Agreements on objectives

The term goal setting is a guide technique in which a manager and their employees agree on the realization of organizational objectives.

• 3.1 Strategic Goals
• 3.2 Operational objectives 3.2.1 earnings target
• 3.2.2 Process Objective

Goal Setting

In prioritizing corporate or project goals, managers are oriented regularly in the general objectives of the overall company. A distinction is made between short-, medium -and long -term goals as well as between operational and strategic objectives.

The target formulation is used to guide the subsequent planning. For the use of resources required intermediate targets are agreed to continue the project considering the development to the next interim target for control. Formulating goals helps to comply with the policy environment; Milestones lead to a section by section editing a project with corrections.

Elements

The target agreement has two elements: a) the measures to achieve the goal and b ) this goal. In other words, a target agreement consists of (quantitative) objectives and number ( qualitative ) together action plans.

The goal

This service by the employee will be agreed as an internal supplier.

A target has four dimensions:

• The target direction and developed from it
• Measure
• The target height of the measured variable, may be set in relation to a
• Reference value

Example:

• " Improvement " is the target direction,
• The measure could then be, for example, EBIT,
• The target height, for example, " 5 %" and
• The reference value, for example, " year "

The goal then would be to completely " EBIT increase of 5 percent over the previous year ." When specifying the target level as an absolute value can be omitted to specify a reference value, for example: " improvement to 3.2 million euros. "

A goal should be defined so that

• The target direction reflects the strategic direction of the company
• The measure of this actually reflects
• The target height accepted, with effort is realistically achievable and motivating. More specifically, ensure under the Occupational Safety Act, that there is no threat to the physical and mental health of the worker from the agreed tasks. Danger can be, for example, under the agreement known as stretched targets result based on the maximum exploitation of the performance potential (they contain no " buffer").

The measures

Almost every employee is also " internal customer ": Colleagues provide him with goods or services ( "input" ), the preconditions for achieving its objectives.

Just as goals have no force if it does not consist of these four elements, inconcrete action plans have no power. Achieving these objectives "SMART" ( originally the English acronym for specific = specific, measurable = Measurable, Achievable = attainable, relevant = relevant, and timed = terminated) be.

The measures to achieve this target must be clear and understandable:

• Who (affected business unit, department, company)
• What ( content-based description of the measure )
• When / until when (time period for intermediate targets, milestones and result )
• What ( use of resources, especially of capital ( cost of operation ) and work ( peer support ) )
• How ( Procedure, specifically methodology and procedures )
• Result ( result to be achieved with regard to the respective destination, with verifiable quality definition).

Examples

Strategic Goals

As a strategic goal a mostly long- term corporate objective is referred to (eg, new product development, increasing market share or entering new markets ), which applies simultaneously for several independent business units. Often these units pursue divergent goals, which among themselves are partly in competition or form so-called goal hierarchies. A known and holistic planning aid for the overall direction is the Balanced Scorecard, are set in the long-term, value-creating objectives. The instruments of the strategic objectives, among others, the portfolio analysis, potential analysis, ROI analysis, or product life cycle can be seen.

Operational objectives

Operational objectives are mostly oriented in the short to medium term, or refer to individual departments of very large companies or small and medium-sized company as a whole. Often it is assumed that annual or quarterly goals. Since this can lead to mutual cannibalization of individual performance areas without an overarching long -term and holistic goal orientation ( individual profit centers work against each other, or marketing and sales follow different strategies ), operational goals must be subordinate to the strategic.

For complex projects, such as in a software development over the course of a development phase to be agreed (eg, requirements definition, design specification, programming, testing, implementation ) milestones as intermediate targets. They are part of a roadmap. Upon reaching such a level of development may optionally be realigned or even prematurely terminated a project, which is a considerable savings in time and money can mean.

In exceptional cases can control consciously operating loss goal also be scheduled if, for example, in the establishment phase or in the introduction of a new product start-up or restructuring aware losses. The break (break even point ) is the threshold at which the revenues cover costs and is strategically planned.

Earnings target

A complete result of objectives might be: " The XZ department is planning a regional operational expansion of direct sales revenue for copiers to 400,000 € for the current financial year in their sales Zip Code (sic! ) 50000-55000. This result is to be achieved with use of both external sales of the department and with the help of a full-time position in the Group's own call center under the direction of the Regional Sales Manager CBA. This is to pay particular attention to the strategic competitive advantages of the type SOSOSO4 opposite the main competitors NENENE9. If necessary, the Regional Sales Manager both support staff in discussions with customers on the spot. "

Process Objective

A complete process of objectives might be: " The seminar quality of our training managers should be increased in the course of this quarter so far that the customer surveys in the categories, practical ',' Learning with fun and joy 'and' feasibility ' means from 80 percent to our review form reach. For this purpose, it is planned to establish a rolling coaching and job shadowing process in which all coaches participate in at least once a month in an event of a colleague. The resulting exchange should be developed no later than mid-quarter conference for teachers and discussion capable. The responsibility for this action has specialist lecturer GRR in agreement with CTS. "

Problems and risks

If the target agreement signed by the employee, then it involves a written amendment to the employment contract. In companies with a works council, workers can seek advice from the works council about the consequences of signing it.

Even with target agreements is in principle the problem of measurability of performance. Based on the written record of objectives there should in theory at staff meetings to no discussion about the values ​​when a power performance was measured objectively. Practically, however, is often the evaluation of the results and their attribution of responsibility for the problem. Since mostly compose, review and assess the superiors both the agreement, conflicts must be mostly resolved at the meta-level.

In a sensible system analysis of both input and output variables have to be evaluated. In the evaluation of employees that condition is neglected in many cases: The duties of the employee as the operational supplier are agreed and their achievement is assessed, the employee's rights as the operational customers are not held to the same degree. Often the quality of target agreements suffers therefore also an asymmetry between the value of services provided by an employee and the evaluation of services that are essential for the successful work of the employee. If this neglect is maintained in spite of opposition by the employee, is the neglect of intent and should be documented by the employee.

It is also possible that performance targets are designed so that the objectives can not be practically achieved. The aim of such an approach may be to create reasons for a behavior-based termination.

In the discussion about Beyond Budgeting is criticized that occur on the target agreement performance-reducing incentives by the usual coupling of the variable remuneration. On one hand, employees who are paid according to the objective degree of realization, a general interest to agree as light as possible to reach goals. On the other hand, a strict target focusing on selfish and short-term behaviors lead to the detriment of the entire company. One example is declining benefits when goals are achieved before the end of the fiscal year in order to create a buffer for the subsequent year. Furthermore, it is recommended instead to agree on fixed targets only relative, self-managing objectives with regard to appropriate benchmarking comparison groups, because a power measurement is meaningful only through the competitive comparison.

Participation

Given the problems and risks of employee assessment used for target agreements is their implementation subject to co-determination in Germany. This is especially the case when it comes to collective and binding in a work requirement to include the employee overarching corporate strategy. However, the council represents the interests of staff with whom a company wishes to conclude individual agreements on objectives. Here is one of the functions of the works is to look for an actual accessibility, to the objective measurability of objectives and in balance. Also important is a risk assessment of the agreed goals and tasks even when no chemical and physical hazards are taken into account, because the modern European labor protection has made the employer responsible for the prevention of work-related psychological and psychosomatic disorders. Here, the works council has very effective participation and monitoring capabilities.

Without reference to the fee a target agreement is in Germany a co-determination requiring " general assessment principle " according to § 94 para 2 WCA in control by data processing system an additional participation of the power and control of behavior applies in accordance with § 87 Section 1 No. 6 WCA. With regard to remuneration, see § 87 Section 1 No. 10 to 12 WCA application. In practice, the use of target agreements through an operating agreement between the management and the works council is regulated in companies with a works council.

Economic importance and implications

Especially with extensive project development objectives are formulated precisely and it is advisable to make interim goals so that the calculation of personnel, material and costs is possible and, where appropriate, a scenario can be drawn about the further progress.