Use the SMART Criteria to Develop Your Company's Goals

In this rapidly changing world, the only way for companies to remain competitive is for managers and team leaders to look for ways to improve their operations. If others are getting better and you are staying the same, you are actually falling behind.

A tried-and-true method for improvement is establishing meaningful objectives at all levels of a company to foster ownership and accountability on all levels. So, how should these meaningful objectives be developed? It starts with an understanding of the fundamentals of an objective.

In simple terms, an objective narrowly focuses on achieving a desired outcome. To be meaningful, this outcome must include five characteristics that can be remembered using the acronym “SMART.” A SMART objective is Specific, Measurable, Achievable, Relevant and Time-based. Let’s explore these SMART characteristics further.

• Specific. The desired outcome must be clear. There should be no ambiguous descriptors, and numbers should be included wherever possible. The following table shows three examples of objectives with varying levels of specificity. Example 3 is the best because it provides clarity in which lines to target for improvement and the percentage to improve.

Example 1	Example 2	Example 3
Increase Output	Increase output on lines 1, 2 & 3	Increase output on lines 1, 2 & 3 by 5%
Vague	Better	Best

• Measurable. This provides a means of comparing results over a period of time. Measures enable us to see if we are on track to achieving a desired outcome. The measures should be easy to obtain (avoiding paralysis by analysis) and accurately reflect actual performance. In last month’s column, I discussed two types of measures: lead and lag measures. Ideally, both should be employed for an objective. In this way, you know how you are doing and what you should do in the future to achieve your goals.
• Achievable. An objective should be challenging, as this can motivate people, but it must also be viewed as within a person’s power to achieve. Neither an objective that is too easy nor one that is too hard will lead to significant improvement. If it is too hard, it may actually demotivate some employees. A lack of power to control or influence the outcome leads to a lack of commitment to the objective.
• Relevant. An objective must be useful and appropriate to the operation. Achieving relevant objectives improve performance. For example, training employees to run all equipment increases resource availability. Objectives that appear irrelevant are less likely to be accepted and possibly even viewed as a waste of time and effort. An example of this would be a run-time objective for a machine that is rarely used. Further examples of relevant objectives applicable to different departments are shown in the table below.

Department	Alternative Relevant Objectives
Quality	Number of Audits Completed	Corrective Actions Closed	First Articles Completed
Finance	Average Receivables Days	Number of Invoices Processed	Number of Fully Trained Employees
Maintenance	Mean Time Between Failures	Number of P/M’s Completed	Number of Inventory Stock Outs

• Time-based. The objective must be specific with respect to time. Time assignment conveys a sense of urgency and prevents objectives from dragging out indefinitely. Selected timeframes can be days, weeks, months or anything up to a year. Most objectives are targeted for completion within a year, which likely coincides with an organization’s fiscal year. Examples of time-based objectives include: The new manual will be completed by the end of the second quarter, 20XX; New recruit training will be completed by March 31; The new machine will be operational by June 1; and The new procedure will take effect September 10.

Meaningful objectives must be SMART. By basing your objectives on the five key characteristics discussed, you can foster a results-oriented operation in which continuous improvement is recognized as crucial to your company’s ability to meet and beat the competition.