Best if printed in landscape.

Role of Goals

Goals are needed to make decisions

Making a decision implies choosing from among alternatives.  The question becomes "which alternative should I choose".  The easy answer is "pursue the alternative that most likely will achieve your goal."

Without a goal, a decision cannot be made.  A simple example can illustrate this point.  When driving down a road and approaching an intersection, how do you know whether to go north, south, east or west?  The answer is "you will turn the direction that will take to where you want to be".  All decisions fit this simple model, you will choose the alternative that you believe will best achieve your goal.

The purpose of a goal is often stated as "to set a direction and to motivate." How about "the purpose of the goal is to motivate and provide criteria by which decisions can be made"?

Without goals, a manager cannot make a decision

Decisions will differ because our goals differ

Your goals are different than mine and thus we can arrive at different decisions even if we face exactly the same situation. Neither of our decisions are wrong just because they are different.  The difference most likely reflects that we have different goals.

What are your Goals

• What are your personal and career goals? And for those who respond "to earn an income," I will ask "how do you intend to use your income," because the answer to that question should begin to describe your REAL goals.
• Example. A student reluctantly stated that she wants a career as an airline attendant. She went on to indicate that she is interested in traveling. The student then revealed that she used this personal goal to identify a possible career and that career, in turn, was used to identify a course of study. This reserved student should be commended for getting the decision making process in the correct order.
• What are your REAL goals? Own a house? Own a business? Travel? Be able to take time away from work and business?   Do not settle for simply saying "earn income".

What are some common business goals?

• Earn a profit?
• Increase owner equity?
• Pay bills on time?
• Do not assume unreasonable risk?
• Offer workers an enjoyable career?
• Offer workers a safe place to work?
• Offer workers opportunity for professional and personal growth?

These common business goals will be discussed in subsequent sections.

What are the characteristics of a goal?

A meaningful goal is

• specific,
• measurable (some means of assessing progress toward achieving the goal),
• challenging but realistic,
• time specific (a specific time when the goal should be achieved), and
• addresses key result areas.

These characteristics certainly are consistent with the idea that the purpose of a goal is to motivate.  Do these characteristics also align with the idea that goals should serve as criteria for making decisions?

Example:   a family may specify a goal to set aside, in addition to its regular savings plan, an extra $20,000 into a savings account over the next three years for home remodeling. The additional $6,700 each year can be challenging, yet it is measurable, has a time limit, states a purpose, and addresses an effort that is important to the family.

Additional examples: 

• "Within five years, I want an annual income that is $2,000 times my age."
• "I want to complete my bachelor degree by December 20XX."
• "I want a job that allows me to spend at least 20% of my work time outside."
• "I want a job that allows me to travel internationally at least three times each year."
• "I want a job that allows me to be at home at least 75% of weeknights and 90% of the weekends."
• "I want a career that allows me to be a business owner (or co-owner) by the time I reach 32 years of age."

Note that statements such as "I want to be rich", "I want a good income", and "want to be happy." are not effective goals. Refine such statements by adding details a such as "how rich do you want to be and by when", or "how much income do you want and by when", or "what do you think will make you happy" -- being married, having children, travelling, owning a home, owning a boat?  Use those desires as the basis for establishing goals, e.g., I want to be married within five years; I want to own a home within three years.

Business goals might be "increase crop production by 3% annually",  "convert all field equipment to GPS by 20XX", "implement an approved GAP system to trace the production of our livestock by 20XX."

What process might be used to develop goals for a group? See paragraph titled Steps in Group Goal Setting.

The next topic considers decision making as a process.

Last Updated September 30, 2010

Email: David.Saxowsky@ndsu.edu

This material is intended for educational purposes only. It is not a substitute for competent professional advice. Seek appropriate advice for answers to your specific questions.

E-Mail:sswandal@ndsuext.nodak.edu
Published by Agricusiness and Applied Economics
Morrill Room 217
North Dakota State University, Fargo, ND 58105-5636
Phone: (701) 231-7441