Management by Objectives
Marwan Ahmed
When you start reading and watching content on management, you will reach the S.M.A.R.T. goals and objectives framework in no time. It has booked its position as the crown jewel of all objectives setting methods in management regardless of the industry and the discipline. Let’s start by explaining the difference between goals and objectives before examining the mentioned framework.
While sometimes used interchangeably, goals are statements of desired outcomes that need to be achieved in a timeline of at least one year, with no description of the methods or the details involved.
Objectives are specific, actionable targets that need to be achieved within a smaller time period, a year or less, to reach a certain goal.
Goals setting is usually company-wide while the objective setting is for departments and teams and must be the managers’ job. Therefore, we all need to understand the process of drafting clear objectives as we will be involved in an objectives drafting process sooner or later.
Before we go into some depth on the topic of the objectives, one last note to differentiate between company goals and strategy. A strategy is the methods and collection of tactics that individuals or companies use to achieve their business goals.
The problem starts from the company-wide misalignment and over-estimation of how much teams and individuals understand their company’s priorities. A study published on MIT Sloan School of Management (one of the most prestigious and important educational institutions in the world) made an analysis of 124 organizations that revealed that only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities.
If the problem is that severe at the upper ranks, how do things look to the lower ranks?
In the Iraqi business context, employees would articulate their business goals by saying growing market-share or increasing sales and leaving us with not much understanding of any other detail even if we ask, because they simply do not know. Whether these goals by their naked articulation are the right ones or not can be debatable.
The problem gets more complicated and blurry when we go into the objectives level of things.
1- The Limitations of the Language: The words goals and objectives both translate to “Ahdaf” in Arabic, leaving no room for accuracy when trying to distinguish between the terms. Not to mention, that these terms often get translated to worse versions and become misidentified as plans or even strategies.
2- Transparency: Declaring the company’s goals and objectives requires a level of transparency and disclosing details. Organizations do not trust their employees unless they are blood relations or have a personal history. The reasons for this initial distrust in non-family members are many and some of them are global and can be seen even in most Eastern societies. However, in Iraq, distrust (or limiting the trust) are reasons that have been amplified due to the history of violence and weak anti-corruption measures.
3- Playing for the Long-term: The famous proverb “if you want to go fast, go alone. If you want to go far, go together” explains the importance of organizations’ internal bonds and alignment for the long-term future. It was almost impossible to witness companies that do not believe in maximizing the short-term gain. Industries have always operated like there is no tomorrow, hence, the excruciating rules of collaterals are everywhere and a finance system that revolves around zero-risk opportunities and overly-conservative plans.
New Beginnings, New Generations!
As more international, and regional companies enter Iraq, in parallel to the sporadic wave of new businesses and startups that is only expected to increase. We need to learn from the mistakes of others, to build workplaces that revolve around rewarding those who perform, and retaining them, which can only be done and measured against certain business objectives that align teams and individuals towards the same goal.
The clarity of the job role is essential for setting the initial expectations on the skills required for the job and the daily routine, for a lack of a better term. However, people need to understand how these tasks are contributing to a team and company’s performance based on an indicator. Managers need to have that gauge as well to act and improve inputs and processes that will help their direct and indirect reports achieve their objectives, or at least be on the right track of doing so.
A key task in the management’s scope of work and a clear expectation from employees on their managers and team leads is prioritizing resources and ensuring that the teams and individuals are working on the tasks that contribute to the company’s success in the relevant areas.
Even if the jobs are self-explanatory, there should be a direction towards an objective to ensure that both the manager and the person who is doing the actual work are aligned on the performance and if the work that is being done (the inputs) is impacting the outputs and ideally the outcomes.
Let’s take an example here:
In Miswag, where I work currently, it is a company’s goal to be the most customer-centric tech organization in Iraq. The Care agents in the Care department understand what they need to do by the default job description and react to incidents in accordance with our customers’ centric policies. So the original hypothesis is that we are not customer-centric by design, we need to shift to be one or get better at it until we perfect it over time. Thus, there should be objectives with timelines that ensure we are moving towards the company’s goal.
Let’s Do It S.M.A.R.T.ly!
The S.M.A.R.T. objective setting framework tries to ensure that objectives are:
S: Specific and very well defined to be understood, communicated, and, ideally, remembered.
M: Measurable with no ambiguity by having a numerical value that can verify any improvement or decline in the performance.
A: Attainable and can be achieved given the resources available and other internal and external factors.
R: Relevant to the team or individuals’ work just like how it is relevant to the company’s. People can relate their work and efforts to it effortlessly.
T: Time-bound where the timeline is defined upfront and clear to all parties.
So for my example on the Customer Care units:
We become faster in solving customers’ tickets in the next 6 months vs. we decrease the solution time of non-voice tickets by 50% by the end of Q2 2022.
We ensure that the customer is always right vs. we ensure that zero customer complaints are closed before going through a secondary verification process and customers rate the experience with an average of ⅘ in 2022.
The objectives above now have teams that are working on them and the narrative of the conversations shift:
From I am closing tickets and this is all that I do, to I am contributing to decreasing the resolution time in alignment with our direction of being customer-centric.
From I follow the processes and ensure that I do not make mistakes, to I follow processes and have a say in making recommendations for improvements because it impacts how my performance is perceived by the management.
From we are not meeting the objectives despite my hard work because my colleagues are not putting the same efforts, to I am always achieving my personal objective but the rest of the team are barely achieving 80% of their objectives so I will speak to the manager to avoid being accountable for something that is not my fault.
Management by Objectives:
The Godfather of management by objectives that later sprang off OKRs (Objectives and Key Results), Dr. Andrew Grove (Intel’s late legendary CEO) detailed the whole methodology with its implementation cookbook and touched upon the systems that need to surround it to ensure the maximum effectiveness of the framework.
Although most people in management and startups founders have come across objectives-setting and the importance of creating and tracking objectives, they find themselves crippled in many stages of the process because of the following reasons:
1- The fear of having imperfect objectives that lead to failure in delivery. This is a classic example of having something instead of nothing. Because having nothing will lead to no improvement. Mostly, the objective will be of positive contribution to the desired outcome.
2- Not knowing where to start. I would argue that this is an opportunity and not an argument for not starting. As the process of reflecting on current performance and coming up with a starting point is in itself an amazing improvement where time will be spent on analyzing the resources vs. priorities and highlighting historical gaps in performance.
3- The fear of not being able to follow through. This statement is at the core of team leaders performance management and an opportunity to do so.
Managers are basically afraid of the ability of the process to uncover that the mediocre performance might be nobody’s fault but theirs due to their inability to manage their team’s bandwidth and resources against the business unit objectives.
The moral of the story here is to start. Start somewhere so you can improve. “Perfection is not having no more things to add, but is having no more to take away” and that means starting will help you to choose what to start with and what to park aside for the time being. Because once you and your team decide on the objectives and everyone starts looking in that direction, it will be like riding a bicycle where they will move in the direction they are steering towards.
Last but not least, please notice that I am including the team in most of my sentences in the last paragraphs because objective-setting processes often fail for not having the team’s involvement in the decision-making process and giving feedback on the final objectives. Do not miss their important inputs because in many cases it will be impossible for you to understand the business details the same way that they do. And remember that all the failing companies did have objectives and plans and still failed eventually. In many cases of these stories, you will find that employees knew it would happen and some of them did leave before the company’s dying years. But nobody was listening. So, again, if you want to go far, go together.