Setting SMART Business Objectives for Success
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Understanding SMART Business Objectives
To enhance clarity and effectiveness in objective-setting, many businesses employ the 'SMART' criteria.
In most scenarios, business owners define the company's goals and objectives. Particularly in smaller enterprises, owners often also take on the role of directors. A good example of a SMART objective might be: 'Achieve sales of refrigerators worth €10 million in Northern European markets by 2004.'
The following sections delve into the detailed aspects of how to formulate SMART objectives.
Section 1.1 Specificity in Objectives
Objectives should articulate precisely what the business intends to accomplish. They must focus directly on the company's operations and be tailored to the specific organization.
For instance, a well-defined objective could be: 'Achieve 10% higher sales of refrigerators worth €10 million in Northern European markets by 2004.' Specificity can also be seen in other sectors, such as a bus company like Eurolines aiming for a particular occupancy rate on its long-distance routes, or a hotel targeting 90% room occupancy during the summer months.
Section 1.2 Measurable Objectives
It's essential for business objectives to be quantifiable, allowing managers to assess their achievement levels. Objectives with measurable values tend to be more effective for employees and directors.
An example of a measurable objective is: 'Achieve 10% higher sales of refrigerators worth €10 million in Northern European markets by 2004.' Other measurable goals might include increasing sales in the North American market by 15% within the current year.
Subsection 1.2.1 Achievable and Agreed
Business objectives should be realistic, considering the available resources and circumstances. Setting unattainable goals can lead to frustration and demotivation among employees.
For example, aiming for a 10% increase in refrigerator sales while the economy is growing at 12% is reasonable: 'Achieve 10% higher sales of refrigerators worth €10 million in Northern European markets by 2004.' The bus company's target for occupancy rates must be established in consultation with the marketing department, based on realistic forecasts derived from previous years.
Subsection 1.2.2 Relevance of Objectives
Objectives should be pertinent to those accountable for achieving them, taking into account the company's resources. For instance, a marketing manager should not be expected to meet objectives that fall under the finance manager's domain.
An objective is relevant when it aligns with the company's strong market presence in Northern Europe, such as: 'Achieve 10% higher sales of refrigerators worth €10 million in Northern European markets by 2004.' Similarly, a bus company might set a goal related to occupancy rates that requires marketing initiatives from the appropriate department.
Subsection 1.2.3 Time-Specific Objectives
When setting objectives, it’s crucial to establish a realistic time-frame for achievement. A deadline ensures that managers can determine whether the objectives have been met in a timely manner.
For example, the objective: 'Achieve 10% higher sales of refrigerators worth €10 million in Northern European markets by 2004' is time-specific. A bus company might aim for a specific occupancy rate within the next 18 months.
Strategically setting objectives is vital for managers as it helps them develop actionable plans, outlining the necessary resources to achieve the SMART business objectives.
Chapter 2 The Importance of Setting SMART Goals
This video, titled "How to Set SMART Goals: Goal Setting for Businesses," explains the SMART framework in detail and its significance in goal-setting for business success.
In this video, "Setting SMART Goals for Business," you will learn practical tips for implementing the SMART criteria in your business objectives.