Financial objectives are typically written as financial goals. When selecting and creating your financial objectives, consider what you’re trying to accomplish financially within the time span of your strategic plan.
- Grow shareholder value: The top goal of your organization may be to increase the value of your organization for your shareholders, stakeholders, or owners. Value can be defined in many ways, so this would need to be clearly defined.
- Grow earnings per share: This objective implies your organization is trying to increase its earnings or profits. For publicly traded companies, a common way to look at this is through “earnings per share.” This can be measured quarterly and/or annually.
- Increase revenue: Revenue represents growth in your organization, so increasing revenue is a sign of company health. You can make this more specific by defining revenue from a key area in your organization.
- Manage cost: On the other side of revenue is the costs or expenses in your business. As you grow (or shrink) you need to carefully manage cost—so this may be an important objective for you.
- Maintain appropriate financial leverage: Many organizations use debt—another word for financial leverage—as a key financial tool. There may be an optimal amount of debt you’d like to stay within.
- Ensure favorable bond ratings: For some organizations, bond ratings are a sign of healthy finances. This is a regularly occurring objective for a public sector scorecard.
- Balance the budget: A balanced budget reflects the discipline of good planning, budgeting, and management. It is also one that is typically seen in the public sector—or within divisions or departments of other organizations.
- Ensure financial sustainability: If your organization is in growth mode or has an uncertain economic environment, you need to be sure you remain financially stable. Sometimes this means seeking outside sources of revenue or managing costs that are appropriate to your operations.
- Maintain profitability: This is a solid top-level objective that shows balance between revenue and expenses. If your organization is investing in order to grow, you may look to an objective like this to govern how much you are able to invest.
- Diversify and grow revenue streams: Some organizations receive revenue from multiple sources or products and services. They set an objective to grow revenue in different areas to ensure that the organization is stable and not subject to risk associated with only one revenue stream.
Customer objectives are typically written like customer goals. Sometimes they are written in the form of a phrase or a statement that a customer would say when talking about your product or service.
- Best value for the cost: This means that your customers know they are not purchasing the most expensive product or service—or even the highest quality—but that they are getting the best deal. This may mean your customers are paying less than average and getting an average or above-average product.
- Broad product offering: This objective works if your strategy is to be able to offer the customer the best product in its class, regardless of price. In the hotel industry, for example, this could reflect the strategy of the Four Seasons or Ritz Carlton.
- Reliable products/services: If your organization takes pride in the reliability of your product or service, this objective—which reflects that you are targeting customers that also value this reliability—may be right for you. This could indicate the on-time reliability of an airline or the dependable reliability of a printer that generates high-quality output.
- Cross-sell more products: Some organizations—like banks or office product companies—focus on selling more products to the samecustomers. This strategy acknowledges that you already have the customer but can make money by selling them more.
- Increase share of market: This customer strategy focuses on selling to more customers, thus increasing the market share. For example, if your organization is a landscape company, you are likely trying to reach more households—or if your organization is a hospital, you likely want more of the local population to use your services.
- Increase share of wallet: This customer strategy focuses on gaining more purchases from the same customers. If you sell fertilizer, for example, you want each customer to purchase a larger percentage of their fertilizer spend with your organization rather than with your competitors.
- Partner with customers to provide solutions: This strategy reflects customer intimacy. As part of this strategy, you may deliver service-oriented solutions or have customers participate in research and development with your organization. Partnering comes at a cost but tends to foster more customer loyalty across your organization.
- Best service: This strategy indicates you want your customers to consider your organization easy to deal with. Customers may choose to work with you even if you have a product similar to your competitors—simply because your service is better.
- Understands my needs: This objective also reflects a customer intimacy strategy. The customer feels like you understand their needs, so they choose your organization’s products and services because they are targeted for their specific problem or situation.
The internal perspective is typically focused on processes that your organization must excel at. According to Michael Treacy and Fred Wiersema—who have written extensively on the topic—these processes can be divided into three areas: innovation, customer intimacy, and operational excellence.
- Most innovative products/services: This objective is for organizations that pride themselves on constant and cutting-edge innovation. You would first need to define what you mean by “innovation” and how you’re innovating in each particular area.
- Differentiate the product: Your organization might use this objective if you are in an environment where the customer cannot tell the difference between your organization and another organization’s product. You are asking your organization to either develop new services around the product or new differentiating features of the product or service.
- Invest a certain amount in innovation: Sometimes organizations use an objective like this to drive investment in research and development or other innovative activities. This objective may be used in a strategy when you are signaling a shift in investments in the innovation category.
- Grow percentage of sales from new products: Similar to investing in innovation, this objective focuses on the outcome your organization is hoping to achieve. It forces you to constantly innovate, even on your most successful products.
- Improve or focus research and development (R&D): This objective focuses on specific innovation. If you are an organization with multiple product lines, you might want to focus your innovation on one product line over another; calling out the specific direction can be quite helpful in your objective.
- Acquire new customers from innovative offerings: This objective focuses on the reason you put focus on innovation. For example, you may be innovating in order to enter a new market or attract customers you might not be able to reach with your current offerings.
- Great customer service: Defining what great customer service means in your organization is a way to set the standard and communicate internally. For example, hone in on whether you want to provide one-touch resolution or proactive support, or whether you’re focused on phone support or on-site support.
- Improve customer service: When your organization has a problem with good customer service, you may want an objective to focus on improvement therein. The problem your company has is likely in a specific area, so this objective should be focused on that particular call center or the reactive support that you provide.
- Invest in customer management: This objective is typically used when your strategy is to focus more on your customer management processes than you have in the past.
- Partner with customers to design solutions: Some organizations focus on forming close partnerships with their clients. If your business is an architectural firm or a custom software developer company, this could be a good objective to ensure you are working with your customers to design critical solutions.
- Improve customer satisfaction: If customer satisfaction is critical in your company, this may be a good objective to hone in on. Because it’s generic, the definition for your organization needs to be more focused around particular areas of satisfaction you place focus on.
- Improve customer retention: If your organization wants to focus on retaining current customers, this objective may work for you. You’d likely want to set measures and projects around certain activities to help retain customers.
- Develop and use a customer database: This is a specific objective focused on implementing a large project like a customer relationship management (CRM) system, that could take years to implement.
- Reduce cost by a certain amount annually: This objective focuses on reducing costs—typically costs within a product or service that is an offering (to make that particular product or service more effective). It could also focus on reducing overhead costs across your organization.
- Reduce waste by a certain amount: If your organization uses a lot of raw materials, a typical objective is to reduce waste from that process. This usually results in significant cost savings.
- Invest in Total Quality Management: Total Quality Management (TQM) reflects a process around quality improvement, which can mean doing things more efficiently or effectively. This objective is used in organizations that have implemented (or are implementing) TQM.
- Reduce error rates: This objective applies for organizations that have many repeatable processes. Sometimes this results in Six Sigma projects, and other times the result is just a focus on defining processes so that staff can adhere to these processes.
- Improve and maintain workplace safety: If your organization uses heavy equipment, chemicals, mechanical parts, or machinery, focusing on workplace safety is a good objective. Improving it can reduce costs and improve job satisfaction.
- Reduce energy usage per unit of production: If your organization uses a significant amount of energy, making a goal to reduce this can be an effective and important strategy.
- Capitalize on physical facilities: In retail organizations, this could mean focusing on an appropriate storefront location. Or it could mean finding underutilized assets and either using them or selling/leasing them to others for use.
- Streamline core business processes: Many complex organizations have very long, drawn-out processes that have developed over many years. If your organization is looking at these processes, this could be a key objective for you.
- Increase reliability of operations: If your organization has poor reliability, having an objective like this will encourage management to look at investments and changes in processes that could increase this reliability.
- Ensure compliance: In a regulated environment, there may be a lot of rules that you need to follow, even if they don’t seem strategic. They are often called “strategic objectives” to ensure no one cuts corners.
- Increase recycling: This is a self-explanatory objective, but can sometimes apply to all aspects of waste. Depending on the organization, there are compliance rules around making this happen.
- Improve reporting and transparency: Organizations just entering a regulatory environment or that are trying to change their business model to meet contract needs may find that they need to improve or change the way they report in order to do better cost accounting or just be more clear about their actions.
- Increase community outreach: For some organizations, it is important to be seen as part of the community. This is especially true for organizations that are either selling a necessity in the community or are creating any kind of negative externality (like pollution).
- Optimize control framework: If you’re a regulated organization in an incentive environment, you may need to make sure you have the proper controls in place to avoid one-off or systematic cheating.
Learning & Growth (L&G) Objectives
Learning and growth objectives focus on skills, culture, and organizational capacity.
- Improve technical and analytical skills: With the increasing advance of computers and technical innovations affecting all industries, this is a common objective for some organizations. Specific technical skills—or a more specific definition—may be included in the objective name.
- Improve a certain skill: This is seen in a goal if an organization is either affected by a new competitive environment or is trying to address a new market. The particular skill would be specific to the organization. This is also seen in organizations with an aging workforce without a clear means to replace highly technical skills.
- Create a performance-focused culture: This objective can be used if your organization is trying to change its culture to one that focuses more on performance management or incentives. This objective shows up a lot in government and nonprofit organizations.
- Improve productivity with cross-functional teams: Large companies see synergies from working together but want to encourage staff to help with this. For example, a bank with multiple products or a multinational company with multiple lines of business may use this objective.
- Invest in tools to make staff more productive: If your organization has the right staff, but the staff does not have the right tools for the job, this may be a critical objective.
- Improve employee retention: This objective is common in learning and growth and may focus on skills, culture, pay, and the overall work environment.
- Attract and retain the best people: This is a good “beginner objective” if your organization is just starting to use the Balanced Scorecard. Ultimately, you’ll need a good plan regarding who you need to hire, how many hires you need, and what the biggest challenges with regard to retention are. You can then become more specific in this objective by addressing those challenges.
- Build high-performing teams: If teamwork is critical in your organization, consider this objective. It can be hard to measure, so you should think about whether you are encouragingteams or mandating teamwork.
- Maintain alignment across the organization: Some companies demand an extensive amount of alignment across the organization, which can be seen through having common objectives or common incentive programs where alignment is important.
- Develop leadership abilities and potential of the team: Many organizations realize that they are good at hiring people but not developing them into good leaders. If this is something your company wants to change, this objective is important.