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Goal Setting in Business

By ritasais Jul 10, 2010 2259 Words
THE IMPORTANCE OF GOAL SETTING IN
SMALL AND MEDIUM SIZED BUSINESSES

INTRODUCTION
What is the difference between a small business that struggles and a small business that thrives? Perhaps it is because one business has more educational backing or initial monetary investments. Or could it be location of the business? Although all these points are factors in whether or not a business will succeed or fail the real answer to these questions are goal setting. Goal setting can either make or break a small business. It is essential early on to realize the desired level of success of a business and to turn those thoughts and ideas into something tangible. This is where goal setting comes in. Whether it is a small business that is just beginning or a business that has been around for awhile setting goals for direction is never too late. Today’s world is ever changing and constantly advancing; therefore a goal setter must always remember that goals should be viewed in the same way. Once a goal is set, it does not mean that it is set in stone. They should be reevaluated at consistent intervals and should change according to company progress. Failing to Plan

If a business fails to plan, then ultimately, the business plans to fail. Without goal setting, a business will lack direction and motivation to excel. This lack of direction and motivation often times will result in a loss of production that effects revenue. This study will show that goal setting will prove to be a worthwhile endeavor and therefore should be given priority because of its importance in business success. Purposes of the Study

The purpose of this report is to demonstrate the importance of goal setting in small business. Compare the differences between businesses that struggle and those that succeed. I will examine common mistakes made early on in a business and how early goal setting could prevent many of these mistakes. Also, goal setting is not something that is “set in stone,” but rather always changing to fit the ever changing needs of a growing business. Scope of the Study

This study investigates what goal setting entails and how to get started setting goals. It also includes strategies and explains how important goals are to a small to medium sized business. A goal is a statement of general purpose or intent. Goal setting is defined as a motivational technique based on the concept that the practice of setting specific goals enhances performance, and that setting difficult goals results in higher performance than setting easier goals. According to this, if a business sets attainable goals, this will improve performance. This will result in the need to reevaluate and reset goals in order to maintain ever increasing improvements in performance. Goal Setting

Creating goal setting in home business can be an interesting experience. Similar to goal setting in life, it can involve the significance of having strategies and clarity in the planning. One can also learn that goal setting has many different forms of strategies that individuals can use effectively. For example, a strategy that one can include in their planning is being consistent in taking action daily. Such action taking includes ensuring doing things that helps to promote the home business development. The actions taken can be minimal but the importance is its great consistency. Secondly, as part of the plan, one can include impacting others positively as one of its main objectives through the business. For example, the knowledge, experiences and products sharing with others in home business can enable individuals to experience worthy causes through the business and impact others positively. Thirdly, the strategy can include focusing on having big dreams in developing the business. Thinking big here can be impacting others positively, becoming a leader and expert and building a successful business that enable better lifestyles for their loved ones. Fourthly, it is also important that one learns to develop healthy habits in developing the business. The healthy habits can include having patience to develop the business, staying focused on the plan, willingness to learn from mistakes and grow, developing contingency plans in difficult periods and adaptability to changes in the market development. Fifthly, the plan can include having long term and short term goals. The long term can include developing the business further and having a larger customer base. The short term goal can include establishing a strong brand in the market. Apart from that, one can learn that the goal setting in the business can include the importance of managing distribution channel, cash flow projections and management well in the business. Sixthly, as part of adapting well in the market changes for the business, the goal setting can include the willingness to accept others feedback well. Such willingness to accept others feedback positively can enable individuals to provide great improvement for their business. It also encourages the individuals to develop and instill great learning spirit to continually learn and develop their knowledge.

Set S.M.A.R.T. Goals
Whether personal or for business, the most effective goals are designed to be S.M.A.R.T. S.pecific
M.easurable
A.ttainable
R.ealistic
T.imely
Figure 1

If your company is like many other small and mid-sized businesses, your employees represent both your organization’s biggest line item expense, and your most valuable asset. This means your company’s productivity—and ultimately, its profitability—depends on making sure all of your workers perform up to their full potential. Creating and developing goal setting in achieving success can be an interesting experience. One can learn that it is a continual learning process. The wonderful part, especially in the information age, is it enables individuals to keep improving and be innovative in their decision making and development in their success for their business. The need to effectively leverage the skills of employees is even more critical for small and mid-sized businesses since most simply cannot compete with large companies when it comes to technology, physical infrastructure, or financial resources. To survive in today’s marketplace, small to mid-sized businesses must find ways to be smarter, more productive, and more cohesive than their larger competitors. How can this be accomplished? Studies show a dramatic increase in both worker and business performance when an organization effectively sets and closely ties individual employee goals to the company’s overall strategy. Yet amazingly, a mere 7% of employees today fully understand their company’s business strategies and what’s expected of them in order to help achieve company goals. The Cold, Hard Facts: A Business Case for Goal Alignment

In a recent study, researchers found a strong correlation between a company’s financial performance and an effective goal setting process. Companies that more closely aligned goals across their organization enjoyed much higher levels of financial success. The study also found that employees in the weakest-performing companies did not clearly understand the connection between their individual efforts and the overall goals of their employers. These same people also reported feeling confused as to their roles at the company, which naturally resulted in unfocused—and therefore less productive—work activity. These findings underscore the critical importance of effectively setting and closely aligning employee and business goals to drive the success of your company. In addition to feeling fairly compensated for their efforts, your employees must clearly understand how their work connects to and serves both the short- and long-term goals of your business. These findings underscore the critical importance of effectively setting and closely aligning employee and business goals to drive the success of your company. In addition to feeling fairly compensated for their efforts, your employees must clearly understand how their work connects to and serves both the short- and long-term goals of your business. The Top Three Business Benefits of Clearly Setting and Aligning Goals Across Your Company:

1. Increased Operating Margins
Employees who clearly understand their individual goals—and how they relate to those of your company—naturally become more engaged with their work. Once employees see how they can make a direct contribution to your company’s success, they begin to focus on finding ways to work smarter and more efficiently. This boost in employee productivity will naturally lead to increased operating margins and profitability for your company. To achieve these results, your company must put a performance management process in place that: • Increases employee engagement with “SMART” goals

• Provides visibility up, down and across reporting levels • Creates shared accountability between employees by “cascading” goals from one employee to another when relevant • Communicates expectations clearly during every phase of goal completion 2. Quicker Execution of Company Strategy

Tighter goal alignment and goal visibility allows for quicker execution of company strategy by enabling your management team to more effectively allocate labor resources across various projects. By exposing redundant business initiatives, it also increases overall efficiency by ensuring employees are not duplicating the efforts of others. Plus, goal alignment strengthens the leadership at your company by allowing managers to: • Understand more clearly all responsibilities associated with specific goals • Eliminate redundancies across job titles

• Focus their staffs on your company’s most pertinent goals 3. Reduced Employee Turnover The business value of having employees engaged in their work cannot be overestimated. As proof, a recent Gallup poll showed that companies with large numbers of dissatisfied workers experience greater absenteeism and lower productivity—as well as a 51% higher employee turnover rate. Fortunately, clear goal alignment can remedy this situation by helping to create greater employee ownership in your company’s ultimate success. Goal alignment also lets you establish a true pay-for-performance culture at your company by providing the foundation for closely linking reward systems with both individual and team performance. Goals Stimulate Employee Idea Sharing

A great observation, made multiple times, is that constraints enhance innovation. Goals are a form of constraint. Yes, there are a million ideas you could have, but how about focusing your energies to solve this one. Goals also break through the code of silence and the basic inertia that can inhibit innovation. A smart approach is to address specific activities that employees can feel, and of which they have first-hand knowledge. Put innovation right in there wheelhouse. Don't put it on the employees to come up with the next market-moving, disruptive innovation. There is beauty and value in small innovations, which cumulatively create impact. Goals are also good for rallying people. They are a shared experience, and elicit both collaborative and competitive behaviors. The graph below conceptualizes the effect of goal setting on employee innovation: Figure 2

Sources and Methods
This study was conducted using business periodicals and various articles from different sources such as newspapers. Research was also done online and produced all of the figures.

RESULTS OF THE STUDY
The findings of this study along with the figures will demonstrate how effective goal setting can be in business as well as in everyday life. 1. Establish a more effective and efficient goal-setting process. Often the task of setting company-wide goals can be even more difficult than actually accomplishing them. By deploying an automated performance management system, your company can significantly streamline its entire goal-setting process. For instance, the best performance management solutions include technology to help managers set goals that are specific, measurable, attainable, relevant and time based—or S.M.A.R.T. for short. Many automated systems also offer role-based goal libraries, developed in conjunction with organizational development experts, which include lists of appropriate goals for specific job titles. These goals can then be easily customized for your particular needs. Finally, performance management systems can help keep the goal-setting process on schedule by sending automatic reminders to managers and reporting their progress back to you. 2. Exponentially speed completion of company goals. By providing everyone at your company with the same vision of success, automated performance management solutions that include goal alignment help your organization achieve its corporate goals quicker. These systems increase goal visibility and boost shared accountability, allowing both your employees and managers to: • Understand how their individual goals match up with your company’s business objectives • Achieve more—in less time—by providing greater visibility into both individual and company-wide goals CONCLUSIONS

Based on these findings, the following conclusions are drawn: 1. Goal setting can either make or break a small business.
2. It is essential early on to realize the desired level of business success and to turn those thoughts and ideas into something tangible. 3. Goals should be reevaluated at consistent intervals and should change according to company progress. 4. Goals should be kept challenging yet achievable (SMART). Works Cited

Acevdeo, Laura. "Corporate Award Ideas." eHow. 1 April 2010 <http://www.ehow.com/way_5314350_corporate-award-ideas.html>. Arina. Goal Setting Guide. 20 February 2010. 1 April 2010 <http://www.goal-setting-guide.com/goal-setting-tutorials/smart-goal-setting>. Schaefer, Patricia. "The Seven Pitfalls of Business Failure." 2006. Business Know How. 15 November 2009 <http://www.businessknowhow.com/Startup/business-failure.htm>. "Setting Objectives and Achievable Outcomes." Free Skills. 1 April 2010 <http://tutorials.freeskills.com/setting-objectives-and-achievable-outcomes.htm>. Spigit. 17 June 2009. 1 April 2010 <http://blog.spigit.com/Blog/View?blogid=105&tagid=10&tagname=innovation>. Ward, Susan. "Business Planning." About.com: Small Business: Canada. 1 April 2010 <http://sbinfocanada.about.com/od/businessplanning/g/bizplanning.htm>.

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