THE PROCESS OF GOAL SETTING

5.9 THE PROCESS OF GOAL SETTING

A question that needs to be answered at this stage is: who sets these goals in an organisation? This question is not easily answered, as different organisations use different goal-setting processes. These processes range from centralized to decentralised goal setting.

In some organisations, the board of directors sets the goals.

These goals encompass the entire organisation and this typically results in more congruent goals, as the setting of long-term as well as short-term goals is more likely to focus on the

organisation’s mission. A retail company may decide at head office that in all its retail outlets at least 40 per cent of managers must be from designated groups before the end of

When goals are set in this way, we speak of centralized goal setting. Although centralized goal setting has important advantages, it also has significant disadvantages. One major disadvantage is

THINK POINT

With the advent of technology and the

that the goal-setters may know little about

speed with which it changes, what challenges are organisations likely to

the particular opportunities and problems

encounter as they keep their operative goals closely guarded? What measures

faced by lower level manager. Lower level

do organisations resort to once they realise that their goals have been

managers may also resist directives coming

either violated or abused in one way or

from above if they do not understand the

the other. In your response, offer an example

reasons for them.

Decentralized goal setting takes place when managers at each level of an organisation have dominant influence on their unit or department’s goals. Two basic approaches can be identified, namely the top-to-bottom approach and the bottom-up approach. In the top-to-

bottom approach to goal setting, the board of directors or corporate-level managers set the corporate goals and the head of each division or business unit sets the goals for his or her division or business unit in line with the corporate goals.

The same approve the goals of lower level managers. In the bottom-up approach, the lower levels set their goals, and higher level managers set their goals to be in line with the lower level goals. This approach is sometimes less likely to yield a coordinated effort and congruent goals, as some managers tend to fall into the trap of tunnel vision and therefore focus only on what in important for their unit.

Decentralized goal setting can be:  Top-to-bottom;  Bottom-up;  A combination of the above.

A combination of the top-to-bottom and the bottom-up approaches is an approach to goal setting used by many organisations – this approach stresses the importance of the purpose and mission of the organisation as formulated by top management, but also takes into account the strengths and the weaknesses of each division. Whether goals are propose from the bottom or imposed from the top, once agreement has been reached, there should be a firm commitment at all levels to provide the resources and achieve the results. Finally, it should be noted that the decision to use centralized or decentralized goal setting affects strategy selection, the organizational structure, and the management of the organisation in general.