Establishing annual objectives is a decentralized activity that directly involves all managers in an organization. Active participation in establishing annual objectives can lead to acceptance and commitment. Annual objectives are essential for strategy implementation because they ( 1 ) represent the basis for allocating resources; ( 2 ) are a primary mechanism for evaluating managers' ( 3 ) are the major instrument for monitoring progress toward achieving long-term objectives; and ( 4 ) establish organizational, divisional, and departmental priorities. Considerable time and effort should be devoted to ensuring that annual objectives are well conceived, consistent with long-term objectives, and supportive of strategies to be implemented. Approving, revising, or rejecting annual objectives in much more than a rubber-stamp activity. The purpose of annual objectives can be summarized a s follows.
Clearly stated and communicated objective are critical to success in all types and sizes of firms. Annual objectives, stated in terms of profitability, growth, and maker share by business segment, geographic area, customer groups, and product, are common in organization.
Annual objectives should be measurable, consistent, reasonable, challenging, clear, communicated throughout the organization, characterized by an appropriate time dimension, and accompanied by commensurate rewards and sanctions. Too often, objectives are stated in generalities, with little operational usefulness. Annual objectives, such as "to improve communication" or "to improve performance," are not clear, specific, or measurable. Objectives should state quantity, quality, cost, and time-and also be verifiable. Terms and phrases such as maximize, minimize, as soon as possible, and adequate should be avoided.
Annual objectives should be compatible with employees'' and managers'' values and should be supported by clearly stated policies. More of something is not always better. Improved quality or reduced cost may, for example, e more important than quantity. It is important to tie rewards and sanctions to annual objectives so that employees and mangers understand that achieving objectives is critical to successful strategy implementation. Clear annual objectives do not guarantee successful strategy implementation, but they do increase the likelihood that personal and organizational aims can be accomplished. Overemphasis on achieving objectives can result in undesirable conduct, such as faking the numbers, distorting the records, and letting objectives become ends in themselves. Managers must be alert to these potential problems.