CC BY
51768 ECONOMCS / «C@yL©qyiym=J©yrMaL»#2î2â),2©19
UDC: 658.8
Kononova Oleksandra,
PhD in Economics, Assoc.prof.
Shpatakova Oksana, Holovchenko Yevheniia
Prydniprovs'ka State Academy of Civil Engineering and Architecture
USE OF THE SMART GOALS AS ONE OF EFFECTIVE APPROACH FOR THE CORPORATE
STRATEGIC PLANNING
Abstract
In the modern management, there are criteria for the correct setting of goals and tasks, such as: specificity, measurability, achievability and relevance of the goal, as well as its time-bound. This technique for the goal setting is called the SMART-model.
The article investigates the history of smart-goals definition and the use of SMART-technique is a modern approach to setting operative goals.
The smart-goal setting system allows, at the stage of targeting, to summarize all available information, establish the acceptable work period, determine the sufficiency of resources, and provide all participants in the process with clear, precise and specific tasks. SMART is an abbreviation, for which there exists the following definition: Specific, Measurable, Achievable, Relevant, and Time-bound. Each letter of the abbreviation SMART means a criterion for the effectiveness of the goals set.
The SMART-methodology helps to correctly determine the criteria for setting goals, and teaches the skills to break goals into tasks and action items, as well as to include them in the calendar plan, skills to control over the achievement of such goals, skills to delegate, techniques of the effective communication and feedback, skills to determine and use areas of responsibility, and methods to sort out and comply with priorities.
The application of the SMART-technique for setting goals can really be called strategic, since it allows setting achievable and understandable goals within the framework of the more global development strategy, as well as ensuring their achievement and continuity being in constant contact with the world through the properly-built feedback and flexible responsive system to rapidly changing external conditions
Keywords: strategy, planning, management, goal, smart goals, corporation.
Against the background of uncertainty, in order to plan the future development of the corporation, there is a need to work out a strategy for its activities. As a result, it becomes necessary to formulate answers to the questions about what directions of the development are more important in a particular situation for a separate corporation. There is a wide range of different options for corporations' strategies, so it is necessary to clearly formulate the priorities of activities and to determine the main goals of its further development.
Any strategic decision is worked out to achieve the result determined by the goals of the corporation's strategic activities. Any strategy adapts the organization to conditions of the environment using opportunities and reflecting them in the goals.
Each head officer of the corporation solves, in his daily practice, a number of management tasks related to planning, setting goals for his subordinates, organizing the function operation, monitoring the fulfillment of tasks and evaluating results. The overall result of the function operation is undoubtedly affected by each of these stages. But, as practice shows, many head officers face the most part of difficulties at the «goal setting» stage. According to research, one of the main reasons for the low performance of employees is the fuzzy goals raised before them. The ability to set clear and practical goals and tasks for his employees is one of the main baseline competencies of an effective leader. In order to avoid situations possible in the management practice, in which employees can misinterpret the goals established for them, it is necessary to correctly formulate
them. In the modern management, there are criteria for the correct setting of goals and tasks, such as: specificity, measurability, achievability and relevance of the goal, as well as its time-bound. This technique for the goal setting is called the SMART-model.
Goal setting, like other behavioral philosophies, can date back to the Greeks, such as Aristotle and Plato, where their philosophies on final causality suggest "purpose can incite action" (George, 1972) or to Sun Tzu on how "victories, not operations, are the objective" (McNeilly, 1996). Through the centuries however, human beings have rarely written and documented management and organization techniques. Thus, the idea of creating SMART goals was never formalized until much later. Scholars and practitioners claim Peter Drucker's (1954) book, The Practice of Management, is instrumental in starting the development of the SMART acronym (Morrison, 2010). However, Drucker never made a direct reference to a SMART acronym in his book (Morrison, 2010). During the 1940s and 1950s there were many engineering and educational publications beginning to discuss the merits of specific and measurable goals (Morrison, 2010). In early managerial and educational publications, organizational activities were labeled with specific and measurable characteristics which suggest that SMART goals and its acronym were known and fairly prevalent. Early literature also used terms such as realistic and relevant when discussing and determining goals (Morrison, 2010). The use of a variety of words over time by both the educational and business worlds to describe
goals suggests that the SMART acronym emerged organically rather than being specifically invented (Morrison, 2010). In the 1960s, Dr. Edwin Locke while examining the relationship between motivation and goal setting explained that employees are motivated when given clear goals and are provided with feedback about their performance (Locke, 1968). His conclusions consisted of specific and challenging goals being more motivational than vague and easy ones. In 1990, he teamed with Gary Latham to develop five fundamental principles behind effective goal setting (Locke & Latham, 1990). However, there is still a lack of documented evidence that provides a definitive author to the SMART goal acronym [1].
The SMART-technique is a modern approach to setting operative goals. The smart-goal setting system allows, at the stage of targeting, to summarize all available information, establish the acceptable work period, determine the sufficiency of resources, and provide all participants in the process with clear, precise and specific tasks.
SMART is an abbreviation, for which there exists the following definition: Specific, Measurable, Achievable, Relevant, and Time-bound. Each letter of the abbreviation SMART means a criterion for the effectiveness of the goals set. Let us consider each criterion of the smart-goal in more detail.
A.P. Girman determines that there are several thoughts about who is the true author of this approach, but the majority of researchers considers J. Dor to be this one, based on the publication of 1981 in Management Review periodical, where the material was called "There is a S. M. A. R. T. way to write management's goals and objectives", which means, when literally translated, the following: "There is a reasonable way to create managerial goals and tasks".
According to A.P. Girman, the "reasonable" goals have the following components: S - specific, specificity. The goal must be clear, understandable, and articulated; it is necessary to formulate the goal so that it would be understandable absolutely to each performer. This explains, why Einstein said: «If you cannot explain something to a six-year-old child, you don't understand it yourself »; if it is difficult for a head officer to formulate the goal to himself, then a subordinate will, with the 100%-probability, understand the task incorrectly. Therefore, in the context of this paragraph, there is a need to answer five W-questions: WHAT - what exactly should be achieved? What result? WHY - why is it necessary to get it? What are the benefits? WHO -who will be involved in achieving the result? WHERE - where will the task be implemented territorially? WHICH (what kind) - what kind of conditions, situation, possible problems and restrictions are there? M -measurable, measurability. The result of efforts is very important to be understood and perceived as early as in the process of forming the task. In the modern interpretation, this criterion is increasingly formulated as "motivational". It provides for creating the system of markers that define the extent, to which the goal is achieved. A - achievable, achievability. In other words, it is important to answer the following question: whether the
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goal is achievable taking into account the available resources? The resources are diverse: human, material, technical and intellectual. Therefore, during the formation of a plan, goals and tasks, it is necessary to make an effort to assess objectively, as best one can, capabilities of the organization. At the same time, this is also an answer to the question of how to achieve the goal for the performer, when the resources are available. R -relevant, relevance. This criterion requires making assessment in regard to the correctness of the goal setting, and determination of methods to achieve it, importance of the goal for the time being, as well as worthiness of the resources expended. Sometimes, it is also an answer to the question: why should the performer do it, i.e. what will he achieve for himself? T - time-bound. Commitment to time. Externally, it is one of the simplest and most understandable criteria; while it is one of the most important. It is not a secret to anyone that the tendency towards procrastination (postponement) is one of the distinctive features for bearers of our mentality. The achievement of the result should be strictly limited by the timeframe; otherwise, the task will necessarily be postponed for last. Relying on such kind of the world-class achievement, the modern economy changes the management system of the business organization as a whole, when the so-called "adhocracy" comes to the place of the bureaucracy with its inherent autocratic governance, hierarchy, and rigid division of labor. It is characterized by the participation-based management, high degree of freedom in actions of employees and their high qualification, creative and innovative approaches, high degree of responsibility for results of one's own activities, and prevalence of informal and horizontal relations in communications of units and individuals. Subject to implementing the latest achievements of the scientific labor organization in production, the effect of synergy triggers. Innovations at the level of each workplace, unit, shop, enterprise or corporation in general give an opportunity to achieve the unprecedented results without additional investments. In developed countries, which, in due time, became the first to understand the benefits of using this inexhaustible source, the GDP significantly increased: in the United States during the 1990-2002 period - by 37%, in France and Germany - by 24%, in the United Kingdom - by 31%, and in Japan - by 15%. For that period, economic growth of the People's Republic of China was ensured by 2,7 times, and that of India - by 88% [2].
I.S. Skurikhina and E.A. Ruzaieva note that the criteria of the SMART-approach are more specific and exhaustive to formulate goals of the corporation. Three criteria of the traditional approach, which the SMART-analysis does not contain, are secondary and not playing a major role in setting goals. The example of the goal formulated according to the SMART-criteria is as follows: it needs to sell the goods A for the amount of not less than UAH 1,000,000 during the first quarter of 2018. At the end of the period, the calculation is made of to what extent each employee has achieved the goals set. Based on this data, the company encourages the
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most successful employees and takes measures to improve the performance of the staff in the future. In practice, goals are formulated relying on tasks assigned [3].
I.A. Ternovaya distinguishes the following advantages of the SMART-methodology:
1. The SMART-methodology helps to correctly determine the criteria for setting goals, and teaches the skills to break goals into tasks and action items, as well as to include them in the calendar plan, skills to control over the achievement of such goals, skills to delegate, techniques of the effective communication and feedback, skills to determine and use areas of responsibility, and methods to sort out and comply with priorities.
2. The application of the SMART-technique for setting goals of the corporation is a very convenient and compact tool in the strategic planning. As practice shows, the time spent to use the SMART-algorithm (upon the availability of the pre-prepared necessary actual information), usually ranges from 45 to 90 minutes.
3. The application of the SMART-technique for setting goals can really be called strategic, since it allows setting achievable and understandable goals within the framework of the more global development strategy, as well as ensuring their achievement and continuity being in constant contact with the world through
the properly-built feedback and flexible responsive system to rapidly changing external conditions [4].
References:
1. Available at: https://iournals.tdl.org/absel/in-dex.php/absel/article/viewFile/90/86
2. A.P. Girman THE PROSPECTS OF LABOR ORGANIZATION IN THE CONTEXT OF THE DEVELOPMENT OF THE SMART ECONOMY // EASTERN EUROPE: ECONOMY, BUSINESS AND MANAGEMENT. - Issue 3 (08). - 2017 ECONOMY AND MANAGEMENT OF ENTERPRISES. - P. 137141.
3. E.A. Ruzaieva, I.S. Skurikhina ANALYSIS AND ASSESSMENT OF METHODS TO FORM GOALS OF A COMPANY // The scientific community of students: INTERDISCIPLINARY RESEARCH: Collection of articles on II International Student Scientific and Practical Conference № 3. URL: sibac.info/sites/default/files/conf/file/stud_3_2.p df
4. APPLICATION OF SMART-CRITERIA FOR SETTING GOALS IN THE STRATEGIC PLANNING OF THE ORGANIZATION // BULLETIN of V.N. Karazin Kharkiv National University. - № 970. - 2011. - P. 381-385 .
