The most important asset in a company is its employees. They are also the face to both external and internal customers so a good understanding of their objectives can improve this relationship. Therefore, to succeed in business it is important that their objectives align with the organisations goals. Successful sports team agree a plan and then work effectively as a cohesive team to deliver to it, which leads to winning results. In business it is no different. So it is important to link these goals together and also ensure effective communication.
The first step is to understand the business leader’s goals. Whether a CEO, Managing Director or Business Owner, they should all have set a direction for your organisation. Objectives like reducing costs, growing sales, improving cash flow or enhancing enterprise value are commonly used. Yet, if you are a Manager in a Shared Service group or other functional leader how do you translate this into your department's objectives – and then link them to individual goals?
To be successful there needs to be a simple two stage approach to this goal. Most business objectives break down their goals into 4 key areas which can be measured, and these usually relate to sales, margin, cost reduction or improved cash flow.
By building a simple matrix it is possible to look at the CEO’s goals and map them to each of these areas. Remember: some may appear in more than one area. For example, selling a new product range could increase sales plus improve margin.
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CEO’s Goals |
My Department Goals |
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Growing Sales |
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Improve margin |
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Reduce cost |
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Enhance cash flow |
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Once you have aligned your department goals to the CEO’s, you then start to think about linking these to individuals. It would be wise for your team objectives and those of your staff, to ensure you set “SMART” objectives which are:
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Specific |
(define area for improvement)
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Measurable |
(ensure the objective can be measured)
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Agreed |
(when reviewing with staff ensure they agree with the goals)
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Realistic |
(as you want to be successful with your team and company make sure the goals have the potential to be met) |
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Time |
(ensure there is a clear time scale and target dates to deliver the objectives) |
When assigning these objectives to your staff you can now explain how they were built and established. It should help reduce debate about how appropriate they are as they directly link to the company’s objectives. You will also be able to show you are treating colleagues consistently as all in the team will be working towards the same goals.
To help get you started, a sample table has been completed for an accounts payable group, below:
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CEO’s Goals |
My Department Goals |
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Growing Sales |
Increase sales by GDP + 2% |
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Improve margin |
Improve margins by 100 bps |
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Reduce cost |
Reduce SGA costs by 1% of sales |
Increase number of invoices processed per person each week by 10% |
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Enhance cash flow |
Improve working capital by 2 days |
Measure payment dates /invoice dates /contractual payment times -Ensure 100% are not paid early -Action 90% to be paid on time Escalate all invoice queries within 3 days of date arriving in the company. Ensure department and supplier are notified to resolve and maintain good company image. Close all invoice queries within 1 month, close 90% within 2 weeks |
Good luck in now building your own team’s goals and then refining these to suite each of your colleagues!
Huw Chapman
Note: Column 2: Performance Setting