Your Operating Plan Should Tie Your Goals, Objectives and Key Performance Indicators (KPIs) Together

When you establish your operating plan, you must tie the objectives you set to the overall goals that you have set for the business. With these things aligned, your organization focuses its efforts on the behaviors that drive toward that result.

“With these things aligned, your organization focuses its efforts on the behaviors that drive toward that result.” 

Aligning Your Objectives to Your Goals

When you have established your longer term goals for your business, you then set the shorter term objectives to meet that goal. For example, if your “goal” is to get to San Francisco, and your “objective” is to get there in less than two weeks for under $1,000, you can them set your priorities and key performance indicators that align your efforts. Some examples:

• If you want to increase sales by 25% this year, how many new customers do need per day and how many new leads per day to generate those customers?
• If one your long-term goals is to reduce costs, you might set the short-term objective of each employee identifying $5,000 of potential savings.

Break down specific actions to be taken by specific people, assigning someone in each department involved to be accountable—and to help motivate employees.

Some Examples

Here are some examples of how long-term goals and short-term objectives are tied together:

• Profitability: A common business goal is to run a profitable operation, which typically means increasing revenue while limiting expenses. Revenue objectives could consist of increasing annual sales by 10 percent or landing three new accounts each month. Expense objectives could involve finding a new operating facility that decreases your rent by $200 a month or cutting monthly utility bills by 15 percent.
• Customer Service: Examples of customer service goals are to develop a perception that your company is easy to do business with or to improve your response time to customer complaints. Objectives to help meet these goals could be increasing your customer service staff from one to three workers by the end of the year or implementing a policy where customers are guaranteed to receive a return phone call before the end of the business day.
• Retention: If you’ve experienced a problem with employee turnover, your overall goal could be to improve retention. To achieve this goal, your objective might be to develop and implement a training program that details new-hire activities for the first 90 days on the job. You also could implement one-on-one meetings with your employees in an effort to build rapport and find out what’s on their mind.
• Efficiency: Another goal could be to become more efficient in your business operation as a way to increase productivity. To improve efficiency, you could challenge your salespeople to improve their closing ratio from 30 percent to 45 percent. If you distribute a product, you might consider implementing a new shipping procedure that improves your delivery time from four days to two.
• Growth: Perhaps your goal is to grow your business operation. If you own a franchise unit, for example, your objective might be to open three more units within a five-year period. If you operate a retail store, your objective might be to increase your selling space by 25 percent by completing an addition to your building within a year.
• Revenue Goals: If your long-term revenue goal is to double revenue by the end of the current fiscal year, another example of a supporting short-term goal is to contract an advertising consultant for one month to help you analyze and capitalize on your customer’s buying trends. Another short-term goal example is to spend the next month learning your primary competition and brainstorming on what you offer that they don’t. Take this research and design a new advertising campaign that highlights the unique points about your business or products.
• Customer Service Goals: Set a long-term goal of receiving at least 95 percent positive customer feedback regarding the service you provide. An example of a supporting short-term goal is to redesign the customer service research process to include new questionnaires and incentives, such as monthly drawings for free products or discounts on future purchases for customers who take the time to respond.
• Employee Appreciation Goals: Implement a long-term employee appreciation goal of awarding an employee of the year award to the employee who provides the most creative input during the year in terms of practical ideas to improve the company. Supporting short-term goals are to award employee of the month designations each month throughout the year to mark the progression of creative input, and to include more employees in the reward process than is possible with a single annual award.
• Community Outreach Goals: Set the long-term goal of building the company’s name recognition within the community through community outreach projects. Examples of short-term supporting goals are to reward employees who volunteer with designated community programs with additional time off, bonuses or gift cards. Another short-term supporting goal is to choose one or two high-profile annual charity events to sponsor.
• Website Traffic Goals: A long-term goal regarding web traffic is to increase traffic to your company’s site by at least 50 percent by the end of the current fiscal year. Supporting short-term goals are to research and purchase web traffic analysis software to better pinpoint current traffic trends, to hire a web consultant for one month to propose and implement programming changes to make the site appeal to a broader audience than your traffic trend research suggests currently exist. Another example of a short-term goal is to select a medium for advertising your site other than the Web, such as a bus campaign where you advertise your site address on the side of city buses for one month, or billboards, where you lease a billboard in a conspicuous place in town for one month.

A few other things to keep in mind when setting your long-term goals and your short term objectives:

• Involve Employees: dictating to employees what their goals and objectives will be is one approach before more effective approach is having them participate in the development of the goals and objectives. This not only spurs conversations about what it will take to achieve these goals and objectives, but facilitate employee buy-in to ultimately what the plan of the company will be.
• Be Careful About Conflicting Goals: it is not uncommon when you develop your goals to have one or more goals that may conflict with each other. For example you may have revenue goals and customer satisfaction goals but not enough resources to adequately achieve both.
• Make Sure Your Operations are not Preventing the Achievement of Goals: for example if you want to provide great customer service to consumers as a goal, it would not make sense you make it difficult for customers to talk to a live customer service representative.

Setting your goals and objectives takes time, but is essential to ensuring that you stick to your plan and hold yourself accountable to the goals that you have set especially in light of all the things that comes across your desk as an entrepreneur.