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Business objectives, government objectives and 3rd sector variations
All organisations need to be clear about their objectives. Watch Douglas Macbeth explain differences between business & government objectives.
DOUGLAS MACBETH: Objectives: All organisations need to be clear about their objectives, which might change over time as circumstances change, or in the public sector, with a new political direction established after a change of government. For the business sector, the number one objective is survival, for without that, nothing else is possible. When survival is threatened, sometimes previously collaborative relationships can be disrupted, as desperate measures are taken to survive the threat. However, even this can be done more collaboratively if the relationship is more like helping a friend out of a difficult situation rather than a strictly commercial and adversarial situation.
In order to survive, businesses need to find and satisfy customers, and to do so with sufficient profit levels to fund their activities and create enough surplus to make possible the achievement of their objectives. However, profits do not always need to be maximised, especially if the trade off for short term profit is a more assured cash flow into the future. This approach is referred to as satisficing. Often profits are used to support growth ambitions. But there are also companies whose main objectives relate more around keeping family and employees in work and generally happy. These are termed “lifestyle” companies and for them, the idea of growth is just too risky and challenging to their comfortable current situation.
Some small and medium sized businesses fall into this category. In the public sector, the objectives are more about the promotion of some public good or service, often supporting useful employment and also regulating individual and corporate behaviour, including the rule of law. Here, the intention is not to make a financial surplus, but ideally, to deliver improved service levels within or at a reduced budget. However, because of an annual budget cycle, there is a tendency to make sure the budget is spent by the end of the year so that next year’s budget is not reduced. This creates distortions in the procurement cycle and in rushed orders and deliveries just before the year end.
The third sector refers to organisations whose objectives revolve around the development of support to some good cause. And this can work with volunteer labour and is often funded by charitable giving by individuals or organisations. Whether the organisation is formally recognised and therefore controlled by the Charity Commission, makes a huge difference to the modes of operation and perhaps the degree to which they follow best commercial business practises. There are, of course, huge charities in this sector which employ highly competent people and operate to the highest standards, at least comparable with major business corporations. Sitting above and pre-dating objectives in the hierarchy of considerations are the concepts of vision and mission. This is intended to crystallise what the organisation is fundamentally about.
What the essential principles are under which it chooses to operate, what values it holds dear and will not compromise on, how it defines and measures its ultimate success, and how it contributes to society. These are highly variable, covering ethical behaviour, belief systems, excellence, quality of employment, staff or community development and service, to name but a few. The objectives, therefore, are built and evaluated internally against these criteria. When dealing with any relationships or negotiating contracts, this background is critically important to understand and to work with where feasible. With so many potential dimensions, it is useful to build some structure into the definition of objectives. And the widely used acronym, SMART, offers this support.
Using this framework, objectives should be specific, measurable, attainable i.e. sensible, be relevant to the organisation and its environment, and finally, be time bound, where this means having some time when they must be attained. Working this through produces objectives which make sense and can be obtained in reality rather than setting targets which are simply ambitions or nice to have.
All organisations need to be clear about their objectives which might change over time as circumstances change, or in the public sector, with a new political direction established after a change of government.
In this video, Douglas explains the difference between business and government objectives and third sector variations. Douglas also introduces the idea of building some structure into the definition of objectives and using the widely-used acronym SMART:
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Specific
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Measurable
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Attainable (i.e. sensible)
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Relevant
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Time-Bound
A copy of the mind map used in this video is available to download in PDF format from a link at the bottom of this page.
Do you think that you have a good understanding of what your organisation’s business objectives are?
Do you think that you have a good understanding of what your individual supplier’s and / or customer’s objectives are?
This article is from the online course:
Contract Management: Building Relationships in Business
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Contract Management: Building Relationships in Business
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