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Blog 3: The 4 steps to setting the right goals for your organization
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Blog 3: The 4 steps to setting the right goals for your organization

Setting goals. Don’t we all? In our private lives and at work. But how do you determine the right goals for your organization? Do you know how many goals your organization has at all? In our experience, many organizations cannot state the exact number. There are too many of them. After the management team or board has set the goals at the highest level, it is the departments’ turn. Each department derives its objectives from these organizational goals and soon you are left with dozens of objectives. How nice would it be if you could create focus in your organization by reducing the number of objectives to a handful. The good news is: you can!

Goals: what are they anyway? They are pieces of text about things you want to achieve personally or professionally. Examples are healthy living, reducing CO2 emissions, achieving profitability or becoming European football champions. You set goals in advance. You only know afterwards whether you have achieved them. Even in the last minute, a lead in the football final can be lost. KPIs are used to measure whether goals have been achieved. So, contrary to what is often said, goals in themselves are not SMART (specific, measurable, attainable, relevant and time-bound). You need KPIs and targets to really get it SMART. At iPM, we call KPIs on goals result-KPIs. They measure results (often in hindsight). During the game, you cannot manage them (at least not proactively), but you can learn from them and thus determine whether you are successful or not in achieving your goals.

Name the aspects that set you apart from the competition.

Peter Geelen – iPM Partners

Ultimate goal

Often, goals within organizations are confused with actions. For example, a recently published multi-year plan stated ”the organization further aims to introduce a dashboard to monitor the progress of the multi-year policy plan”. This is not a goal, but an action. A goal is something you want to achieve. It is not something you are going to do.

  1. Define your ultimate goal: Start by defining your ultimate goal. The ultimate goal is close to your reason for existence or mission. Measure your ultimate goal with KPIs that measure your contribution to society. For profit organizations, this means that continuity must be guaranteed. This results in a second KPI, such as profitability.
  2. Define the goals belonging to your growth strategy: To determine the goals belonging to your growth strategy, the questions differ from one organization to another. Here, we distinguish between non-profit and for-profit organizations. For a non-profit organization, the next step is a stakeholder analysis. Who are the stakeholders (on the output side of the organization), what do they expect from your organization, can you summarize this in objectives per stakeholder or stakeholder group and link a result KPI to it? An example: Suppose a charity recognizes that a group of volunteers who raise money for the charity is an important stakeholder group. These volunteers do so because they have a warm heart for the institution’s ultimate goal, so this KPI is already captured in the ultimate goal. Additionally, they will have expectations related to spending the funds they raise for the institution correctly. That is where you formulate your additional objective with, for example, the result KPI: % Euros well spent. By going through this per stakeholder group, a schedule of objectives and result KPIs unfolds in which it is clear per stakeholder and for all stakeholders together what the charity wants to achieve. For a for-profit organization, the growth strategy works in a different way. Then the product-market combinations (PMC) are the focus point. In which PMCs do you operate, where do you want to grow and where do you want to keep your share? This is where you formulate your objectives. Result KPIs that measure growth are often sales or market share.
  3. Define goals that align with customer values: Growth can of course be achieved in several ways, but for most organizations, customers are the most important source. But why does that customer buy from you? What are your distinctive values or brand promises? What evidence can you provide for this? Name the aspects that set you apart from the competition. Again, distinguish different types of customers, e.g. for an A-brand supplier, these are both retailers and consumers. What is the best way to measure whether you are meeting your brand promises? Asking the customers themselves, of course. So customer satisfaction or NPS are good result-KPIs on these types of objectives. Note, however, that customer satisfaction and NPS are perception. So measure customer loyalty as well. This is the true behaviour of your customers!
  4. Define the goals for your productivity strategy: As a counterpart to the growth strategy, also look at the productivity strategy. After all, growth cannot be achieved at any cost. It is determined by the typology behind your business model. It matters whether you are a wholesaler, service provider or manufacturer of products. Each typology has its own challenges, productivity targets and result KPIs, characteristic of the typology.

In our experience, when following the above steps, as part of the iPM method, a simple visual picture emerges in which the goals (limited to 4 areas) with about 6 to 8 result-KPIs can be captured. The whole organization works towards these goals and result-KPIs. This gives focus.

At this point, it is clear what the organization wants to achieve. So don’t start cascading these goals! That only blurs the picture. It is preferable to translate to operations and strategic projects in a different way. Or as it is often nicely put: working in and working on the shop. Do not make this translation to your shop through the organizational chart. The organizational chart does not deliver performance. Departments that work together in the chain to get products or services to customers properly and on time do so. Make sure you translate these targets and result KPIs to your customer chains. You can read how that works in our next blog.

The iPM implementation approach

In the coming weeks, we would like to take you through the questions and changes we encounter in practice during the implementation of iPM at our clients. These include questions about the set-up and design of iPM, but also about the best implementation approach. Topics will include:

Introduction of iPM

  1. From planning & control to iPM
  2. Ready for take-off
  3. Setting the right targets
  4. Which customer chains does my organization have
  5. Division of roles: hierarchy versus chain
  6. Tactics of the chain in focus
  7. Customer journey versus customer
  8. How to determine the right KPIs
  9. Getting your KPIs right in 10 days
  10. Consultation structure in iPM organization
  11. Effective performance dialogue and the usefulness of BRV
  12. Leader and team development
  13. Encouragement as a style to get more out of teams
  14. iPM in complex organizations
  15. Tips for implementation

Curious? Get in touch with us!

We outline what we often see in the traditionally controlled organization and indicate what that looks like when you apply iPM. Want to know more about healthy performance management? We illustrate this with situations and examples we encounter in daily practice. Contact us and we will help your organization move forward!

Back to the overview

Winning with the right KPIs

From strategy to execution: how performance indicators can help your company.

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