Myriad research shows a strong correlation between effective goal setting and company performance. In general, the more closely companies align their goals across the organization, the higher the level of financial success they achieve. Goal setting includes short-term and mid-term goals, not only long-term goals. Short-term goals may include cash flow or sales goals while intermediate goals may include hiring and profitability goals.
Goal setting helps companies allocate resources, assess company and employee performance and provide management direction. Effective business goals generally follow the S.M.A.R.T. model. Goals must be specific, measurable, attainable, relevant and timely. This means that companies must state exactly what they want to achieve and how they will measure that achievement. Companies, its management and employees must establish reachable targets that relate to the company’s business. In addition, companies must set specific dates by which to achieve the targets.
Short Term Goals
Short term goals are goals that businesses aim to achieve within the next few days to a year. Some newer or rapidly growing businesses may shorten this time period to six months. Businesses believe they can marshal the resources and make the desired impact during this time period. Short term goals therefore often includes habits or tasks, for example, reconciling the bank account with accounting records within 10 days of month end or revamping the billing process to reduce outstanding invoices from 45 days to 25 days.
Intermediate goals typically range from one to three years at more stable companies to six months to two years at new and fast growth companies. Intermediate goals include quarterly or annual revenue growth target and profitability or net income improvements. Intermediate goals also include personnel-related objectives, for example, employee hiring and training targets or strengthening the executive management team. Intermediate goals include market expansion and cost reduction objectives.
As Stepping Stones
Some of the most effective short term and intermediate goals are goals that directly relate to long-term goals as actual sub-goals of a company’s long-term objectives. Short-term goals can help employees make noticeable progress towards achieving intermediate goals and long-term goals. According to a joint study between the Harvard Business Review and the World Economic Forum, employees feel the most happy and most motivated when they are making progress toward their goals. Setting short term and intermediate goals can help engender a culture of success and aid significantly in achieving long term operational and financial success.
- Success Factors: The Incredible Power of Company-Wide Goal Alignment & Organizational Business Goals [http://www.successfactors.com/en_us/lp/articles/corporate-goal-alignment.html]
- Christian Brother University: Prentice Hall: Business Essentials, 7th Edition http://facstaff.cbu.edu/~rlawrenc/My%20Documents/Cayce’s%20Stuff/Courses/BUS%20103/ebert_griffin_ppt/chapter%205.ppt
- Harvard Business Review: The HBR List: Breakthrough Ideas for 2010 http://hbr.org/2010/01/the-hbr-list-breakthrough-ideas-for-2010/ar/1