Page 3: Aims and objectives
The relationship between a business’s aims and its objectives is important. Aims are general statements of what a business is seeking to achieve. They are closely related to its vision.
Objectives are much more specific. They often include quantifiable elements that specify precise performance targets. Managers can use these objectives to monitor progress. They can compare actual performance against the targets set out in the objectives. They can then take corrective action if the business looks like it will fail to meet targets.
The relationship between aims and objectives can be illustrated using examples from Zurich. The company’s vision is to be the ‘best global insurer’. This is backed-up by three key long-term aims:
- to ensure customer satisfaction
- to deliver shareholder value
- to be the employer of choice.
The company has a series of objectives to help it measure progress towards these aims.
In relation to the aim of customer centricity, one of Zurich’s objectives is to achieve top quartile customer satisfaction when compared with other companies in the financial services industry. This means that Zurich wants to be in the top 25% of insurance and financial services providers for all aspects of its performance as measured by independent research.
In relation to the aim of giving shareholder value, one of Zurich’s objectives is to achieve a return on equity of 16%. This means the company wants to achieve a £16 profit after tax for every £100 of capital that it holds. Zurich will be able to pay dividends to its shareholders if it makes sufficient profit.
In relation to the objective of being the employer of choice, one of Zurich’s objectives is to secure high employee engagement scores. These are measured through employee satisfaction surveys. A committed and motivated workforce are more likely to deliver high levels of customer service and be loyal to the company. In other words, Zurich will be an employer of choice.
Note that all these objectives set by Zurich are measurable. In general, all business objectives should be SMART. This means that they should be:
- specific – exactly what is to happen
- measurable – by quantity or proportion
- achievable – capable of being achieved within available resources
- relevant – to the overall business or corporate objectives
- time-related – with a deadline attached.