Organizational Goals

An organizational goal is the end-point toward which activities are aimed. It is the target or end that managers want to reach. Goals provide direction and serve as a reference point. Goals are the raisin deter of an organization. In other words, goals are the reason for the existence of an organization. If an organization fails to achieve its goal, it can be said that it has failed in its objectives. Thus, goals are critical to organizational success and effectiveness. Organizations are purposive. They have specific goals to attain. In the process of attaining these goals, they mobilize various resources-human as well as non-human (financial, physical, technical, etc.) available to them. Organizational goals, in fact, provide an idea about the character, tensions, activities, and behavior of an organization. The nature of goals differs from organization to organization. A business enterprise wants to make a profit or increase its market share, or attain higher ethical standards in the conduct of all its affairs. A social organization like a university, in contrast, may have an objective of increasing access to higher education or providing relevant and quality education to students in given fields of study. A non-profit hospital aims at improving community health or patient care through mobile camps. These are only general statements about the tensions between these organizations. The goals are more precise, specific, measurable, and focused statements. They should state clearly what is to improve change, reduce, or maintain. Organizational goals are as far as possible, expressed in quantitative measurable, and concrete terms desired to be achieved within a given time period. Goals are firm commitments of the organization to accomplish something specific. Organizations direct their scarce resources and energies into areas that will help them to attain their goals. To motivate efforts goals should be linked to rewards. An organization may have multiple goals to pursue in a given period of time. When organizations have such multiple goals to attain within a limited time, financial and material resources, and priorities are fixed. Most crucial and urgent goals are given top priorities.[1]

Organizational goals are created in an attempt to achieve the desired state of profit and success. General organizational goals are found in the mission/vision statement of the company, but details of those goals are defined in the business plan.[2]

Importance of Organizational Goals[3]
Organizational goals are essential to regulate and control the functioning of individuals and groups inter se and also individuals and group in relation to the organization. The importance of these goals has been described under the following heads:

  • 1. Focus Attention of Individuals and Groups to Specific Activities and Efforts of Organizations: When an organization's goals are known to individuals and groups, it will help them in channelizing their activities towards attaining the organization's goals. In other words, the goals prescribe the course of action to individuals and groups which will be helpful and complementary to the achievement of the organization's goals.
  • 2. Provide a Source of Legitimacy to Action by Members: Once this course of action has been decided for the individuals and the groups within the framework of organizational goal, it will promote legitimacy and justification of individual’s or group’s actions and decisions.
  • 3. Serve as a Standard of Performance: Goals provide a measure of an individual’s or group’s performance. They may help the organization members to evaluate the level of their performance from the perspective of the organization's goals.
  • 4. Affect the Structure of Organization: Goals and structure are intimately related to each other. The relationship among people in the form of authority and responsibility or the positions to be created at different levels has to be decided on the basis of organizational goals. In other words, what the organization proposes to do will be determined by the organizational setup it will structure. Similarly, it will be the structure also which will influence the goals.
  • 5. Provide Clues about the Nature and Character of Organization: The nature and character of an organization may be known by its goals. For instance, the goal of maintaining the quality of a product without much regard for return on investment may help the outsider to hold the organization and its members in very high esteem.

Key Organizational Goals[4]
Drucker, an organizational guru, has identified 8 key areas in which organizations should establish result-oriented goals:

  • Market share
  • Innovation. Tom Peters found that excellent companies are obsessed by innovation. Eg. Minnesota Mining and Manufacturing (3M) has generated 25% of its sales from products less than 5 yrs old.
  • Productivity. This is probably the most oft-cited goal of all, to produce greater outcomes with fewer inputs. This provides organizations with a competitive edge. For example, GE estimates that a one percent increase in productivity at their plants translates into $300 million dollars of increased revenues. As productivity increases market share goals can be pursued by dropping prices.
  • Physical and financial resources. Renovating and maintaining equipment is important in the long run for an organization. Increasing cash flow is often important for new ventures.
  • Profitability. This is usually expressed as a percentage and should always be stated.
  • Management performance and development. Management training is important because management is key to organizational success. For example, GE has a special course in Crotonville for up-and-coming young managers, and IBM spends 15 days per year training management in better management practices. This is often a neglected aspect in many organizations.
  • Employees' performance and attitude goals. Employees are the most important asset in any organization, although many organizations don't act as if they believe this.
  • Social responsibility. More and more organizations see this as somewhat important to gain legitimacy on the public's eye. These days one is witness to organizations providing matching funds for fundraising efforts and giving their employees a certain number of paid hours time off to volunteer in community activities.

Steps for Organizational Goal Setting[5]
Organizations cannot survive and flourish for a very long time without some basic goals. Goals give an organization a purpose and direction to move towards the entire year. Brainstorm goals as a group. (People support what they create, and will accept responsibility more easily.)

  • 1. Choose from the brainstormed list those you want to attend to.
  • 2. Prioritize as a group.
  • 3. Determine objectives and plans of action for each goal. Be specific and include deadlines.
  • 4. Move into action. Follow through.
  • 5. Continually evaluate your progress.
  • 6. Be flexible; allow your objectives to change to meet your new circumstances.

Organizational Goals - Categories[6]
Organizational goals are most commonly classified into two broad categories:
a. level-wise(top, middle and operational),
b. time-wise (short-term, medium-term, and long-term).

  • 1. LEVEL WISE GOALS: Organizations are generally divided into three levels-top, middle, and bottom. Generally, organization goals are formulated at the top of the pyramid and filtered down. In some cases, the reverse is also true. Based on this classification of organizational levels, four types of goals can be identified.
    • a) Mission: The organization's mission describes the vision its top leadership has of the organization's purpose and philosophy. The organizations must first visualize what they aim to become. They develop and formulate inspiring statements of the core purposes of their work. These mission statements, thus, reflect the focus, image, philosophy, and aspirations of the organization. The mission projects the image of the organization. Organizational members identify themselves with the mission and share pride and commitment.
    • b) Strategic Goals: Strategic goals are stated in general terms. They are developed in view of the mission of the organization. They outline overall organizations' goals relating to different dimensions of their business like profit making, product development, resource allocation, human resource development, research priorities, and so on. These are, therefore, organization-set strategic goals. The board of directors and the top management of the organization set strategic goals. While setting such goals, they seek input from staff specialists and middle managers. For strategic goals, they seek inputs from staff specialists and middle managers. Strategic goals, thus, indicate the real tensions of an organization. The executive management of an organization usually determines the strategic goals. These top leaders scan the external environment for opportunities or threats to the organization aim is to match internal strengths and weaknesses to changes in the external environment in order to create new opportunities.
    • c) Tactical or Intermediate Goals: Tactical or intermediate goals are set to translate strategic goals into action. These goals involve middle-level managers. Compared with strategic goals, these goals have a somewhat shorter time span and a more specific and concrete focus. The focus of tactical goals is on how to rationalize actions necessary to achieve strategic goals.
    • d) Operational Goals: Operational goals are set for lower-level management. The main concern here is with shorter-term issues associated with intermediate or tactical goals. The supervisory level staff members are responsible for develop in and implementing operational goals that will meet the tactical goals. Activities and resources are assigned to individuals and groups to carry out some portion of the operational goals. The operational goals affect employees' day to-day-activities.
  • 2. TIME SPAN: Organizational goals are also set across different time spans. It is a common practice divide goals into three time frames-long term, medium and short -term. Missions have infinite time horizon. Strategic goals are long term and cover many years, perhaps even decade. Intermediate or tactical goals are medium term and usually cover periods from one to five years. Operational goals are short term and have a time frame of one year or less.

Types of Organizational Goals[7]
One useful scheme for describing organizational goals was provided by Charles Perrow. He has identified the following types of organizational goals:

  • Officials goals. These goals are the formally stated goals of an organization described in its charter and annual reports and they are emphasized in public statements by key executives.
  • Operative goals are the outcomes that the organization actually seeks to attain through its operating policies and activities.
  • Operational goals Organizational goals define the performance objectives and desired behaviors within an organization.

However, a typical social organization today has multiple stakeholders-groups of people, and consequently has multiple goals, which, at times, may be mutually conflicting. According to Perrow, multiple organizational goals can be classified into four major categories:

  • Output goals. These goals are the "end product," such as consumer products, services, health care, or education.
  • System goals. System goals relate to the organization itself, and they consist of such things as growth, stability, profit, efficiency, market share.
  • Product goals. Product goals consist of the characteristics of the goods or services, such as quality, styling, uniqueness, variety, and price.
  • Derived goals refer to the way an organization uses its power and influence to achieve other social or political goals (such as employee welfare, community services, or political aims).

Henry Minztberg has provided a different classification of goals:

  • System goals. There are four system goals: survival, efficiency, control, and growth.
  • Formal goals. Formal goals are used by managers to tell everyone what they are doing.
  • Ideological goals. These goals are what the people within the organization believe in.
  • Shared personal goals. These goals are what people within the organization come together to accomplish for their mutual benefit.

For most organizations, goals are constantly changing and members of the organizations must respond appropriately, by formulating new goals as well as deciding which goals will be accomplished, and in what order.

Benefits of Organizational Goals[8]

  • 1. Goals serve as guidelines for action, directing and channeling employee efforts. They provide parameters for strategic planning, allocating resources and identifying development opportunities.
  • 2. Goals provide constraints in the organization. Choosing certain goals reduces discretion in pursuing other goals. eg. The goal of maximizing stockholder dividends immediately reduces financial resources available for expense accounts.
  • 3. Goals act as a source of legitimacy by justifying an organization's activities and existence. For new organizations the struggle for legitimacy is great. Maintaining legitimacy is easier but still, some organizations do lose legitimacy. For example, imagine a hospital whose goal was to increase occupancy by performing as much surgery as possible. Such a goal would surely reduce its legitimacy.
  • 4. Goals define standards of performance. To the extent that goals are clearly stated, they set standards for evaluation.
  • 5. Goals provide a source of motivation. By presenting a challenge and how to achieve it, organizational goals act as behavioral incentives. For example the path-goal theory of leadership.

See Also


  1. Understanding the meaning of Organizational Goal Organization Nature
  2. What are Organizational Goals
  3. The Importance of Organizational Goals Your Article Library
  4. Key Organizational Goals
  5. Steps for Organizational Goal Setting
  6. The Categories of Organizational Goals
  7. Types of Organizational Goals
  8. Benefits of Organizational Goals Ryerson University

Further Reading