Page 2 - MCS August Day 2 Suggested Solutions

CIMA AUGUST 2018 – MANAGEMENT CASE STUDY

SMART objectives

Even if a balanced scorecard has appropriate CSFs and KPIs it may still be seen as a failure of
adequate performance evaluation if the objectives are not written in a SMART way.

Having objectives that are very specific in what they state helps managers understand what they
should be working towards. For instance, having an objective of ‘recruiting highly qualified staff’
is a bit vague and would need to be tailored to each relevant department to make it appropriately
specific to each manager.

Objectives should also be measurable. An objective to ‘improve quality’, whilst it ties into the
overall strategy, is not very measurable. Even an objective to ‘reduce the level of defects’, whilst
better, doesn’t have a specific target to compare to. A smarter objective would be ‘to reduce the
level of defects to 3% in 2018’. Achievement can then be measured against the target.

Objectives also need to be achievable. If defect levels are currently running at 10%, then reducing
them to 3% in a short timescale might not realistically be achievable. Setting targets that are
perceived to be too difficult to achieve can be very demotivational for managers.

Objectives also need to be relevant to the department. There may be a crossover between
certain areas. For instance, setting a target for the recruitment of skilled lens operatives may not
wholly fall under the remit of production and may be more appropriate as a human resources
target.

Objectives should also include a timescale so that managers know the deadlines for their
performance to be evaluated.

Examples of SMART objectives

Customer perspective:

Reduce the number of product returns due to faulty equipment by 5% in the year to 31 March
2019.

Internal business process perspective:

Reduce the number of lenses failing quality control checks by 5% in the year to 31 March 2019.

Financial perspective:

Monitoring of the sales margins achieved compared to target could give an indication of whether
quality is being maintained (and therefore whether customers are willing to pay Montel’s prices).
The objective could be to keep sales margins across all brands to within 1% of target for the year
to 31 March 2019.

Learning and growth perspective:

Maintain a 95% completion rate of planned training for lens operatives in the year to 31 March
2019.

Financial Manager

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