At a minimum, every business should have at least three levels of objectives.
- Level I – 3-6 Highest Level Business Objectives
- Level II – Key Area Objectives (eg Marketing, Sales, Finance, Customer Service)
- Level III – Individual Role Objectives
Level I – 3-6 Highest Level Business Objectives
These are your top level objectives which you should be thinking about at least every week. In fact, they should become built into ongoing discussions, job descriptions everything.
The reason we suggest between 3 and 6 is because:
- Any less and you are probably not covering the most important ones of short-term financial focus, long-term financial focus and people
- Any more than six and it becomes difficult to remember them.
At the time of writing, here a sample from one of my businesses. (Feel free to use some or all of these).
- Objective 1 – short-term financial (often net profit)
- Objective 2 – long-term financial ( offer net profit but could be some other important measure)
- Objective 3 – internal stakeholders ( including employees, close contractors and investors)
- Objective 4 – external stakeholders (clients and other contractors)
- Objective 5 – the community at large ( this is what many would call Social Responsibility)
- Objective 6 – the environment
You will see that the way the above breaks down and makes it very easy to remember is:
- Objective 1 & 2 – Financials
- Objectives 3 & 4 – People
- Objectives 5 & 6 – Community & Environment
We don’t pretend that all businesses should adopt these 6 type of objectives. You should do what is right for your business.
But at a minimum, it is our experience, that its good to have at least the 3 mentioned above ( short-term financial, long-term financial and people)
Note the importance of having both a short-term and long-term financial focus results in a good balance in your strategy and day top day action.
Level II – Key Area Objectives (eg Marketing, Sales, Finance, Customer Service)
Underneath your highest level objectives sits the objectives for each of your key areas. (some people might call these “critical areas” or similar)
The key areas for any business can change from time to time but ones that we commonly see are:
- Business Processes
- Customer Service
- Product Development
Whatever your key areas, they should each have a manager (even if you are on multiple or all areas) and the manager should be responsible for achievement of the objectives that relate to that area.
A good analogy here is the Ceaser model.
Your strategy is such that if each of your Key Area Managers (Generals) achieve their objectives, then you can be confident that the business will achieve its Highest Level Objectives (taking the city).
Level III – Individual Role Objectives
This is where the rubber hits the road and you start to see day-to-day action tidy into the highest level organisational objectives.
A big mistake that many owners and managers make is to think in terms of individuals rather than roles.
What’s important is to first get clear on the roles that you need in order to achieve the Key Area Objectives and only then to find the right individual to fill that role.
Each role should have a Job at Description (mainly a list of responsibilities) and then objectives should be developed which are allied to each of the responsibilities.
Individuals are then responsible for self assessing their progress. My own preference is for individuals to do this informally on a weekly basis and then formally each month amongst other things, a good system when I will managers (including the CEO) to see overall progress of each individual in their team and their area as a whole. (see more here)
Building These 3 Levels
In terms of building these three levels, not all businesses will go from top-down.
If you are a new business, then that is probably the best approach. ( or at least at a minimum you will want Level 1 and III Objectives)
For an existing business, it tends to become more of a mishmash of taking what you already have (even if you haven’t already formalised it) and building around it. For example, for some businesses, it works best to start working on Job Descriptions in Level III.
Getting Input and Engagement
In building the above, the ideal at the appropriate time is to have engagement and agreement from all or most of your stakeholders before settling on the the Level I Objectives and the list of Key Areas.
The best way we know how to do this is through a face-to-face strategy sessional workshop we would least:
- discuss the Highest Level Objectives; and
- get agreement on the Key Areas