Menu
Organizational objectives are set of specific goals that an organization intends to achieve within a targeted time frame. The objectives should be purpose-driven, unambiguous, and attainable. The organizational objectives could be short-term, medium-term, or long-term. It can also be classified into financial and non-financial including:
These are organizational objectives that can be measured in monetary terms. They are quantifiable or quantitative objectives. Companies can aim to maximize profits, increase market share, and minimize cost or expenses. The financial organizational objectives of a company may include but not limited to:
The primary corporate objective of a company is to increase the wealth of its owners i.e., maximizing its market value. This can be achieved by engaging in business activities that can create value for the company or embarking on viable projects that are designed to enhance shareholders’ equity value. This objective is considered the overall corporate objective of an organization and it is generally accepted as a sound basis for financial planning. Company’s management exist to create value and must strive towards enhancing the owners’ wealth.
However, this type of organizational objectives is egoistic and often criticized because it is not in consonant with the best interests of the company’s other stakeholders including employees, government, suppliers, creditors, communities etc.
Represents the process of increasing the profit of an organization through aggressive sales and cost optimization. The overarching goal of any company is to make money on a consistent basis. It involves rearranging the price and cost structures of a firm to earn the highest profit possible. To achieve this objective, company will need to increase revenue through continuous marketing efforts, or increase selling price (if possible), and minimize costs by finding and building mutual relationships with reliable suppliers, and focusing on operating efficiency to achieve economies of scale etc.
However, this kind organizational objectives is short-term in nature, and does not take into consideration, the underlying risk and reward.
Earnings per share is the profit attributable to owners of a business divided by the ordinary shares outstanding during a financial year. The earnings per share growth measures the rate at which a company’s profitability is increasing over a specified time frame. It is the percentage change in the current year earnings per share relative to the previous years. A higher growth rate in earnings is better and desirable but cannot be sustained over a long-time horizon.
Generally, the organizational objective might be to increase the earnings per share each year by a specific percentage over a given period. This is because if there is increase in EPS, there will be sufficient profit available for distribution to owners in form of dividend, and there will be more retained earnings for growth and expansion. Consistent growth in EPS can maximize shareholders’ equity value over a long-term period.
Revenue is the money generated from sales of goods or services from the ordinary activities of a business during a financial year. The main fundamental objective of a company is to increase revenue. The organizational objective of increasing revenue can be achieved by engaging in marketing campaign efforts for the purpose of generating lead or increase the selling price of the company’s product or service. To achieve the sales growth, company will need to set specific percentage increase in revenue over a given time frame. For instance, a firm may set an objective of increasing revenue by 25% annually for the next three or five years.
This objective is designed to achieve the most economical methods of delivering goods and services to the intended customers without compromising quality. Its focus is on cost reduction by reorganizing the cost structure to achieve cost optimization without reducing quality of product or service. When a business is going through financial crisis or in bad economic condition, there will be need to reduce production capacity, overheads, and improve efficiency. This type of organizational objectives can be achieved by:
These are organizational objectives that cannot be expressed in monetary terms. They represent non-quantifiable or qualitative organizational objectives. Examples include:
The quality of the products or services produced by an entity have material effect on its reputation and the amount of business opportunity that it can generate in the marketplace. Therefore, company should strive to produce goods or services of high-quality on a consistent basis to enhance customers’ experience and loyalty and increase business referrals.
Company should be intentional in creating conducive working environment that attract and enable employees to develop creative and innovative ideas. This has the potential to inspire staff to freely express their creative ability, while offering novel solutions to solve problems. It also has the capacity to motivate and make employees believe that the company cares about them. This objective should include:
Good customer service is essential to providing customers with a lasting impression whenever they interact with the business. The first impression created by a business in the minds of its customers in terms of reasonable pricing, good interaction, provision of high-quality product or service, will go a long way in enhancing the customer experience. Making customers feel valued usually encourage them to give company additional business referrals or opportunities in the future. Improved customer service can be achieved through continuous training of employees.
Therefore, it is imperative that company should monitor the way its employees interact and engage with the customers. Surveys and informal conversations can be used to assess the quality of customer service that is currently available in the company and the areas that need improvement.
This is the type of organizational objectives that is designed principally to Improve the way and manner the public perceives a company. Business should therefore engage in any activities that are intended to promote the corporate image of the company and bring its repute to a prominence standard. This is because good public relations can result in increased business opportunities and stronger relationships with the community. Hence, company should aim to use the activities of the business to benefit the society by:
The social activities or public relations have the tendency of promoting and ensuring smooth working operations in the community and enhancing corporate citizenship of a company.
To achieve increasing and consistent profitability, companies must not only earn revenue, but should also control their costs. This is because if costs are too high, net profit margins will be too low. Hence, there will be little to pay out as dividend to suppliers of equity capital. In this case, it will become costly and challenging to compete favorably against competition.
The organizational objectives that an entity wants to achieve should be specific, measurable, achievable, relevant, and time bound (SMART). Company should set its intended objectives and communicate same to all members and other stakeholders of the organization on a consistent basis. When designing organization’s objectives, management should ensure the congruence of all business units’ objectives with that of its overall objectives.
Together we can create increasing value for your business and promote its corporate image to a prominent standard
At Adda, we pride ourselves with highly experienced and committed professionals willing and ready to collaborate with businesses to create value
info@addalli.com
Postal Code: 100213
74 Ogunnusi Road, Ojodu Ikeja, Lagos
SIGN UP below to receive Insightful Articles from Adda
