Mullins L.J. Management and organisational behaviour, Seventh edition
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In Chapter 4 we saw that the context of the organisational setting is central to the
application of organisational behaviour and the process of management. It is the inter-
action of people in order to achieve objectives that forms the basis of the particular
organisation. If you do not know where you are going, you cannot tell if you have
arrived. Underlying the effective management of people, therefore, is the requirement
for a clear understanding of the nature of the business that the organisation is in and
how best to provide customer or consumer satisfaction.
1
In order to study organisa-
tional behaviour you need to explore the nature of organisational goals and strategy
for the formal organisation as a whole.
All organisations have some function to perform, some contribution to make to the
environment of which they are part. The function of the business organisation may be
seen, for example, as the creation and/or supply of goods and services. This involves bring-
ing together the factors of production and their successful mix and direction, to provide
products or services in order to create value added. Others might see the function of busi-
ness organisations as, for example, providing a source of employment and of income.
In addition to performing some function, all organisations also have some incentive
for their existence, and for their operations. The goals of an organisation are the reason
for its existence. The activities of the organisation are directed to the attainment of its
goals. A goal is a future expectation, some desired future state. It is something the
organisation is striving to accomplish. The meaning of a goal is, however, subject to a
number of interpretations. It can be used in a very broad sense to refer to the overall
purpose of an organisation – for example, to produce television sets. A goal may also be
used to refer to more specific desired accomplishments – for example, to produce and
sell a given number of a range of television sets within a given period of time.
The concept of organisational goals is more specific than that of the function of an
organisation. The goals of an organisation will determine the nature of its inputs and out-
puts, the series of activities through which the outputs are achieved, and interactions with
its external environment. The extent to which an organisation is successful in attaining its
goals is a basis for the evaluation of organisational performance and effectiveness.
The goal model approach concentrates on the study of organisational goals and the
measurement of success against the realisation of goals. Etzioni suggests a potential dis-
advantage of this approach.
2
Goals are ideals and more attractive than actual
achievement. Organisations are characterised by low effectiveness. They rarely achieve
their goals with any degree of finality and can, therefore, almost always be reported as
a failure. The goal model approach results in attention being focused on the organisa-
tion’s lack of success in attaining goals at the expense of more meaningful forms of
analysis. Instead of comparing organisations in terms of their stated goals, performance
may be assessed relatively against different organisations.
The concept of organisational goals is ambiguous. Goals may be expressed very
simply: in the case of business organisations, for example, to make a profit, or to
increase productivity. Such broadly based goals might be taken for granted and they
tell us little about the emphasis placed on the various activities of the organisation in
meeting its goals. In any case, profit might more correctly be interpreted as a reward to
the shareholders or providers of capital, and a means of ensuring the continued ex-
istence of the organisation and maintaining its growth and development.
Goals have been defined by Simon as value premises which serve as inputs to decisions.
3
Goals at different levels within the organisation contribute to alternatives for decision-
making. Simon compares goal-setting with the mathematical approach of linear
programming and he sees goals more as sets of constraints which the organisation must
CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES
THE NATURE OF ORGANISATIONAL GOALS
Goal model
approach
Alternatives for
decision-
making
145
satisfy – for example: profit for shareholders, or a minimum rate of return on invest-
ments; satisfying demands of consumers; complying with government legislation on
safety standards; providing job satisfaction for staff; pacifying environmental groups
such as Friends of the Earth. Goals limit the scope of actions and decision-making at
lower levels of the organisation. Constraints may themselves be regarded as goals in
that they represent objectives which management is trying to meet.
Despite the problems associated with the goal model approach, the concept of organ-
isational goals serves a number of important functions.
4
■ Goals provide a standard of performance. They focus attention on the activities of
the organisation and the direction of the efforts of its members.
■ Goals provide a basis for planning and management control related to the activities
of the organisation.
■ Goals provide guidelines for decision-making and justification for actions
taken. They reduce uncertainty in decision-making and give a defence against possi-
ble criticism.
■ Goals influence the structure of the organisation and help determine the nature of
technology employed. The manner in which the organisation is structured will
affect what it will attempt to achieve.
■ Goals help to develop commitment of individuals and groups to the activities of the
organisation. They focus attention on purposeful behaviour and provide a basis for
motivation and reward systems.
■ Goals give an indication of what the organisation is really like, its true nature and
character, both for members and for people outside of the organisation.
■ Goals serve as a basis for the evaluation of change and organisation development.
■ Goals are the basis for objectives and policies of the organisation.
Goals are therefore an important feature of work organisations. To be effective goals
should be emphasised, stated clearly and communicated to all members of the organi-
sation. The movement towards greater delegation and empowerment down through
the hierarchy means that staff at all levels must be aware of their key tasks and actions,
and exactly what is expected of them and their department/section. There must be
clearly laid down organisational goals, objectives and strategy.
5
To be effective, organisational goals should encourage the use of empowerment but
still incorporate an element of traditional management measurement and control.
For example, Mills and Friesen suggest that to be effective goals must exhibit several
characteristics:
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PART 2 THE ORGANISATIONAL SETTING
THE FUNCTIONS OF GOALS
An important
feature of work
organisations
In today’s environment, old-style command and control structures no longer work. People
want freedom, but it must be freedom within a framework. Organisations, like individuals,
need goals. Ensuring that appropriate goals are set is every manager’s responsibility.
Although currently it is popular to encourage commitment by letting the organisation set its
own goals, this approach frequently yields only modest results. More challenging goals, cre-
ated top-down, can have far more dramatic effects on business performance ... Setting
ambitious goals forces the organisation to dig deeper for creative solutions and to rethink
how the business should be run.
Sir Brian Pitman, Chairman of Lloyds TSB
6
■ Understandable – otherwise those who are given them seek further input before
acting. If they cannot act on their own it follows they have not been empowered.
■ Contain a time element – in order that those being empowered will know when
their progress will be measured. This helps them to accept empowerment and stop
looking for direction.
■ Carefully drawn – broad enough to support independent action but not so broad
that confounding factors prevent their achievement. For example, asking a team to
keep company stock price above target is too broad as factors influencing share
prices are beyond the control of any one team.
■ Subject to alignment – with other goals across the organisation in order to facilitate
co-ordination among teams and to ‘roll up’ into collective company goals.
7
The goal-setting process is of importance to all types of organisations and facilitates the
attainment of objectives. In the public sector, for example, organisations such as hospi-
tals, local authorities and universities have complex, diverse and competing goals. The
clarification of goals and objectives is the basis for corporate planning, and a planning,
programming, budgeting systems (PPBS) approach to decision-making.
Strictly, organisations have no goals; only people do. Organisational goals are estab-
lished by people, either individually, or, more usually, by a number of individuals
co-operating together. For example, a group of senior managers may collectively agree
on a particular desired course of action which may then come to be referred to as an
organisational goal. However, this is still the goal of those managers who initially
determined it.
Success of the organisation is measured by the progress of people towards goals set
by people. This gives rise to the questions:
■ To what extent has the organisation one common set of goals, or is there diversity
among the various goals of different departments or divisions of the organisation?
■ How far are the goals of management compatible with the goals of the organisation?
■ To what extent do individual members obtain satisfaction of their own goals
through the attainment of organisational goals?
Members of the organisation have different, and often conflicting, goals. As a result,
the goals which the organisation actually pursues (informal goals) may be distinguished
from the officially stated goals (formal goals) which are set out in broad terms as the
reasons for the purpose of the organisation. Informal goals may be inferred from the
actual decisions made and actions taken within the organisation. Managers, and other
members of the organisation, will have:
■ their own perception of the goals of the organisation – for example, to produce
high-quality television sets which satisfy requirements of the customers; and
■ their personal goals – for example to earn high wages, to achieve promotion, to gain
social satisfaction, to achieve status – which they expect to fulfil by participating in
the activities of the organisation. (See Figure 5.1.)
If organisational goals and personal goals are pulling in different directions, conflict
will arise and performance is likely to suffer. An organisation will be more effective
when personal goals are compatible with organisational goals. Organisational perform-
ance will depend ultimately on the extent to which individuals are provided with the
opportunity to satisfy their own goals by contributing to the goals of the organisation.
8
CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES
147
INTEGRATION OF GOALS
Informal goals
Compatibility
of personal
goals and
organisational
goals
Management has a responsibility to clarify organisational goals and to attempt to inte-
grate personal goals (including their own) with the overall objectives of the organisation.
Only when organisational goals are shared by all members of the organisation will com-
plete integration be achieved. In practice, this is unlikely. As McGregor points out:
Perfect integration of organizational requirements and individual goals and needs is, of course,
not a realistic objective. In adopting this principle, we seek that degree of integration in which
the individual can achieve his goals best by directing his efforts towards the success of
the organization.
9
Management should endeavour, therefore, to structure the organisation so that people
may realise their own (personal) goals by helping the organisation to satisfy its goals.
One attempt at integrating organisational goals with the needs of the individual mem-
bers of the organisation is provided by the approach of Management by Objectives.
This is discussed in Chapter 7.
We have seen that goals are an important feature in the management of organisations.
The goals of an organisation may be classified in a number of different ways.
Etzioni provides a classification which distinguishes three types of organisational goals
in terms of their relationship with the concept of power and compliance.
10
■ Order goals are negative and attempt to place some kind of restraint upon members
of the organisation and to prevent certain forms of behaviour.
■ Economic goals are concerned with the production of goods and/or services for
people outside of the organisation.
■ Cultural goals are concerned with symbolic objects and with creating or maintain-
ing value systems of society. Social goals, which serve the various needs of members
of the organisation, are classified as a sub-type under cultural goals.
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PART 2 THE ORGANISATIONAL SETTING
INFORMAL
GOALS
Personal goals of other members
of the organisation
Perceived goals of
the organisation
Personal goals of managers
Extent of compatibility
The reason and
purpose of the
organisation
Officially stated
organisational
goals
FORMAL GOALS
Figure 5.1 Compatibility of goals within an organisation
CLASSIFICATION OF ORGANISATIONAL GOALS
The concept of
compliance
Most organisations would be expected to display one of three central combinations of
organisational goals and compliance structure. Although there are other possibilities,
the three most usual combinations are:
■ organisations with order goals and a coercive compliance structure – for example,
closed prisons;
■ organisations with economic goals and a utilitarian compliance structure – for
example, business firms;
■ organisations with cultural goals and a normative compliance structure – for exam-
ple, professional bodies.
Organisations may, of course, serve more than one goal, and these goals may not
necessarily fall into the same category. Usually, however, there is one main goal which
maintains a relationship with compliance structure in keeping with one of the three
central combinations.
The concept of power, involvement and compliance is discussed further in Chapter 21.
A systems view of organisational goals
There are a number of possible alternative classifications. However, by adopting a sys-
tems view of organisations we can distinguish four main types of organisational goals:
■ Consumer goals. These relate to the nature of outputs in terms of the market to be
served and consumer satisfaction – that is, the range and nature of goods and/or
services produced or supplied in order to meet the needs of customers or clients.
Examples are consumer products, educational services or health care.
■ Product goals. These relate to the nature and characteristics of the outputs
themselves – that is, the goods and/or services provided. This is the main area in
which organisations deliberately attempt to distinguish themselves from other organi-
sations – for example, in the range, design, quality and availability of their outputs.
■ Operational goals. These relate to the series of activities involved in providing out-
puts, and to the operation and functioning of the organisation. Examples are the
management of opportunities and risks, the choice of structure, the nature of tech-
nology and management processes.
■ Secondary goals. These relate to goals that are not the main aim of the organisa-
tion. They arise from the manner in which the organisation uses its power and
influence in pursuit of its outputs, and in undertaking the series of activities to
achieve these outputs. Political aims, aid to the community, the development of
staff and social responsibilities would come under this heading.
Survival of the organisation will depend upon its ability to adapt to change and to the
demands of its external environment. In practice, however, organisations usually
appear to alter their goals only on a gradual basis. Commitment to the objectives and
policies of the organisation, people’s cognitive limitations and their uncertainties and
fears, may mean a reluctance to accept change. Organisations may also find it difficult
to make short-term, rapid changes in resource allocation. The very complexity of envi-
ronmental influences may itself hinder rapid change. (See also the discussion on
organisational change in Chapter 22.)
It is important, however, that the organisation does not restrict innovation but is ready
to respond positively to changing circumstances and, increasingly, to anticipate future
change. Management has to balance the need for adaptability in meeting the challenges
and opportunities presented by change with, at the same time, preserving an atmosphere
of stability and continuity in the interests of members of the organisation.
CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES
149
ALTERATION OF GOALS
The goals of the organisation may be pursued in accordance with an underlying ideol-
ogy, or philosophy, based on beliefs, values and attitudes. This organisational ideology
determines the ‘culture’ of the organisation and provides a set of principles which
govern the overall conduct of the organisation’s operations, codes of behaviour, the
management of people and its dealings with other organisations.
11
These sets of princi-
ples may be recognised and implemented informally as ‘accepted conventions’ of the
organisation or they may be stated formally in writing.
Certain aspects of an organisation’s philosophy may be so dominant that they
become the ‘hallmark’ of that organisation and place constraints on other areas or
forms of activities. An example is the high quality standard of Marks & Spencer’s mer-
chandise and their explicit policy of buying primarily from United Kingdom sources.
In the case of the Walt Disney Company, quality service is embedded deeply within its
corporate culture. The overriding byword of The Body Shop is honesty and this under-
lies their policy of: ‘We WILL be the most honest cosmetic company.’ As another
example, the highest-quality hallmark of Rolls-Royce cars would presumably prevent
entry into the cheaper mass-production market.
Organisational values and beliefs
Some 30 years ago, Brech wrote about the ideology of an organisation related to the
idea of both an ethical foundation and an organisational or operational foundation.
12
■ Ethical foundation embodies the basic principles which govern the external and
internal relations of the organisation. External relations concern standards of fair
trading and relations with, for example, customers, suppliers and the general public.
Internal relations are concerned with fair standards of employment and relations
with members of the organisation, including authorised union representatives.
■ Organisational or operational foundation is concerned with the structure, opera-
tion, and conduct of the activities of the organisation. External aspects relate to, for
example, methods of trading and channels of distribution. Internal aspects include
methods of production, use of equipment and managerial practices relating to
organisational performance, productivity and profitability.
In more recent years organisations have given growing attention to a set of stated cor-
porate values displayed prominently for all to see. Lucas questions whether such grand
statements of corporate principles really mean anything and concludes that they actu-
ally have a point and values can be used with success. ‘A set of values is obviously a
nice thing for an organisation to have; something to pin on the noticeboard. But for
those organisations that have learnt to walk the talk, deeply embedded values can
attract the right people, underpin the business in times of crisis and provide direction
for the future.’
13
Dainty and Anderson point out that values are the guidelines a person uses to make
choices and within organisations, basic beliefs affect what decisions are made, how
people interact, and the kind of work practices that are pursued and developed. They
form the glue that binds an organisation’s culture. ‘Building an understanding of
values that are shared within an organization will be as important in the 21st century
as it is today. In fact, many feel that organizations and people should be returning to
more fundamental values, rather than moving away from them. Increasingly, organiza-
tions are spending time working out and agreeing the values by which they want their
organization to be managed.’
14
Cloke and Goldsmith contend that organisations can increase their integrity, coher-
ence, and integration and improve their performance by reaching consensus on shared
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PART 2 THE ORGANISATIONAL SETTING
ORGANISATIONAL IDEOLOGIES AND PRINCIPLES
values. They can bolster value-based relationships by recognising and encouraging
behaviours that uphold their values; communicate and publicise their values, and
encourage individual and team responsibility for implementing them; develop meth-
ods for monitoring compliance with values, providing feedback and identifying
potential conflicts of interest. Most importantly consensus on shared values means
organisations can accomplish these goals without moralising, preaching, excusing, or
imposing their values on others.
15
In recent years it has become increasing popular for organisations to produce a mission
statement and/or its ‘vision’ that sets out the purpose and general direction for the
organisation.
16
There is sometimes an apparent uncertainty of the distinction between
the terms ‘mission’ and ‘vision’. It seems to be generally accepted that the vision pro-
vides the overall frame of reference within which mission statements are written and
goals selected. ‘If vision is ill formed, mission statements will be vague and goal
achievement hard to measure.’
17
Johnson and Scholes suggest that ‘mission’ is a general
expression of the overall purpose of the organisation, which, ideally is in line with the
values and expectations of major stakeholders; while ‘vision’ is the desired future state
of the organisation, and an aspiration around which to focus attention and energies of
members of the organisation.
18
Mission statements vary in length, the extent of specific or general content, and
according to the type of the organisation.
The mission statement of the Institute of Chartered Secretaries and Administrators
in Article 4 of its Royal Charter is: ‘The object for which the Institute is established and
incorporated is the promotion and advancement of the efficient administration of
commerce, industry and public affairs by the continued development of the study and
practice of secretaryship and administration of companies and other bodies.’
The mission statement of Hambrook Landscapes Ltd, Southampton is:
As experts in your garden we strive to exceed our customers’ expectations
while the company’s vision statements are:
Business: our vision is to grow our business by 20% gross profit per year, thus affording the
directors the opportunity to expand business ventures.
Staff: our vision is for our staff to grow by training and developing them to meet the business
challenges by innovation, care and competence.
Customers: our vision is to give our customers growing confidence by doing it in the Hambrook
way and exceeding their expectations.
For Aveda, the international beauty and hair product organisation, the mission state-
ment is:
Our mission at Aveda is to care for the world we live in, from the products we make to the ways in
which we give back to society. At Aveda, we strive to set an example for environmental leadership
and responsibility, not just in the world of beauty but around the world.
Value of mission statements
The value of a mission statement is dependent, however, upon the extent to which it is
understood and accepted throughout the organisation, and translated in meaningful
terms to all members of staff including those at the operational level. Perrin and
CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES
151
MISSION STATEMENTS
Tavakoli, for example, raise doubts over managers who have a naïve notion that the pro-
duction and dissemination of a well-crafted statement will create a sense of mission:
The picture will remain gloomy whilst managers and consultants believe that creating a mission
statement is synonymous with creating a sense of mission. You only create the latter if your mis-
sion statement is understood, believed and acted upon by a majority of organisation members.
19
Rigby suggests that mission statements can be dynamic, but they can be trite and busi-
nesses should look at whether or not one is really needed;
20
Trapp argues that most mission
statements lack substance and only serve to confuse colleagues and customers alike.
21
A mission statement is only likely to be of any value if the organisation actually
practices what it preaches. As Riches, for example, questions: is there congruence
between what it says (the values posted on the wall) and what it actually does? Is there
a high level of trust in the organisation? Are the organisation’s culture, systems, struc-
tures, processes or policies in sync with the stated core values? In other words, does
management walk the talk?
22
A similar point is made by Gratton:
How often do corporate plans and mission statements remain simply that: senior executive rheto-
ric with little meaning to those people whose job it is to deliver customer satisfaction or bring
complex products rapidly to the marketplace? Employees may hear corporate mission statements
extolling the virtues of customer satisfaction or product innovation, but when the communication
fanfare is over, the customer-focus workshops completed, and the lights dim on the business
video, what is left? A group of employees trying to make sense and create meaning from the
many messages and cues they have received.
23
In accordance with its ideology or philosophy, the goals of the organisation are trans-
lated into objectives and policy. Terminology and use of the two terms varies but
objectives are seen here as the ‘what’, and policy as the ‘how’, ‘where’ and ‘when’ – the
means that follow the objectives.
■ Objectives set out more specifically the goals of the organisation, the aims to be
achieved and the desired end-results.
■ Policy is developed within the framework of objectives. It provides the basis for deci-
sion-making and the course of action to follow in order to achieve objectives.
The relationship between the organisation, its objectives and management is illus-
trated by Fayol who stated that one of the managerial duties of an organisation is to:
… see that the human and material organization is consistent with the objective, resources and
requirements of the concern.
24
The establishment of objectives and policy is therefore an integral part of the process
of management, and a necessary function in every organisation.
A systems view of goals and objectives
The objectives of an organisation are related to the input–conversion–output cycle. In
order to achieve its objectives and satisfy its goals the organisation takes inputs from
the environment, through a series of activities transforms or converts these inputs into
outputs and returns them to the environment as inputs to other systems. The organisa-
tion operates within a dynamic setting and success in achieving its goals will be
influenced by a multiplicity of interactions with the environment. (See Figure 5.2.)
Whatever the type of organisation, there is a need for lines of direction through the
establishment of objectives and determination of policy. Objectives and policy form a
basis for the process of management.
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PART 2 THE ORGANISATIONAL SETTING
OBJECTIVES AND POLICY
Clearly defined and agreed objectives are the first stage in the design of organisation
structure and help facilitate systems of communication between different parts of the
organisation. The ability to communicate corporate objectives to those responsible for
seeing that those objectives are achieved is also an essential characteristic of an effec-
tive incentive pay scheme.
25
The choice of objectives is an essential part of the decision-making process involving
future courses of action. Objectives may be set out either in general terms or in more
specific terms. General objectives are determined by top management. Specific objec-
tives are formulated within the scope of general objectives and usually have more
defined areas of application and time limits.
Objectives may be just implicit but the formal, explicit definition of objectives will
help highlight the activities which the organisation needs to undertake and the com-
parative importance of its various functions. An explicit statement of objectives may
assist communications and reduce misunderstandings, and provide more meaningful
criteria for evaluating organisational performance. However, objectives should not be
stated in such a way that they detract from the recognition of possible new opportuni-
ties, potential danger areas, the initiative of staff or the need for innovation or change.
A policy is a guideline for organisational action and the implementation of goals and
objectives. Policy is translated into rules, plans and procedures; it relates to all activities
of the organisation, and to all levels of the organisation. Clearly stated policy can help
reinforce the main functions of the organisation, make for consistency and reduce
dependency on the actions of individual managers. Policy clarifies the roles and responsi-
bilities of managers and other members of staff and provides guidelines for managerial
behaviour. Securing agreement to a new or revised policy can help overcome reliance on
outdated practices and aid the introduction of organisational change.
26
Policy provides guiding principles for areas of decision-making and delegation. For
example, specific decisions relating to HRM policy could include:
■ giving priority to promotion from within the organisation;
■ enforcing retirement at government pensionable age;
■ whenever possible, employing only graduate or professionally qualified accountants;
■ permitting line managers, in consultation with the HRM manager, to appoint staff
up to a given salary/wage level.
CHAPTER 5 ORGANISATIONAL GOALS, STRATEGY AND RESPONSIBILITIES
153
Objectives
Figure 5.2 A systems view of organisational goals and objectives
Policy
Some policy decisions are directly influenced by external factors – for example govern-
ment legislation on equal opportunities.
Objectives and policy together provide corporate guidelines for the operations and
management of the organisation. The activities of the organisation derive their signifi-
cance from the contribution they make to achieving objectives in the manner directed.
The formulation of objectives and policy, and the allocation of resources, provide the
basis for strategic planning which is the first stage in the planning and control
processes of business organisations.
27
In order to be successful, the primary objectives of the business organisation may be
seen as:
■ to continue in existence – that is, to survive;
■ to maintain growth and development; and
■ to make a profit.
All three objectives are inextricably linked and it is a matter of debate whether the
organisation survives and develops in order to provide a profit, or makes a profit by
which it can survive and develop.
Summers and Nowicki suggest that using a Maslow-like hierarchy of needs (discussed
in Chapter 12), the first concern for organisations is survival. After organisational sur-
vival is ensured, managers then have considerable latitude in what they want the
organisation to be and do.
28
If we accept survival as the ultimate objective of the business organisation, then this
involves the need for a steady and continuous profit. Organisations must be prepared to
accept the possibility of a reduction in short-term profitability in order to provide for
future investments. The profit goal is achieved through the process of management and
the combined efforts of members of the organisation. In times of economic recession the
survival objective takes on particular importance, especially for small businesses.
Managers today have a problem. They know their companies must grow. But growth is hard,
especially given today’s economic environment where investment capital is difficult to come by
and firms are reluctant to take risks. Managers know innovation is the ticket to successful growth.
But they just can’t seem to get innovation right.
29
Although the objective of profit maximisation is undoubtedly of great importance, it is
not, by itself, a sufficient criterion for the effective management of a business organisation.
In practice, there are many other considerations and motivations which affect the
desire for the greatest profit or maximum economic efficiency and the accompanying
assumptions which underlie the economic theory of the firm. (See Figure 5.3.)
The meaning of ‘profit maximisation’ is not, by itself, very clear. Consideration has
to be given to the range and quality of an organisation’s products or services, to the
costs of its operations and to environmental influences. Reducing attention to longer-
term ‘investments’ such as quality and after-sales service, research and development,
sales promotion, management development, satisfaction of staff and their employment
conditions may increase profitability in the short term, but is likely to jeopardise future
growth and development, and possibly even the ultimate survival of the organisation.
A business organisation has to provide some commodity or service by which it con-
tributes to the economic and/or social needs of the community. It also has broader
social responsibilities to society. (Social responsibilities are discussed later in this
chapter.) Profit can be seen as the incentive for an organisation to carry out its activi-
154
PART 2 THE ORGANISATIONAL SETTING
Corporate
guidelines
THE PROFIT OBJECTIVE
Not a sufficient
criterion for
effective
management