By Flávia Maia, consultant at FALCONI
A good goal-setting process, which produces value for companies, is one that manages to translate the need to improve results at the organizational level (CEO’s goals) into goals for all levels, thus defining the responsibilities of each one of the parts in order to achieve the whole.
This requires an association between financial and technical goals. Responsibilities cannot be assigned to each department of an organization without a clear mapping of the cause and effect relationship that exists between financial goals and technical and operational goals.
Some steps are important for this process. The first is to understand the company’s value chain, i.e., what the fundamental processes are (those directly linked to the company’s core business), as well as support processes.
This also includes results indicators that assess the company’s efficiency as a whole.
From there, the indicators should be mapped that reflect the results of each of these processes (fundamental and support), determining what is important to measure and manage throughout the chain, so that end results are achieved.
Once this mapping is complete, it is recommended to build an indicator tree, showing the cause and effect relationship between the indicators. This makes it clear how each technical and operational goal has an impact on financial goals.
The indicator tree makes it easy to identify how each operational lever is contributing to the financial results. By assigning responsibilities for these levers to the departments that produce the results, it is possible to establish goals so that those responsible for the ends have authority over the means.
Establishing goals this way enables much more assertive performance and creates solid bases for meritocracy.
When organizations are already mature in such management, this logical construction generates even more benefits, since it is possible to map the gaps in each one of the technical and operational levers through internal and/or external benchmarks.
By consolidating these bottom-up gaps, opportunities can arise in financial goals that are greater than those that would have been mapped by only assessing the latter.
What should I do as a manager?
In short, the following steps can be adopted:
This makes it much easier to achieve your goals and ensure a systemic vision, and perceive the effects that these technical and operational results have on the company’s financial metrics.
Text published in the may/2018 edition of O Papel magazine in the Leadership column.