Objective Setting: A Corporate Planning Approach

Business objectives play a vital role in providing direction and purpose for a company. Just as an individual cannot plan a route for a journey until he determines his destination, so a company needs to establish some notion of its final destination for its journey into the future before managers can begin to deploy company resources. Even in companies which do not have formal planning systems, managers must still make strategic decisions regarding investment, product development and the like which will set their course into the future, and so they must have some goals in mind in making their decisions. But whilst such companies will have objectives, in the absence of any formal planning these objectives are likely to remain implicit, being carried in the heads of executives. Thus there is always the danger that managers will operate with different goals in mind, so that the company lurches into the future in an unco‐ordinated fashion.