Goal Formulation and Approaches to Goal Formulation
Goal formulation.
Managers set goals in organizations. Top-level managers formulate long-term (strategic) goals. Middle-level managers set Mid-term (tactical) goals and lower-level managers formulate short-term (operational) goals. Goal formulation process these all types of goal-setting procedure. Generally, the goal formulation process includes the following procedure.
1. Environmental Scanning:
Environmental scanning is a process of collecting information about change and development in the environment. Environmental scanning can be helpful for conducting a SWOT analysis.
a) Analyzing External environment:
Political-legal, economic, socio-cultural, and technological factors are external environments. The external environment creates opportunities or threats. Opportunity is a favorable condition and threat is an unfavorable condition. By analyzing the external environment, we can be familiar with what opportunities or threats are in the environment?
b) Analyzing internal environment:
Internal cultures of organization, structure, resources, policies, rules, etc are internal environment. Internal environment indicates strengths or positive sides and weakness or negative sides of an organization. By analyzing the internal environment, we can be familiar with strengths and weaknesses.
The strength, weakness, opportunity, and threats analysis (SWOT Analysis) is generally conducted by top-level managers. Environmental scanning represents this whole procedure. Therefore, environmental scanning is a process of collecting information from the environment identifying strengths, weaknesses, opportunities, and threats that affect an organization.
2. Formulation of the overall goal:
After identifying strengths, weaknesses, opportunities, and threats, top-level managers formulate the overall goal of an organization. Overall goal refers to the strategic or corporate and long-term goal. The overall goal should be formulated as per the change and development in the environment. The goal of ‘getting 25% return on investment up to 5 years, ‘Product differentiation within 6 years’ ‘increasing market share by 10% within 10 years, etc. can be the overall goals of an organization.
3. Formulation of a specific goal:
Here the specific goal is represented by a tactical goal and operational goal. Middle-level managers formulate tactical or mid-term goals. These are the goals of the departments like production, finance, marketing, and human resource management department. Tactical goals are formulated on the basis of the corporate or overall goals.
On the other hand, the operational goal is the goal of the units. Lower-level managers formulate such short-term goals. Operational goals are formulated on the basis of tactical goals. Tactical goals and operational goals both are specific goals. Whether we follow a top-down approach, down-top approach, or management by objective approach, we should follow the above goal formulation process for formulating goals systematically.
Approaches to goal formulation.
Approaches of goal formulation are the methods and procedures that indicate a particular viewpoint to formulate the goals. Major procedural viewpoints of formulating the goals are as follows:
1. Top-down approach:
Top-level managers take the whole initiation of goal setting. They formulate overall goal and goals for the departments and units. Top-level managers circulate it to middle-level and operational-level managers. Middle-level and operational level managers take the initiation of implementation of plans circulated from the top level. Top-level managers acquire suggestions from experts and consultants but don’t interact with middle-level and lower level.
2. Bottom-up approach:
In the bottom-up approach, middle-level and operational level managers leave chances of setting goals for their departments and units. They forward operational goals and tactical goals to the top-level managers. Top-level managers take it as a basis and information to formulate an overall organizational goal. In this approach, top-level managers not get only departmental and unit-level goals but also individual goals. lower level. It may be important information to set a proper corporate goal. This approach can be more advantageous than that of the top-down approach for employee motivation in implementation.
3. Management by objective approach:
All levels of managers (Top-level, middle level, operational level) jointly formulates the goals as per this approach. Both the superiors and subordinates make interact, share ideas and formulate corporate, tactical, and operational goals. They jointly decide about individual responsibility to achieve expected results. Short-term goals, actions, plans are also formulated jointly. The important features of management by objective are highlighted below,
a) Formulation of strategic, tactical, and operational goals jointly by all level managers.
b) Defining individual responsibility.
c) Formulating action, plans and implementations.
d) Periodical evaluation is made jointly after accomplishing the tasks. New goals and plans are formulated jointly.
Management by objective is advantageous for participation and motivation of all level managers, It helps to increase productivity and effectiveness. All of the above approaches follow the process of goal formulation.
