Goal Approach to Effectiveness

The goal approach to defining and evaluating effectiveness is the oldest and most widely used evaluation approach. According to this approach, an organization exists to accomplish goals. The degree of accomplishment indicates the degree of effectiveness.

The idea that organizations, as well as individuals and groups, should be evaluated in terms of goal accomplishment has widespread commonsense and practical appeal.

The goal approach reflects purposefulness, rationality, and achievement — the fundamental tenets of the modern societies.

The goal approach to effectiveness consists of identifying an organization’s output goals and assessing how well the organization has attained those goals.

This is a logical approach because organizations do try to attain certain levels of output, profit, or client satisfaction.

The goal approach measures progress towards attainment of these goals. Popular goal attainment criteria include profit-maximization, winning a cricket match, passing examinations etc. Their common denominator in this approach is that they consider the ends to which the organization was created to achieve.

Indicators: The important goals to consider are operative goals. Efforts to measure effectiveness have been more productive using operative goals. Operative goals reflect activities the organization is actually performing.

In the words of Chester I Bernard, “Effectiveness . . . is the accomplishment or recognized objectives of cooperative effort. The degree of accomplishment indicates the degree of effectiveness”.

Assumptions: The goal-attainment approach assumes that organizations are rational, goal-seeking entities. Goal attainment therefore becomes an appropriate measure of effectiveness. The use of goals assumes that:

  1. Organizations must have goals.
  2. Goals must be identified and understood by members of the organization.
  3. Goals must be measurable.
  4. There must be general consensus on goals.

Application: Business firms typically evaluate performance in terms of profitability, growth, market share, and return on investment. However, measuring performance of an organization is not easy because of mainly two reasons:

  1. Multiple and Conflicting Goals: Effectiveness cannot always be assessed by a single indicator. Further, high achievement on one goal may mean low achievement on another. The full assessment of effectiveness should take into consideration several goals simultaneously.
  2. Subjective Indicators: The other issue to be resolved with the goal approach is that indicators are subjective. Therefore the problem that arises is: how to measure goal attainment. Subjective assessment is often needed for outcomes such as social responsibility or employee welfare.

Problems: The goal-attainment approach is fraught with a number of problems. The more widely recognized problems include:

  1. Organizations have multiple goals and this creates difficulties. Suppose, for instance, that a firm states that its goal is to maximize profit and to provide safe working conditions for its workers. These two goals are conflicting because by providing safe working conditions, profitability is negatively affected and vice-versa.
  2. Goal achievement is not readily measurable for organizations that don’t produce tangible outputs.
  3. What an organization states officially as its goals does not always reflect the organization’s actual goals. It is also questionable whether members are committed to organization’s official goals.
  4. An organization’s short-term goals are frequently different from its long-term goals. In applying the goal-attainment approach, it becomes difficult which goals – short-term or long-term should be used.
Corporate Insights: Making a Difference

In October 1979, the management of Chrysler Corporation was attempting to secure a $1.5 billion federal loan guarantee. According to Lee Iacocca, then Chrysler’s president, based on testimony made to Congress, failure to get this loan guarantee would leave Chrysler with no other option than to file for bankruptcy.

However, while Iacocca was in Washington portraying the imminent demise of Chrysler, the company was running full-page advertisements in major magazines and newspapers proclaiming, “We’ve been around for seventy years and we expect to be around seventy years from now.”

The intent of these ads, of course, was to encourage prospective customers to buy Chrysler products and to ignore any future concern about the availability of parts, service, and warranty coverage.

In its quest for survival, Chrysler projected itself one way to the public and another way to government officials.

Source: Stephen P Robbins, Organization Theory – Structure, Design and Applications”, (3rd Ed), Prentice-Hall of India Pvt Ltd (2004), Page 57.

How to make goals operative?

In spite of several limitations, many management practices are based upon the goal-attainment approach. The goal-attainment approach is probably most explicit in management by objectives (MBO) Opens in new window.

According to the MBO technique, managers specify in advance the goals that they expect their subordinates to accomplish and then evaluate periodically the degree to which they accomplish them. Under the MBO techniques, tangible, verifiable, and measurable goals are developed. The degree to which each goal must be satisfied is also specified. Actual performance is then measured and compared with the goals.

The other widespread management practices that reflect the goal-attainment approach include, zero-based budgeting, cost-benefit analysis, incentive pay system etc. Each of the above mentioned practices makes the assumption that individual, group or organization has an overriding goal that can be identified and measured.