Objective setting is a process related to management by objectives. Its main assumption is to set specific, measurable, achievable, realistic and time-bound objectives for people employed in the company in order to mark their progress.
Why objectives should be set?
Objective setting has many advantages, for instance:
- it enhances performance,
- it is a motivational factor for the employees,
- effects are often realized on pre-arranged standards,
- it has a positive impact on employees’ performance and satisfaction,
- it provides a valuable feedback.
In useful objectives, five different elements are required. They can be easily described by the acronym SMART, which stands for specific, measurable, achievable, realistic (or relevant) and time-bound.
An objective which is set in a correct way should be:
- Specific – it means that the objective should be outlined in a precised way and the requirements should be clear. Specific objectives must describe the result in a detailed, focused and well-defined way. When setting a specific objective, the manager should use action-oriented verbs (e.g. change, create, apply, perform) and avoid misleading and ambiguous expressions (e.g. the employee is aware of …. ).
- Measurable - the organization should be able to monitor progress and to know when the objective will be achieved. This element is vital for the manager, because it enables him to evaluate the outcome or the achievement of the employee. It is crucial in setting measurable objectives to decide which elements can be measured.
- Achievable - the objective should be challenging, but also possible to achieve by the employees. An objective can be described as achievable if all necessary resources are available or similar outcomes have been achieved by others in the past in similar circumstances. The objectives must be agreed both by managers and by the employees in order to ensure mutual commitment to them. The employee to which the objective is assigned should be willing and able to achieve it. If the objective is not achievable, employees often feel demotivated and unwilling to invest their enthusiasm and power into something which seems to be impossible.
- Realistic/relevant - realistic objectives should be set in a such way that it is clear how the objective can be reached. “Relevant” means that the objectives are appropriate to the team or the individual.
- Time-bound - the date of achieving the objective must be defined as it contributes to making objectives measurable. Deadlines also help to prompt action and to create the necessary urgency.
Things which should be avoided when setting objectives
When setting the objectives to the employee, the manager should avoid following mistakes:
- setting not specific, unachievable and unrealistic objectives,
- having no time-frames and deadlines,
- having no method to record the actions and the progress,
- forgetting that the situation may change and there can be a need to review and renegotiate the objectives in future.
- Chinchilla N., Pitta N, Rey C. (2017), p. 45
- Islami X., Mulolli E., Musafa N. (2018), p. 95-96
- Chinchilla N., Pitta N, Rey C. (2017), p. 46
- Chartered Management Institute (2019), p. 2-4
- Chartered Management Institute (2019), p. 5
- Chinchilla N., Pitta N, Rey C. (2017) Objectives are SMART, Missions are WISE: Employees with Purpose, IESE Insight, vol. 33, pp. 45-51
- Greenbank P. (2001) Objective setting in the micro-business, International Journal of Entrepreneurial Behaviour & Research, vol. 7, pp. 108-127
- Islami X., Mulolli E., Musafa N. (2018) Using Management by Objectives as a performance appraisal tool for employee satisfaction, Future Business Journal, vol. 4, pp. 94-108
- Setting SMART Objectives Checklist (2019), Chartered Management Institute
Author: Marta Łazarz