Understanding Goals and Objectives in Business

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Ask a group of business professionals to describe the difference between goals and objectives and you are likely to walk away no smarter than when you asked the question. These two popular and important terms are perhaps the two most misused and confused terms in all of the business. And there's no wonder, the distinctions between the two are subtle. 

Goals and Objectives

A goal is a broad, over-arching destination. "We want to achieve 50% market share in two years," or, "I want to compete in and complete a triathlon within 18 months." It does not define how you will achieve this market share; it does not describe a strategy to get there or offer the specific tasks necessary to achieve the strategy. It simply is out there as a destination or target. 

An objective is a specific, measurable activity you will take to work towards a broader goal. For example: "As part of our goal to achieve 50% market share in two years, we will introduce a new product in each market segment every six months." Or, "To achieve my goal of completing a triathlon, I will engage a running coach to help me improve my cardio conditioning, pacing, and running technique." 

In both cases, the objectives are capable of being broken down at a more detailed and measurable level called tactics. However, there's a missing link between goals and objectives: strategy. 

Where Does Strategy Fit with Goals and Objectives

The strategy connects objectives with goals. Business leaders and managers strive to create strategies and supporting actions that help them move towards an overarching company goal. In our example above, in order to achieve the goal of 50% market share in two years, the firm must adopt a strategy and then define the specific sets of actions necessary to realize the strategy which will propel them to the goal. 

This high-level strategy statement identifies the approach the firm will take in growing market share. It frames the major actions but stops short of describing specifically how those actions will be implemented. 

As mentioned above, the objectives will focus on particulars, including bringing a new product to market in each market segment every nine months. The objective can further be broken down into a series of tactics, including researching customer needs; hiring additional engineers and product managers and adding production capacity to support manufacturing the new offerings. 

Making Goals and Objectives Personal

In many organizations, the performance appraisal and planning process involves identifying goals and objectives for an upcoming period. Individuals struggle with the differences between the two just as their senior managers often conflate the terms and concepts. A helpful approach is to break down the goals and objectives using the following template:

  • Define one to three statements that describe a destination for your professional development in the upcoming year. These are your goals. 
  • Support each goal statement with a description of the high-level approach you will take to get there. 

For example: 

  • Goal:​ My goal for this upcoming period is to strengthen my effectiveness as a manager by delivering improved and more frequent feedback. To measure the change in my performance, we will rely on my team's assessment via a 360-degree survey compared to this year's results, as well as my group's measure of engagement and their overall achievement of corporate goals. 
  • Objective: ​To achieve my goal of strengthening my effectiveness as a manager during the upcoming period, I will seek and complete training within three months on delivering constructive and positive feedback and maintain and review a daily log of all of my feedback exchanges and the outcomes.

The goal is clear and in this instance the path to improving the goal via the objective is clear. Both the employee and manager understand what the employee is striving for, how progress will be measured and how the goal will be reached. 

The Bottom Line

Focus on the goal as the destination and the objective as the action(s) needed to get to the destination. Resist the temptation to use these terms interchangeably, and importantly, teach your team members how to define clear goals and objectives. 

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