ORGANISATIONAL GOALS: Concept and Rationale

Definition
Organization goals: Those ends that an organization seeks to achieve by its existence and
operation.
Goals are predetermined and describe future results toward which present efforts are directed.
Organizational goals are the results to be achieved by a organization. They represent the desired
future conditions that organizations strive to achieve.The organizational goals are very much
important for a organization. Their importance include the following:

They provide clear vision of future.

They are starting point for planning.

Goals reduce uncertainty in making decisions.

They serve as a basis for evaluating actual performance and reward.

Goals provide distinct identity to organizations.

Goals are important in understanding organizational behaviour.

Goal
Types of Goals
Official goals are the general aims of an organization as expressed in the corporate charter,
annual reports, public statements and mission statements. Their purpose is to give the
organization a favourable public image, provide legitimacy, and justify its activities.
Operative goals reflect the actual intention of an organization. They describe the concrete steps
to be taken to achieve the organization's purpose. They often don't correspond with official goals.

For example: Many organizations mention environmentally friendly behaviour as a goal of the
organization. However in a study of organizations actually including environmental friendly
behaviour as an organizational goal, very few had corresponding operative goals, i.e. very few
delineated how such behaviour would be implemented in the different departments of the
organization.
Additional examples: Most prisons have rehabilitation of prisoners, preparing them for reintegrations into society as their official goal, however in practice, most of their operative
procedures involve aspects of custodial care. For many voluntary organizations, especially in
these days of funding cutbacks, the community service which is their official mandate or goal
takes secondary precedence to the fundraising activities which will ensure their survival.
Reasons for differences between official and operative goals
1. Participants disagree on the organizations actual goals. Pfeffer and Salancik (1989)
interviewed the officers of several organizations and asked the simple question: what is
the main goal of your organization. They found very little agreement. Each officer
viewed the goal of the organization through the lens of his/her own department/division.
From the results of this study, Pfeffer and Salancik came to the conclusion that there is
really only one clear and clearly shared goal in any organization, and that is survival.
2. Even if there is agreement as to what the organization's official goals are, perceptions
about how to accomplish official goals may differ.
3. Official goals are often financially or politically unrealistic
4. Operative goals are the result of internal negotiations among groups and coalitions who
want to make sure their interests are represented and therefore they often deviate from the
official goals.
Some organizations never state official goals, not to attract potential competition or opposition.
One can determine an organizations true goals not by reading their charter but by examining
resource allocation process.
Benefits of organizational goals
1. Goals serve as guidelines for action, directing and channelling employee efforts. They
provide parameters for strategic planning, allocating resources and identifying
development opportunities.
2. Goals provide constraints in the organization. Choosing certain goals reduces discretion
in pursuing other goals. Eg. The goal of maximising stockholder dividends immediately
reduces financial resources available for expense accounts.

3. Goals act as a source of legitimacy by justifying an organization's activities and

existence. For new organizations the struggle for legitimacy is great. Maintaining
legitimacy is easier but still, some organizations do lose legitimacy. For example imagine
a hospital whose goal was to increase occupancy by performing as much surgery as
possible. Such a goal would surely reduce its legitimacy.
4. Goals define standards of performance. To the extent that goals are clearly stated, they set
standards for evaluation.
5. Goals provide a source of motivation . By presenting a challenge and how to achieve it,
organizational goals act as behavioural incentives. For example: the path-goal theory of
leadership.
Key organizational goals
Drucker, an organizational guru, has identified 8 key areas in which organizations should
establish result oriented goals:
1. Market share
2. Innovation. Tom Peters found that excellent companies are obsessed by innovation. Eg.
Minnesota Mining and Manufacturing (3M) has generated 25% of its sales from products
less than 5 yrs old.
3. Productivity. This is probably the most oft cited goal of all, to produce greater outcomes
with fewer inputs. This provides organizations with a competitive edge. For example, GE
estimates that a one percent increase in productivity at their plants translates into $300
million dollars of increased revenues. As productivity increases market share goals can be
pursued by dropping prices.
4. Physical and financial resources. Renovating and maintaining equipment is important in
the long run for an organization. Increasing cash flow is often important for new
ventures.
5. Profitability. This is usually expressed as a percentage and should always be stated.
6. Management performance and development. Management training is important because
management is key to organization success. For example, GE has a special course in
Crotonville for up and coming young managers, and IBM spends 15 days per year
training management in better management practices. This is often a neglected aspect in
many organizations.
7. Employees performance and attitude goals. Employees are the most important asset in
any organization, although many organizations don't act as if they believe this.
8. Social responsibility. More and more organizations see this as somewhat important to
gain legitimacy on the public's eye. These days one is witness to organizations providing

matching funds for fundraising efforts and giving their employees a certain number of
paid hours time off to volunteer in community activities.
Individual vs organization goals
Organizations don't make goals; individuals do. Therefore, goals will reflect the interests of the
individual. The greater the overlap between an individual's goals and organizational goals, the
better for the organization. Unfortunately often this is not the case. For example, it may be in the
best interests of an organization to amalgamate certain departments or to out-source some kinds
of tasks, but this may infringe on the power of certain departments and their leaders, so these
goals will not be supported.
Goals are set in an organization by creating coalitions of non-competing groups. There is
constant bargaining among the different organizational leaders to find the right direction of the
organization. Organizational groups with greater power will have more control over the direction
of the organization. This is not always in the best interests of the organization.

Individual and Physical abilities.

Organizations comprises of people from different cultures. Thus organizations get seriously
affected by such individual qualities as ability, perception, learning and motivation. We would try
to learn each one separately.
Individual Ability
Organizational behaviour is traditionally considered as the study of human behaviour in the
work place. According to this view organisations, representing collective entities of human
actions and experiences, are dependent upon the extent to which such actions/ experiences, are
effectively coordinated. To understand human action, one needs to have a fundamental
understanding of human behaviours and the underlying stimuli. The behaviour of individuals are
influenced significantly by their abilities. The following diagram presents the various individual
factors affecting the final behaviour of a person.

Figure 1.Behaviour of Individuals

ABILITY
Ability refers to an individuals capacity to perform the various tasks in a job.
An individual's overall abilities are essentially made up of the following factors:
1. Intellectual Abilities, and
2. Physical Abilities.
Different Types of Abilities

Figure 2. Various types of abilities

INTELLECTUAL ABILITIES:
Intellectual Abilities are those that are needed to perform mental activities. Mental activities can
be measured by intelligent quotient (IQ) tests, that are designed to ascertain one's general Mental
abilities. Some familiar examples of such tests in are Common Admission Tests (CAT),
Management programs admission tests (GMAT), law (LSAT), and medical (MCAT), etc. Usually
these tests try to measure and evaluate ones mental abilities on various academic areas
pertaining to the success in the relevant courses, such as mathematics, English, General
knowledge etc.
It is believed that there are a few different dimensions of mental abilities. Some of the most
frequently cited dimensions of intellectual capacities are:
1. Number Aptitude (Mathematics),
2. Verbal Comprehension (English),
3. Perceptual Speed,
4. Reasoning,
5. Deductive Reasoning,
6. Spatial Visualization,
7. Memory
Generally speaking, the more information processing is required in a job, the more general
intelligence and verbal abilities will be necessary to perform the job successfully. Of course, a
high IQ is not a prerequisite for all. In Fact, for many jobs in which employee behavior is highly
routine and there are little or no opportunities to exercise discretion, a high IQ may be unrelated
to performance. On the other hand, a careful review of the evidence demonstrates that tests that

assess verbal, numerical, spatial, and perceptual ability are valid predictors of job proficiency at
all levels of jobs. Therefore, tests measure specific dimensions of intelligence have been found to
be strong predictors of future job performance.
Exhibit 1: Different Dimension of
Description
Job Example
Types of Mental
intellectual abilities
abilities Sr No.
1
Number aptitude
Ability to do speedy Accountant
and accurate
arithmetic
2
Verbal
Read write speaking Senior managers
Communication
ability
3
Perceptual Speed
Identify similarities
Investigators
and differences
quickly and
accurately
4
Inductive reasoning
Logical sequence
Market Researcher
drawing
5
Deductive reasoning Ability to use logic
Supervisors
and assess the
implications of the
argument
6
Spatial Visualization Ability to imagine
Interior decorator
7
Memory
Ability to retain and Sales personrecall past
Remembering
experience
customers name
PHYSICAL ABILITIES
To the same degree that intellectual abilities play a larger role in complex jobs with demanding
information-processing requirements, specific physical abilities gain importance for successfully
doing less skilled and more standardized jobs. For example, jobs in which success demands
stamina, manual dexterity, leg strength, or similar talents require management to identify an
employee's physical capabilities.
Research on the requirements needed in hundreds of jobs has identified nine basic abilities
involved in the performance of physical tasks. These are described in Exhibit 2. Individuals
differ in the extent to which they have each of these abilities. Surprisingly, there is also little
relationship between them: A high score on one is no assurance of a high score on others. High
employee performance is Likely to be achieved when management has ascertained the extent to
which a job requires each of the nine abilities and then ensures that, employees in that job have
those abilities.
The specific intellectual or physical abilities required for adequate job performance depend on
the ability requirements of the job. So, for example, airline pilots need strong spatialvisualization abilities. Beach lifeguards need both strong spatial-visualization abilities and body
coordination Senior Managers need verbal abilities; high rise construction workers need balance;
and Journalists with weak reasoning abilities would likely have difficulty meeting minimum jobperformance standards.

What predictions can we make when the fit is poor?

Quite obviously, if employees lack the required abilities, they are likely to fail. But When the
ability-job fit is out of sync because the employee has abilities that far exceed the requirements
of the job, our predictions would be very different. Job performance is likely to be adequate, but
there will be organizational inefficiencies and possible declines in employee satisfaction. Given
that pay tends to reflect the highest skill level that employees possess, if an employee's abilities
far exceed those necessary to do the job, management will be paying more than it needs to,
Abilities significantly above those required can also reduce the employee's job satisfaction when
the employee's desire to use his or her abilities is particularly strong and is frustrated by the
limitations of the job.
Exhibit 2: Different Types of Physical Abilities
Nine Basic Physical abilities
Strength factor
1

Dynamic

Exerting muscular
strength rapidly and
repeatedly

Trunk

Exerting muscular
strength rapidly and
repeatedly using the trunk
muscle

Static

Exert force against

external object

Explosive

Exert and expend all force

in one or series of
explosive acts.

Flexibility factor
5

Extent

Ability to bend trunk and

back muscle

Dynamic

Ability to bend trunk and

back muscle rapidly and
repeatedly

Other factor
7

Body Co-ordination

Mind and body control

Balance

Ability to maintain
equilibrium against
external force.

Stamina

Questions
Q1. Define Organization Goals.
Q2. What are the types of goals ?
Q3. Briefly explain Key organizational goals.
Q4. Briefly explain benefits of organizational goals.
Q5. What are Individual and Physical abilities?

Ability to exert force

persistently.