After formulating the mission statement, the next step for the company, is the establishment of major goals. The goals designate specific results the businesses want to achieve. In this context, the purpose of goals is to specify, as accurately as possible, as to what is to be done, if the company is to attain its mission. Goals are more specific than the mission but less specific than objectives. Objectives define and refine the goals further. Strategic goals help managers to establish end results of activities in general without getting bogged down in issues of measurement and timing.
Goals, in general, can be long term or short term. Short term goals generally cover a period of about one year. Long term goals cover a time period beyond one year. Sometimes, there is a category of intermediate goals, which cover a time period of between one and five years. Long term goals are usually related to such issues as customer satisfaction, improvements in product quality, worker efficiency and productivity, innovation and so on. These long term goals require management to do strategic planning in terms of long term profitability and in terms of longterm investments in equipment, people, research and development and so on.
According to M.D. Richards, meaningful goals should have four characteristics. First, goals should be sufficiently specific so that they are precise and measurable. It would assist management in monitoring the progress towards achievement of these goals at each specific point in time.
The second characteristic is concerned with the issues that a goal addresses. A goal should only address important issues. Short term goals and objectives should be left to the lower management to plan and achieve. Such important issues as reducing costs or improving quality should be included in goals, which are to be achieved by top or middle management. For example, Boeing’s goal of being a market leader in aircraft business by maintaining a minimum of 60 percent market share is an important issue that a goal addresses.
A third characteristic of well constructed goals is that they should be realistic and challenging. Challenging goals motivate managers to be innovative and ambitious about improving the operations. However, the goals have to be realistic and compatible with the resources available. An unrealistic goal would cause resentment among employees. For example, Boeing Company decided to achieve a 30 percent unit cost reduction by improving efficiency of operations. However, the time period they projected in achieving this goal was 6 years. This goal was considered challenging and realistic. The goal would have been unrealistic and unachievable if they had projected the time period for such cost reduction much less than 6 years’
The fourth characteristic of realistic goals is the specification of time period in which a given goal is to be achieved. For example, when Boeing decided to cut the per unit cost by 30 percent, they put the time frame to be 6 years. Deadlines, if realistic, can inject a sense of urgency into goal attainment and can motivate employees to work hard and with dedication. The dedication becomes even higher when appropriate rewards are related with the timely goal attainment.
Some of the strategic goals established by Elpaso Electric Company in various areas of concern are taken from their annual report and are briefly stated below:
1. Customer Service
- Provide a quality of service to customers at least equal to the highest standards in the industry.
- Maintain reliability of service to customers at a level above 99 percent.
- Insure that customers are educated on the safety aspect of focusing electricity.
2. Community Service
Promote economic growth and increased development of the company’s total service area. Provide job opportunities and an investment in the service area, which promotes a higher standard of living for all citizens a Cooperate with and serve the educational institutions located in the service area in a manner consistent with other leaders in the industry.
3. Shareholder Relations
- Assure that all expenditures are made in such a way as to protect and enhance the shareholder’s investment.
- Provide a rate of return to the shareholders, which is competitive with other investments.
- Base all company involvement in new programs or projects on solid economic principles.
4. Employee Management Obligations
- Monitor and strive to improve the quality of management and supervision. Attract, develop and retain able and loyal employees.
- Provide equal employment opportunities and a high degree of training along with modem, professional tools.
5. Corporate Communications
- Make an assertive effort to provide informative communications on relevant company issues.
- Keep senior management apprised and educated on current topics of interest. Enhance the community image of the company by being receptive to the needs of customers and the community.