Business objectives are specific, time-limited actions that a business organization formally adopts and sets out to accomplish in order to meet its stated goals. Business objectives are important to the success of an organization because they give shape, focus and energy to the business's efforts. A strategic objective can also help motivate employees and achieve full buy-in from stakeholders. Well-crafted, useful business objectives also share common characteristics. To increase an organization’s chance of success in meeting these objectives, it’s important to also understand the characteristics of the business itself including its strategic plans. Furthermore, characteristic's examples of specific business objectives help others more fully commit to the process of meeting those goals.

Business Definition of Organizational Objectives

What constitutes an effective, appropriate business objective? The answer will depend on the business, its industry, economic and political conditions, corporate finances and the business's values and mission statement.

Generally speaking, the fewer objectives a business adopts, the better its chances of meeting those objectives successfully. Scattered focus leads to scattered efforts, with diminished effectiveness in meeting any one objective.

Business objectives could seek to improve profitability, expand product or service lines, launch into a new market or improve employee retention rates.

Difference Between Goals and Objectives

Although in many cases you may see "goal" and "objective" used interchangeably, they mean different things in the business context.

Goals refer to outcome-oriented statements of intent. They are usually tied to a specific business function or department, such as profitability or customer service, and they establish a measurable change that the business can work toward. For example, a business may seek to increase its profitability by 20 percent within two years.

By way of contrast, an objective is a specific stepping stone that leads to the achievement of that overall goal. Objectives are precisely described actions that are characterized by time-bound, measurable details. Most importantly, objectives are the path to reach the goal.

Strategic Focus of Objectives

It's important to connect business objectives to the business’s overall operating and strategic plans. For example, if a particular business has been experiencing a significant drop in customer retention rates, this presents a challenge to the company's profitability. Since it's more expensive to gain a new customer than retain an existing one, the company naturally wants to reverse that trend. This need then becomes the overall goal.

To achieve that goal, the company could establish a series of specific objectives. In this case, the company may set an objective of creating new staff training protocols. In that new staff training, the company would explain its new customer service initiatives designed to encourage existing customers to buy again. This approach keeps objectives focused and helps employees understand the importance and relevance of participation and support.

Well-Defined Objectives

Business objectives should be specific and well-defined. This applies to the objective as a whole, as well as to its individual components. For example, an objective to create and run a new employee training program on the company's flagship customer service initiative should specify all the relevant details about this training program, including:

  • Which employees will be responsible for creating the training?
  • Who will lead the training?
  • Which employees must attend, and when?
  • What is the budget for this new training program?
  • When will the sessions be conducted?
  • When will the training program be completed?

Other factors may also need to be spelled out to create a well-defined business objective, depending on the nature of the objective. Undefined business objectives can wreak havoc with a company's attempt to reach its goals. A poorly defined objective can waste time, effort and money and yield no tangible results.

Business Objectives Should Be Measurable

A business must know when and to what extent its objective has been met. To determine this with certainty, the objective must be measurable by some realistic, practical standard.

For example, let's say a business wants to increase its market share. To make this a measurable objective, the business should specify its desired increase in a percentage format, for example, 20 percent, and add a time frame to the objective, such as within three years.

Or if a business wants to lower its operating costs, the objective should include a specific goal figure, for example, to reduce the professional services budget by 12 percent. These benchmarks should be incorporated into the objective itself. Every team member who is responsible for meeting this objective should know precisely what metrics they are expected to achieve. This helps employees assess their own performances and adjust their efforts accordingly.

Practicality and Flexibility of Business Objectives

Business objectives should be both realistic and attainable for them to be successful. They should also be flexible in the face of changing circumstances. The company must have the necessary resources and available time to complete their objectives. If those resources become strained due to unforeseen circumstances, then the objective may have to be adjusted accordingly.

For example, let's say a company wants to increase its revenue. It's true that a visionary "big" objective can be powerfully motivating for employees and managers. However, if that objective is too far beyond the current reality of the business, or if it requires more resources than the company could possibly hope to provide, it's no longer realistic and attainable.

Keep your business objectives flexible in order to pivot smoothly to a backup plan in the event an objective proves impossible to meet. Changes in the economy and staff, budget reductions or a new strategic direction can all impact the ability of a business to meet its stated objectives. By remaining flexible and ready to shift focus when prudent, a business is able to continue making progress towards its established goals.