however, is to verify and validate the link to success factors. Managers who do not scrupulously uncover the fundamental drivers of their units’ performance face several potential problems. They often end up measuring too many things, trying to fill every perceived gap in the measurement system.
Don’t Just Measure the Past
For a variety of reasons, it is important to capture past performance. After all, many stakeholders such as investors, owners, customers, and regulators have an interest in how the firm has lived up to its obligations. However, particularly in the area of objectives and measurement, the best systems track the past, present, and future. Echoing this observation, Robert Kaplan, co-originator of the Balanced Scorecard framework, published a book on the subject called The Balanced Scorecard: You Can’t Drive a Car Solely Relying on a Rearview Mirror.
A combination of goals, objectives, and measures that provides such information is sometimes referred to as a dashboard — like the analogy that a dashboard tells you how the car is running, and through the windshield you can see where you are going. Indicators on how well the economy is doing, for instance, can suggest whether your business can experience growing or declining sales. Another leading indicator is customer satisfaction. General Electric, for instance, asks its customers whether they will refer other customers to GE. GE’s managers have found that the higher this likelihood of referral, the greater the next quarter’s sales demands. As a result, GE uses this measure to help it forecast future growth, as well as evaluate the performance of each business unit.
Take Stakeholders Into Account
While it is important to track the goals and objectives most relevant to the needs of the business, relevance is subjective. This is why it is valuable to understand who the organization’s key stakeholders are, and set the goals, objectives, and measures in such a way that stakeholders can be satisfied. Or, at the very least, stakeholders can gain information relevant to their particular interests. Some stakeholders may never be entirely satisfied with companies’ performance — for example, some environmental groups may continue to criticize a company’s environmental impact, but they can be somewhat placated with more transparent reporting of what the company is doing on the environmental front. Similarly, stakeholders with social concerns will appreciate transparency in reporting on the organization’s corporate social responsibility efforts.
Cascade Goals Into Objectives
The less-is-more concept can apply to the way that goals cascade into objectives, which then cascade into measures. Tying goals and objectives to drivers of success means that vision, mission, and strategy cascade down to goals, and so on. The first benefit of this cascade approach is that goals and objectives are consistent with the strategy, vision, and mission. A second benefit is that goals and objectives in lower levels of the organization are more likely to be vertically and horizontally consistent since they should be designed to achieve the higher-level goals and objectives and, ultimately, the overarching strategy of the organization.
