Achieving financial goals is essential for the continuity of an organization. Whether you are a startup entrepreneur, operate in the SME sector, lead a multinational, or manage a non-profit institution, the financial health and stability of your organization significantly determine your market position, future growth opportunities, and overall business sustainability. Below are some steps to ensure your organization achieves its goals.
Mission, Vision, and Strategy
Managing your organization begins with clearly defining your purpose, or the mission. This mission is long-term and should not be adjusted midway.
From this, the vision follows. What is your outlook for the next five to ten years? Where do you want to lead the organization?
Next, the strategy is defined, which outlines how you plan to achieve the vision. The mission, vision, and strategy should be the starting point for every organization.
Developing and executing the strategy can be an iterative process, depending on market conditions and, for example, macroeconomic factors. The way you achieve your vision may change as circumstances evolve.
You can communicate the mission and vision to your stakeholders. The strategy, however, is typically for internal business purposes, as it often contains sensitive competitive information. Once the strategy is clear, organizational goals can be set.
Set Your Goals
Before you can achieve your goals, they must first be established. Both financial and non-financial goals should be SMART: specific, measurable, acceptable, realistic, and time-bound. It is important that these goals are based on the strategy.
The strategy should be communicated top-down from management throughout the organization. Based on the (strategic) goals, Key Performance Indicators (KPIs) can then be defined.
Develop Key Performance Indicators (KPIs)
KPIs are specific metrics that help measure progress toward both financial and non-financial goals. Regular monitoring of these KPIs is essential. It is also important to understand the relationship between non-financial performance (such as customer satisfaction or employee engagement) and financial outcomes. For example, high customer satisfaction can lead to repeat purchases and referrals, ultimately improving financial performance.
Non-financial metrics (such as customer satisfaction) are often referred to as leading indicators, compared to lagging indicators (such as cash flow), which refer to financial KPIs. It is crucial to recognize that while there are many KPIs, not all are equally important. For instance, Jack Welch highlighted that the three most important things an organization should measure are employee engagement, customer satisfaction, and cash flow.
“In a business, there are two measurements that count. Employee engagement and customer satisfaction. You get those two things right, and then you measure cash flow—and cash flow is the ultimate measurement. You’ll watch your cash flow grow as you engage your employees and satisfy your customers.”
– Jack Welch
Invest in Continuous Improvement
Whether it concerns financial processes, customer service, or internal operations, striving for continuous improvement is crucial for achieving financial organizational goals.
Invest in Employee Training and Development
Your team is a critical factor in achieving both financial and non-financial goals. By investing in their growth and development, you increase the likelihood of reaching the set organizational objectives.
Conclusion
Achieving financial organizational goals is not merely a matter of profit. It reflects the overall health and sustainability of an organization. Management control helps you achieve both financial and non-financial goals. By implementing the steps outlined above, your organization can focus on sustainable growth and long-term value creation.
Sources:
https://chiefexecutive.net/jack-welchs-masterclass-on-employee-engagement-in-a-business-there-are-two-measurements-that-count/ Accessed on 19-09-2023