Organizational Goals


Organization goals: Those ends that an organization seeks to achieve by its existence and operation.

Goals are predetermined and describe future results toward which present efforts are directed.

Types of Goals

Official goals are the general aims of an organization as expressed in the corporate charter, annual reports, public statements and mission statements. Their purpose is to give the organization a favourable public image, provide legitimacy, and justify its activities.

Operative goals reflect the actual intention of an organization. They describe the concrete steps to be taken to achieve the organization's purpose. They often don't correspond with official goals.

For example: Many organizations mention environmentally friendly behaviour as a goal of the organization. However in a study of organizations actually including environmental friendly behaviour as an organizational goal, very few had corresponding operative goals, i.e. very few delineated how such behaviour would be implemented in the different departments of the organization.

Additional examples: Most prisons have rehabilitation of prisoners, preparing them for re-integrations into society as their official goal, however in practice, most of their operative procedures involve aspects of custodial care. For many voluntary organizations, especially in these days of funding cutbacks, the community service which is their official mandate or goal takes secondary precedence to the fundraising activities which will ensure their survival.

Reasons for differences between official and operative goals

  1. Participants disagree on the organizations actual goals. Pfeffer and Salancik (1989) interviewed the officers of several organizations and asked the simple question: what is the main goal of your organization. They found very little agreement. Each officer viewed the goal of the organization through the lens of his/her own department/division. From the results of this study, Pfeffer and Salancik came to the conclusion that there is really only one clear and clearly shared goal in any organization, and that is survival.
  2. Even if there is agreement as to what the organization's official goals are, perceptions about how to accomplish official goals may differ.
  3. Official goals are often financially or politically unrealistic
  4. Operative goals are the result of internal negotiations among groups and coalitions who want to make sure their interests are represented and therefore they often deviate from the official goals.

Some organizations never state official goals, not to attract potential competition or opposition.

One can determine an organizations true goals not by reading their charter but by examining resource allocation process.

Benefits of organizational goals

  1. Goals serve as guidelines for action, directing and channelling employee efforts. They provide parameters for strategic planning, allocating resources and identifying development opportunities.
  2. Goals provide constraints in the organization. Choosing certain goals reduces discretion in pursuing other goals. Eg. The goal of maximising stockholder dividends immediately reduces financial resources available for expense accounts.
  3. Goals act as a source of legitimacy by justifying an organization's activities and existence. For new organizations the struggle for legitimacy is great. Maintaining legitimacy is easier but still, some organizations do lose legitimacy. For example imagine a hospital whose goal was to increase occupancy by performing as much surgery as possible. Such a goal would surely reduce its legitimacy.
  4. Goals define standards of performance. To the extent that goals are clearly stated, they set standards for evaluation.
  5. Goals provide a source of motivation . By presenting a challenge and how to achieve it, organizational goals act as behavioural incentives. For example: the path-goal theory of leadership.

Key organizational goals

Drucker, an organizational guru, has identified 8 key areas in which organizations should establish result oriented goals:

  1. Market share
  2. Innovation. Tom Peters found that excellent companies are obsessed by innovation. Eg. Minnesota Mining and Manufacturing (3M) has generated 25% of its sales from products less than 5 yrs old.
  3. Productivity. This is probably the most oft cited goal of all, to produce greater outcomes with fewer inputs. This provides organizations with a competitive edge. For example, GE estimates that a one percent increase in productivity at their plants translates into $300 million dollars of increased revenues. As productivity increases market share goals can be pursued by dropping prices.
  4. Physical and financial resources. Renovating and maintaining equipment is important in the long run for an organization. Increasing cash flow is often important for new ventures.
  5. Profitability. This is usually expressed as a percentage and should always be stated.
  6. Management performance and development. Management training is important because management is key to organization success. For example, GE has a special course in Crotonville for up and coming young managers, and IBM spends 15 days per year training management in better management practices. This is often a neglected aspect in many organizations.
  7. Employees performance and attitude goals. Employees are the most important asset in any organization, although many organizations don't act as if they believe this.
  8. Social responsibility. More and more organizations see this as somewhat important to gain legitimacy on the public's eye. These days one is witness to organizations providing matching funds for fundraising efforts and giving their employees a certain number of paid hours time off to volunteer in community activities.

Individual vs organization goals

Organizations don't make goals; individuals do. Therefore, goals will reflect the interests of the individual. The greater the overlap between an individual's goals and organizational goals, the better for the organization. Unfortunately often this is not the case. For example, it may be in the best interests of an organization to amalgamate certain departments or to out-source some kinds of tasks, but this may infringe on the power of certain departments and their leaders, so these goals will not be supported.

Goals are set in an organization by creating coalitions of non-competing groups. There is constant bargaining among the different organizational leaders to find the right direction of the organization. Organizational groups with greater power will have more control over the direction of the organization. This is not always in the best interests of the organization.