Page 167 - Fundamentals of Management Myths Debunked (2017)_Flat

166 Part 2 • Planning
types of goals. Most company goals can be clas-
sified as either strategic or financial. Financial goals are
related to the financial performance of the organization,
while strategic goals are related to all other areas of an
organization’s performance. For instance, McDonald’s fi-
nancial targets include 3 to 5 percent average annual sales
and revenue growth, 6 to 7 percent average annual operat-
ing income growth, and returns on invested capital in the
25
high teens. An example of a strategic goal: Nissan’s
CEO’s request for the company’s GT-R super sports car:
26
match or beat the performance of Porsche’s 911 Turbo.
Amber Miller/Newscom what an organization says, and what it wants its stake-
These goals are stated goals—official statements of
holders to believe, its goals are. However, stated goals—
which can be found in an organization’s charter, annual
report, public relations announcements, or in public state-
ments made by managers—are often conflicting and
Pierre-Andre Senizergues, influenced by what various stakeholders think organizations should do. Such statements can be
founder and CEO of Sole vague and probably better represent management’s public relations skills instead of being mean-
Technology, set a goal for his
company to be the first action ingful guides to what the organization is actually trying to accomplish. It shouldn’t be surprising
sports firm to go carbon neutral by 2020. then to find that an organization’s stated goals are often irrelevant to what’s actually done. 27
Shown here planting a tree in honor of his
employees, he devised a six-point plan—from
reducing water usage to using green Stated vs. Real Goals
production materials—to achieve his goal.
If you want to know an organization’s real goals—those goals an organization actu-
ally pursues—observe what organizational members are doing. Actions define priorities.
Knowing that real and stated goals may differ is important for recognizing what you might
otherwise think are inconsistencies.

setting goals. As we said earlier, goals provide the direction for all management deci-
sions and actions and form the criterion against which actual accomplishments are measured.
Everything organizational members do should be oriented toward achieving goals. These goals can
be set either through a process of traditional goal setting or by using management by objectives.
Traditional Goal Setting. In traditional goal setting, goals set by top managers flow
down through the organization and become subgoals for each organizational area. (See
Exhibit 5–5.) This traditional perspective assumes that top managers know what’s best because
they see the “big picture.” And the goals passed down to each succeeding level guide individual
employees as they work to achieve those assigned goals. Take a manufacturing business, for ex-
ample. The president tells the vice president of production what he expects manufacturing costs
to be for the coming year and tells the marketing vice president what level he expects sales to
reach for the year. These goals are passed to the next organizational level and written to reflect

Exhibit 5–5 Traditional goal Setting

”We need to improve the
company’s performance.”
stated goals
Official statements of what an organization says, ”I want to see a
and wants its stakeholders to believe, its goals are signi cant improvement Top
in this division’s pro ts.” Management’s
real goals Objective
Those goals an organization actually pursues as ”Increase pro ts
shown by what the organization’s members are Division regardless of the means.”
doing Manager’s Objective
”Don’t worry about
Department
traditional goal setting quality; just work fast.” Manager’s Objective
Goals set by top managers flow down through
the organization and become subgoals for each Individual
organizational area Employee’s Objective