THE BLOG
11/02/2012 07:17 pm ET Updated Jan 23, 2014

About Leadership: Setting Objectives

There is nothing more basic to management practice than setting objectives -- specific, time defined, measurable, achievable yet stretching, relevant to the main goals -- and yet somehow we often forget to do it systematically, and this is a big mistake. If someone comes to talk to me about a new job, whether inside the company where I am already employed, or from outside, the first question I want to ask is 'What would you expect me to accomplish in the first year? What do you think my objectives are?'

If I have taken over a new department or organization, the first thing I want to understand are what everyone's specific objectives are for the coming year. And how do they align with my own. And how do they align with my boss' view.

The process of setting objectives makes everyone think about what they are going to accomplish, why they are coming to work every day. It should facilitate dialogue across the department and between manager and the team. Objectives make you ask the question 'Whose help do I need to get done what I want to get done this year?' and conversely 'What is my role in accomplishing what the team needs to accomplish to be successful?' At the BP refinery in Germany I saw that every employee had a little booklet. In it were the things the refinery had to achieve that year -- yield, safety, costs, cash -- broken down by limit and team. Each of them could know just what his part was in the whole.

I don't think it matters if one is in a big corporation or a small company, or even in a charity. Having an annual discussion about objectives, setting them, reviewing progress two or three times a year, and then an annual appraisal, is a good discipline that should not be neglected. When things go well, objectives are accomplished and everyone feels good. We enthusiastically move on to the next level of performance. When things don't go well, we have something against which to measure how badly they went. If an employee is to be rewarded, we can do it against exceeding expectation on set objectives. If a team member is not working out, we have something in writing against which to have what can be a difficult discussion.

And don't forget to do this at the highest levels as well as at the intermediate and junior levels in the company. Certainly there is no better way of ensuring alignment than having well-crafted specific objectives from top to bottom in the Company. It also requires thought on the part of the CEO, the Chairman and the senior executives. I have seen where this thought process leads to the conclusion that one fewer executive was needed.

Sure, we are flexible, and there is nothing inviolate about a plan for the year. Opportunities arise, plans change. One of the best reasons for having a plan is to know when you have deviated from it. Having specific objectives does not constrain flexibility in any way. You just sit down, assess the situation, decide what to drop and what new objectives to agree, and move on.

About Leadership:
About Leadership is a series of 52 columns on corporate leadership -- essential skills, leading teams, managing your career, the strategic and business practices to make a company and its leader distinctive from competitors. These columns will be of interest to people leading small and medium sized companies today, many of whom have not had much formal training in management skills and techniques; for the many people in big companies who aspire to senior management; and for anyone who thinks: Give me a hint, how can I do this better?