GOALS ...... I would like to be in a managing position...

Unit 2 - Goals and Objectives W H A T ’ S I N I T F O R M E ?

Reading this chapter will help you do the following:

1. Understand the nature of goals and objectives and why they are important.

2. See how our thinking about goals and objectives has evolved.

3. Know what characterizes good goals and objectives.

4. Understand the roles of goals and objectives in employee performance reviews.

5. Map out relationships among economic, social, and environmental goals and objectives.

6. Set and manage your own goals and objectives.

Goals and objectives are a critical component of management, both in terms of planning

and in terms of the larger planning-organizing-leading-controlling (P-O-L-C)

framework. You can see their role summarized in the P-O-L-C figure. Unfortunately,

because their role and importance seem obvious, they also tend to be neglected in

managerial practice or poorly aligned with the organization’s strategy. You can imagine

why this might be problematic, particularly since one of a manager’s functions is to

evaluate employee performance—it would be nice if employees could be evaluated based

on how their achievement of individual goals and objectives contributes to those critical

to the organization’s survival and success. In this chapter, we introduce you to the basics

on goals and objectives and provide you with an understanding of how their usage has

evolved. We also show you how to develop a personalized set of goals and objectives to

help you achieve your personal and professional aspirations.

Figure 2.2 Goals and Objectives in the P-O-L-C Framework

6.1 Case in Point: Nucor Aligns Company Goals With Employee Goals

Manufacturing steel is not a glamorous job. The industry is beset by many problems,

and more than 40 steel manufacturers have filed for bankruptcy in recent years. Most

young employees do not view working at a steel mill as their dream job. Yet, one

company distinguished itself from all the rest by remaining profitable for over 130

quarters and by providing an over 350% return on investment (ROI) to shareholders.

The company is clearly doing well by every financial metric available and is the most

profitable in its industry.

How do they achieve these amazing results? For one thing, every one of Nucor

Corporation’s (NYSE: NUE) 12,000 employees acts like an owner of the company. The

overarching goal is “take care of our customers.” Employees are encouraged to fix the

things they see as wrong and have real power on their jobs. When there is a breakdown

in a plant, a supervisor does not have to ask employees to work overtime; employees

volunteer for it. In fact, the company is famous for its decentralized structure and for

pushing authority and responsibility down to lower levels in the hierarchy. Tasks that

previously belonged to management are performed by line workers. Management listens

to lower level employees and routinely implements their new ideas.

The reward system in place at Nucor is also unique, and its employees may be the

highest paid steelworkers in the world. In 2005, the average Nucor employee earned

$79,000, followed by a $2,000 bonus decided by the company’s annual earnings and

$18,000 in the form of profit sharing. At the same time, a large percentage of these

earnings are based on performance. People have the opportunity to earn a lot of money

if the company is doing well, and there is no upward limit to how much they can make.

However, they will do much worse than their counterparts in other mills if the company

does poorly. Thus, it is to everyone’s advantage to help the company perform well. The

same incentive system exists at all levels of the company. CEO pay is clearly tied to

corporate performance. The incentive system penalizes low performers while increasing

commitment to the company as well as to high performance.

Nucor’s formula for success seems simple: align company goals with employee goals and

give employees real power to make things happen. The results seem to work for the

company and its employees. Evidence of this successful method is that the company has

one of the lowest employee turnover rates in the industry and remains one of the few

remaining nonunionized environments in manufacturing. Nucor is the largest U.S.

minimill and steel scrap recycler.

Case written by [citation redacted per publisher request]. Based on information from Byrnes, N., & Arndt, M. (2006, May 1). The art of motivation. BusinessWeek. Retrieved April 30, 2010, from http://www.businessweek.com/magazine/content/06_18/b3982075.htm; Foust, D. (2008, April 7). The best performers of 2008. BusinessWeek. Retrieved April 30, 2010, from http://www.businessweek.com/magazine/toc/08_14/B4078bw50.htm?chan=magazine+channel_top+stories; Jennings, J. (2003). Ways to really motivate people: Authenticity is a huge hit with Gen X and Y. The Secured Lender, 59, 62–70; Marks, S. J. (2001). Incentives that really reward and motivate. Workforce, 80, 108–114.

R E F L E C T I O N S

1. How do goals and objectives at NUCOR relate to the planning facet of the P-O-L-C

framework?

2. What negative consequences might arise at Nucor Corporation as a result of tying pay to

company performance?

3. What effects do penalizing low performers have on Nucor employees?

4. What other ways can a company motivate employees to increase productivity, in

addition to monetary incentives?

5. How might the different reward systems at Nucor, individual empowerment and

economic incentives, motivate people differently? Or do they have the same effect?

6. How would unionization at Nucor impact the dynamic of the organization?

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