Whether it’s through product, customer service, or innovation, the best companies are always looking for ways to improve. They aren’t content to be average. They want to be great. And this is where business objectives come into play.
Business objectives, at their core, provide a roadmap, guiding companies from their current position to a desired future state. They serve as anchors that make sure a company remains focused on its core mission and vision even while changing.
Yet, not all objectives are created equal. They vary in nature, timeframe, and the metrics by which success is measured. Whether it’s achieving short-term financial gains, enhancing customer satisfaction, or driving long-term innovation, understanding the myriad objectives can empower businesses to craft strategies that are both effective and aligned with their overarching goals.
However, many entrepreneurs and business owners are not sure what their business objectives should be and how to reach them. Others may be confused about the difference between business objectives and business goals. In this article, we’ll explain the 4 main types of business objectives and look at why it is important to apply them to your business. But first, let’s take a look at the difference between business objectives and business goals.
Business Objective vs Business Goal
Goals and objectives have a similar purpose, but there are some key differences between business goals and business objectives.
Goals are short statements that describe your intention for the business or department. You might associate these with the action phrases contained in a vision or a mission statement. Goals describe what your business or department does or is in the future. They are more of a long-term picture. Goals look forward to the next few years, but they aren’t very specific.
For example, you might have the departmental business goal to “provide excellent customer service.” This is a good goal, but it isn’t specific.
Business objectives are precise actions for the short term. These objectives are more detailed, and they serve your long-term goal. For example, if your goal is to “provide excellent customer service,” your business objective might be to “increase customer satisfaction scores by the end of quarter 4.” Setting a business objective and monitoring its progress will increase your chances of reaching your business goal.
There are several different types of business objectives. They include economic, social, human, and organic objectives. As you decide which objectives to set, you may notice that there can be some overlap in which departments and people are involved with each objective.
Economic Business Objective
These types of objectives deal with numbers and financial projections. The ability to run a profitable business – one that doesn’t spend more than it earns – is vital to its ability to survive.
While the focus here is on making money, these objectives easily overlap with other areas of the business. And it’s easy to see why. Every business should make its number one goal to create a profit. Otherwise, it is a charity or a non-profit enterprise. And, even these kinds of groups still need money to do their good work. The difference would be that nonprofits raise money through grants and donations.
Business objectives can happen in stages. One of the first economic business objectives for a business is to survive. From there, profitability and growth should soon follow. During all of these stages, the actions taken to achieve those objectives vary widely depending on the business and industry.
While profitability and growth can be simple objectives, others align with this type of objective. For example, minimizing waste in the workplace is an important one. By minimizing waste, a business can maintain its margins by not losing money on materials and unused products.
Businesses should also focus on maximizing productivity. When a business can increase output, they are better positioned to compete and grow market share. Along those same lines, innovation is also important to reaching economic business objectives. Innovating, which allows the business to expand and grow, is vital to get past the initial stages of business growth.
Social Business Objective
Businesses are an important part of society. Not only do businesses create goods and services to satisfy the wants and needs of the public, they also provide employment opportunities to the masses. This means that business’s impact on society is something that cannot be overstated. However, beyond these obvious effects, businesses are also an important part of society in many other ways.
Not only do businesses create and sell products and services to others, a good objective to have is to do it at a fair price.
In 2016, Mylan, the manufacturer of the EpiPen, faced public outrage when it was revealed that the price of the life-saving epinephrine auto-injector had increased by over 500% in less than a decade. The price went from about $100 for a two-pack to over $600. This price hike made it difficult for many patients with severe allergies to afford the essential medication.
The scandal drew attention to pharmaceutical pricing practices and led to calls for increased transparency and regulation. Critics argued that Mylan was exploiting its dominant market position. However, the company defended its pricing by citing improvements to the product and increased access programs. Although the company denied any wrongdoing, they were forced to pay a $264 million settlement in 2021.
Along with fair trade practices, there are some other social objectives businesses should pursue. Here are some social business objectives:
- Serve the community through social programs
- Offer fair hiring practices
- Look to create more jobs
Setting some social business objectives can help a company show that it is a good corporate citizen. This shows that the business isn’t just looking to take by making profits, but that it voluntarily contributes to society.
Human Business Objective
People are needed to turn any vision into a reality. Whether you’re starting a new business or looking to grow an existing one, it’s important to plan how you will keep your people engaged. How will you recruit people to join your company? How will you motivate them to keep working for your company? These are just a few questions that can be answered when you create human business objectives.
Here are a few examples of human business objectives:
- Offering competitive pay for employees
- Starting an employee incentive program
- Implementing a promote-from-within philosophy
- Offer training opportunities for current employees to develop their skills
- Improve workload for current staff by filling open positions
Organic Business Objective
Organic business objectives overlap with some other types of business goals. These goals concern not only the profitability of the business but also the outlook, reputation, and its viability.
These types of goals may be especially important when your industry or the economy at large is facing uncertainty. A recent example of this was in 2020 when the continual uncertainty caused unprecedented financial challenges for both business owners and employees. Organic objectives can focus on helping the business rebuild after a tough period of hardship.
Organic objectives can also focus on growing the business and bringing it to a more mature phase. This may mean taking profits and reinvesting them back into the business to fuel more growth or strengthen the business. It can also mean using the traction of sales or profitability to raise more capital from outside investors.
When talking about organic objectives, you also have to look at maintaining and enhancing a positive brand reputation. This can be done through specific social media and other online, as well as offline campaigns.
Creating business objectives will set your company on a course for success. These objectives are clearly defined for the short term. Implementing these objectives, monitoring their progress, and identifying any setbacks will help you move further toward your long-term goals. This process is the key to transforming a vision into a reality.