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Another Look at Objectives

Copyright 2004 Craig Cochran Craig.cochran@edi.gatech.edu Objectives are some of your most powerful improvement tools available. Most quality practitioners already know the obvious caveats related to objectives: they must be measurable, they must be clearly defined, they must be documented. In the November, 2000, issue of Quality Digest, I wrote an article entitled, Using Quality Objectives to Drive Strategic Performance Improvement (available here). That was just before the official publication of ISO 9001:2000. Now, nearly four years later, what else have we learned about objectives? What kind of wisdom has emerged about the use of these continual improvement tools? Lets take an inventory of some key principles related to objectives:

Set objectives, and then plan to change your processes

Objectives, in and of themselves, are really nothing more than communications tools. They communicate, Here is what we believe to be important for our future success. Lets try to focus on these issues. Objectives are bright spotlights, nothing more. The mere presence of objectives does not make anything happen. A good analogy is the farmer who purchases a bag of seeds in early spring. He may think to himself, Soon Ill be eating corn, but theres a lot of work that will happen between buying the seeds and eating the corn. Your objectives are just like those seeds. Theyre a good start, but it will take a lot of effort to make them take root, grow, and produce positive results.

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Once the organization sets objectives, it must inevitably re-examine its processes. If we want revenue to increase, then how do we expect this to happen? More aggressive marketing? More reliable products? Acquisition of our competitors? Exactly how do we hope to increase revenue? Just saying what you want to do it is not enough. You must have a plan, and the plan must address the underlying processes of the organization. When you embrace objectives, change is not far behind. If your way of operating does not change, then youre fooling yourself to think youll achieve your objectives. Each objective must be matched to an improvement plan. The plan should address each of the following points: Means: You must state specific how you are going to achieve your objectives. Trying harder is not a good enough. What processes are going to be changed? How are they going to be changed? What intermediate steps will be taken? Lay out the means in a logical manner so they can be implemented. Resources: Change will require resources. The resources may include funds, time, people, facilities, equipment, and information. State the necessary resources, then make sure they are available before trying to implement the plan. Responsibilities: Who is responsible for each step of the plan? Clearly designate and communicate responsibilities, and then hold people accountable. Dont leave anything to chance. Timeframes: The plans for improving objectives will take time to implement. How much time to do we think well need? The timeframes need to be explicitly written into the plans, especially when multiple steps are linked in a dependent manner.

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Contingencies: Sometimes progress on our plan is contingent on other variables not directly related to our plan. Examples include actions of competitors, suppliers, regulators, lawmakers, community, and the economy, to name just a few. State the external issues that could possibly affect the success of our plan, then define what we will do to help manage the contingencies.

Disciples of W. Edwards Deming are quick to reject the use of objectives in absolute terms. This is silly, though. Objectives are concise ways to communicate the variables of future success. When Deming demonized the philosophy of Management by Objectives, he was really criticizing the use of objectives without a plan to achieve them. Deming himself said quite elegantly, Internal goals set in the management of a company, without a method, are a burlesque (Out of the Crisis, 1986, p. 75). Of course you must have a method for achieving objectives, and the method must drive real change. Strap on your seat belts when you establish objectives, because the scenery will quickly evolve within your organization. Your processes, procedures, methods, equipment, and overall philosophies may all change. Youll need a plan to drive and manage this change. Status quo will guarantee failure.

Make objectives measurable and clearly defined This point is almost a no-brainer, but it bears repeating. Objectives must be measurable, and the organization must define exactly how they are measured. General themes, philosophies, and aspirations rarely constitute measurable objectives. These

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guidelines have been repeated countless times in the past few years, and yet I still see objectives like these: Incorporate excellence into all that we do; Offer a challenging and rewarding environment for our employees; Earn the respect of our neighbors in the community; Create an unmatched service experience for all our customers; Make associates proud they joined our team.

These are all admirable concepts, but theyre not measurable objectives. They could possibly be the first step toward measurable objectives, though. The trick is to look at high-level aspirations like the ones shown above and ask yourself, What indicates whether weve done that or not? Keep asking that question until you uncover a metric that gets to the heart of success or failure. Get specific about what youre trying to achieve. Platitudes such as Incorporate excellence into all that we do are so vague that they serve no purpose whatsoever. The best reason for setting measurable objectives has nothing to do with ISO 9001, and everything to do with becoming more successful: people have trouble contributing to fuzzy, undefined objectives. Nobody knows whether their efforts are making a difference because the objective cant be gauged. The organization begins to drift like a rudderless boat. On the other hand, measurable objectives focus everybodys energies and creative powers. Combined with leadership and an empowered workforce, measurable objectives pave the way to success.

Use a scorecard to communicate progress against objectives

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When you tell someone that an objective is important, she is bound be curious how the organization is doing with regard to it. Curiosity of this sort is human nature. Employees want to know if the organization is moving forward or moving backwards. The clearest way to communicate progress is through the use of an objectives scorecard (also referred to as a dashboard). The organizations performance against objectives should be reflected in colorful, simple graphics: Run charts, bar charts, pie charts, and other simple diagrams. If you cant fit your objectives onto a single scorecard the size of a piece of paper, then you may have too many objectives. Heres a revealing story about scorecards told to me by Lauren Kelly of the CVS/Pharmacy Distribution Center in Woonsocket, Rhode Island. Lauren Kelly and Keith Kirby (of the CVS/Pharmacy Distribution Center in Bessemer, Alabama) developed an eye-catching scorecard to reflect progress against their facilities key measures. Proud of her work, Lauren showed the scorecard to her father, who happens to be an Industrial Engineer with twenty-five years of experience. He looked at the scorecard and said that it wasnt clear to him which trends were good and which trends were bad. After all, a downward trend was good in the case of one measure and bad in the case of another. If an engineer had trouble interpreting the scorecard, do you think that production employees would have trouble? Of course. Lauren decided that the easiest way to communicate the good trends versus the bad ones was to affix a face next to each chart: A yellow smiley face (circa 1972) for the positive trends and an ugly frown face for the negative trends. Lauren took the simple concept of the scorecard and made it even simpler. A child can now review the facilitys scorecard and understand how things are

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going. The scorecard, by the way, is updated on a regular basis and distributed throughout two distribution centers with a total workforce of over 900 employees. A lot of work? Yes, but this is type of communication is worth the trouble. Its important to remember that simply posting progress on objectives will not directly lead to their achievement. The communication of progress is simply a method of driving awareness. The awareness must then lead to other things, like improvement. This provides a logical segue to our next topic, which is taking action on objectives.

Provide specific examples of how employees can contribute to objectives

The best objectives are often broad and strategic. They lead to systematic improvement of the organizations processes. Thats a good fact. The only problem is that most employees are not focused on strategic issues. They are focused on the tactical aspects of their jobs, which may be a far cry from the issues addressed by objectives. When you start talking about throughput, cash flow, employee retention, and other topics, peoples eyes begin to glaze over. Thats why the organization must provide specific examples of how individuals can contribute to objectives in their day-to-day activities. The CVS/Pharmacy Distribution Center that I mentioned earlier developed a simple card that lists their key measures on one side, and the actions employees can take to help achieve objectives on the other. This drives a hands-on understanding of objectives. In talking to the employees about objectives, I noticed an intriguing trend: many employees told me the means of them contributing to objectives, and the means were not the ones listed on their pocket card. The employees had extrapolated and

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expanded on the guidance provided them. They provided all kinds of interesting examples that I had never even considered. This means the subject of objectives is in the forefront of their minds as they perform their work. Interestingly, a number of the examples provided by employees were broader than their own jobs. They required facility-wide processes and methods to be changed. Should management embrace these ideas for impacting objectives? Absolutely. The CVS/Pharmacy distribution center even has a suggestion system of sorts for capturing ideas and problems: Express Yourself. Employees are encouraged to think about ways to change and improve their processes so that the facility can more successful. The best ideas are then addressed by management through action plans and followed-though to completion. Can employees really affect broad objectives through their day-to-day actions? Not typically. The only thing they can do is work within the established processes that exist in the organization, and these processes produce a very predictable range of outputs. Employees can propose changes to the organizations processes, though. This is where real improvement can be generated. Start by giving employees some ideas on how their jobs are related to objectives. They will then expand on this knowledge. You will be surprised by the kinds of ideas that people generate. If you harness and act upon this creativity, you will find your objectives moving in the right direction.

Let employees benefit from achieving objectives

You cant pick up a newspaper or turn on the television these days without hearing about the exploding compensation of top executives. Three million, four million,

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five million dollars per year, and much more. It would be easy to get the idea that the purpose of working toward objectives is to fatten the pocketbooks of top executives. Smart organizations compensate all employees based on the contribution they make to the organization, and they also let everyone know how achievement of objectives benefits them. Dont assume that employees will understand excess inventory ties up cash that could otherwise be used for a conveyer system that would reduce employee injuries, improve service speed, and increase net income. Give them the facts, and draw a clear line to their personal successes and livelihoods. The most progressive and wisest organizations realize that if you want everyone to be truly engaged on strategic objectives, then compensation should be linked to their achievement. Theres only so much enthusiasm that can be generated by charts, graphs, and explanations of how activities are linked to objectives. When you start to put money into everyones pocket as a result of meeting organizational goals, then they really get engaged. Just make sure that everyone gets the same additional compensation. No function can be claimed to have contributed more than another, so no function or person should get more benefit.

Revisit the validity of objectives on a regular basis

Nothing remains static in business. The competitive landscape is constantly changing, sometimes on a daily basis. Objectives will obviously need to change over time to reflect new realities in the business. For instance, revenue growth may have been critical two years ago, but now its more important for our organization to generate a

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profit. Two very different objectives with different means that lead to their achievement. Dont let your objectives become static measures that cant be changed. The use of objectives must become an institution, but the objectives themselves must be adaptable. They will evolve to reflect changes in strategy, the environment, and your customers needs.

Provide examples of how objectives are used

At the end of the day, objectives can seem like some sort of clever mind-control for managing hourly employees. Sure, the objectives keep employees focused on critical aspects of their jobs, but management has a whole other set of priorities, right? Wrong. These objectives will be used by everyone, from one side of the organization to the other. They are strategic tools of the most usable sort. The organization should provide details of how it has analyzed progress against objectives and taken real action as a result. The action plans I mentioned at the beginning of the article are one of the best ways to communicate how objectives are used. When plans are shared with employees, a funny thing happens: they get involved with making them a success. Oftentimes, employees detect weaknesses or blind-spots that planners had not considered. Few managers are so smart that their plans couldnt stand a little additional scrutiny. The best criticism can come from surprising places. Put the improvement plans out there, and be prepared to re-examine the plans based on feedback you receive.

In summary

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Objectives are a logical start to realizing continual improvement. By themselves, however, they are nothing. Each measurable objective embraced by the organization must be matched to an action plan than drives changes to the organizations core processes. Good intentions, pretty charts, and begging everyone to work harder do not achieve anything. Change is the only path to making objectives work. And change has to be lead by management and carefully controlled. Sure, get employees involved in thinking about change, too. The more minds you can apply to the problem of achieving objectives, the more likely you are to realize success.

Deming,W. Edwards. Out of the Crisis. Cambridge: Massachusetts Institute of Technology, Center for Advanced Engineering Study, 1986.

Special thanks to Lauren Kelly, Keith Kirby, Norm Lamoureux, Ben Cote, Dave LaCroix, and Bill Corbeille of the CVS/Pharmacy Distribution Centers in Woonsocket and North Smithfield, Rhode Island, and Bessemer, Alabama, for their assistance with this article.

About the author

Craig Cochran is a project manager with the Center for International Standards & Quality, part of Georgia Techs Economic Development Institute. Hes an RAB-certified QMS lead auditor and the author of Customer Satisfaction: Tools, Techniques and Formulas for Success and The Continual Improvement Process: From Strategy to the

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Bottom Line, both available from Paton Press (www.patonpress.com). CISQ can be reached at (404) 894-0968 or on the Web at www.cisq.gatech.edu.

Copyright 2004 Craig Cochran