Setting objectives the SMART way

Lionel WIJESIRI

The Hubble Space Telescope (HST) is one of the largest and most versatile space telescopes in the world, and is well-known as a vital research tool.

The HST was built by the United States space agency NASA, and is one of its Great Observatories.

Although Hubble was funded in the 1970s, the first launch took place only in 1990. To the disappointment of all concerned, scientists found that it was a major disaster.

It was supposed to provide information about the Universe, but it didn't.

To revive Hubble, the Administration Team of NASA set tough objectives. Many major component changes were needed to be done in space.

They were very hard work but NASA met its objectives in time and in full. Within the stipulated time of three years, Hubble was revived. It was a major triumph and possibly saved the entire future of NASA.

'Operation Hubble Revival' was a visible demonstration of the power of objective setting with systematic follow-through.

Today, setting objectives is seen as a specialized art. It is regarded as a way of steering an organization into the future and guiding its employees to work in an orderly manner. Yet equally how one sets them is a critical factor in making them useful.

SMART

All objectives must be SMART. (The term SMART is an acronym for five words: - Specific, Measurable, Achievable, Realistic and Timely).

Specific - Is the objective precise and well-defined? Is it clear? Can everyone understand it? For example a softdrinks company may want to achieve 3 percent market share in 12 months.

Measurable - How will the individual know when the task has been completed? What evidence is needed to confirm it? Have we stated how we will judge whether it has been completed or not? A 3 percent market share over 12 months means that each month market share targets can be measured against a specific goal.

Achievable - Is it within our capabilities? Are there sufficient resources available to enable this to happen? Can it be done at all? Is the 3 percent objective for the 12 months achievable? Does the company have the resources, manpower and finances to achieve it?

Realistic - Is it possible for the individual to perform the objective? How sensible is the objective in the current business context? Does it fit into the overall pattern of this individual's work? Is the 3 percent objective over a 12 month period realistic or does the company need longer? Does the company have the skills and resources to achieve this over the time period set?

Timely - Is there a deadline? Is it feasible to meet this deadline? Is it appropriate to do this work now? Are there review dates? In our example, we have set ourselves a period of 12 months to achieve the 3 percent market share target.

Each objective must be easily understood by all so that there can be no ambiguity when discussing performance. The key question to ask anyone at the time of the objective setting is: "How will we know that we have been successful? What will we see, hear, touch, find, use that assures us that we have achieved this objective?"

If each objective is measured against this key question and given a time limit and resource allocation then both the manager and the member of staff will be able to monitor progress during the period and measure achievement at the end.

Equally this will make it easy to see where successes arose and failures occurred.

Scenario

Let's say we're an importer and distributor of high-quality brand of bathware, and we're going to write down our newly-adopted vision and the corporate objectives. They might look like this.

Vision - To be the bathware everyone considers going to first.

So, that's the general end game we want to achieve. It's big picture, and there can be any number of components that go into achieving that vision. However, this is where a lot of people get stuck. They haven't sat down and done the hard work to think about what it is they want to achieve and why.

That takes us to our objectives.

(1). Double our turnover in two years (2). Increase our profit margin up to 25 percent within 18 months (3). Obtain a 60 percent market share (from 40 percent) by next June (4). Reduce complaints to three per five hundred customers. (5) Improve retention of staff by 20 percent within one year (6). Double the number in dealer network within two years (7). Offer the fastest after sales service in Sri Lanka, as measured by industry norms within two years. (8). Give all customers the service they need, plus a bit more - as measured by consumer studies - within two years.

All of these items follow the SMART methodology, which means they're Specific, Measurable, Actionable, Realistic, and Timed.

Targets

Once we have the objectives written, we have to develop a strategy of targets for each one. It's like the roadmap for how we'll get there. For example, our second objective may need converting into few targets.

(1). Increase sales price by 10 percent in two stages (half-yearly) within a year (2). Identify overheads and their proportion to the total sales value within a month (3). Reduce by 20 percent on selected overhead within one year (4). Launch two new products with exceptional profit margins quarterly.

These are all the elements we'll need to put in place to make the objective happen.

Managers are required to get specific tasks done by their team. To do this effectively, the team members must understand their individual contributions to the activity. This means that each individual has to have their own specific targets.

Appraisal

The benefit of clear and precise objectives and targets comes when a manager and a member of staff sit down for an appraisal interview. With clear objectives and targets the discussion of past performance should be simple and this will leave time to review and revise objectives for the coming period and to discuss career aspirations.

The key question to ask anyone at goal setting time is: 'How will we know that you have been successful? What will we see, hear, touch, find and use that assure us that you have achieved this objective?"

If each objective is measured against this key question and given a time limit and resource allocation then both the manager and the member of staff will be able to monitor progress during the period and measure achievement at the end. Equally this will make it easy to see where successes arose and failures occurred.

But what if you're a manager and your organization provide little clarity around its goals? This is a good question and one that many have asked from me. I would suggest using a balanced scorecard approach. The balanced scorecard approach takes into account a balanced set of factors that affect the long-term success of an organization: financial, customers, internal processes, learning and growth. Using this approach you would set objectives for your team for each of these categories.

(The writer is a company director experienced in Human Resource Management and Development)