Managing a company’s finances requires organization, attention to detail and clear goals. This approach helps solve problems and signal to the team which path the company intends to follow. This way, the chances of achieving better results increase.
Fortunately, there are methodologies that make managers’ work easier, such as SMART goals. Adopting them can contribute to the development of more assertive action and strategic management plans, especially regarding the financial scope of the business.
This post will explain SMART goals, their key benefits, and how to implement them in your business. Have fun reading!
What are SMART goals?
SMART goals are a model for defining objectives to be achieved by a company’s management and employees. To understand the concept, it is necessary to break it down letter by letter.
Just look:
Specific (S)
SMART objectives need to be clearly stated. The term “specific” is used at the beginning of the acronym for this reason. This suggests that the objectives should be clear and measurable.
One example is improving a business’s financial indicator. Instead of setting a vague goal, such as “reducing expenses “, it is recommended to specify what measure will be adopted. One alternative may be to renegotiate with suppliers.
This makes the objective clearer and more understandable for both management and employees. In other words, a more direct approach can help define other strategies that lead to achieving this goal.
Measurable (M)
Another important characteristic of SMART goals is that they are measurable. Therefore, defining numerical parameters can be useful for management to know whether the objective has been achieved. These parameters can be monetary, percentage or refer to units of time.
The objective in the first scenario was to cut costs. Renegotiating with suppliers was one of the strategies used to do this. Therefore, cutting input spending by 5% could be an example of a measurable target.
Achievable
SMART goals must be feasible in addition to being precise and quantifiable. Thus, the initial “A” in their name. This component entails accomplishing goals of a moderate level of difficulty.
After all, goals need to be in line with the company’s current reality. Therefore, ideally they should not be too easy — nor too difficult. This is because, in the first case, the team will tend to become complacent, without feeling sufficiently challenged. The second case, however, can end up generating frustration.
Relevant (R)
The fourth element of SMART goals is relevance. This means that achieving the goals must add tangible value to the company. This way, employees tend to be more engaged, once they have been convinced of the importance of the purpose for the business.
Time-based (T)
The last characteristic is consistent deadlines. Consequently, it is best to select a reasonable timetable for achieving objectives. This measure can also keep employees committed, which tends not to happen if deadlines are fluid or indefinite.
What are the advantages of SMART goals?
Now that you know what SMART goals are, you might be interested in learning about the benefits they have to offer.
The first refers to self-analysis. After all, setting goals helps managers define which path the company should follow. In addition, this is also a way to identify problems, such as operations and indicators that need to be improved.
The second benefit concerns team performance. As you have seen, employees tend to be more engaged when they are aware of the goals and their respective deadlines. This increases the likelihood of the company achieving positive results.
Finally, SMART goals also save time . This is because following this methodology can speed up the process of defining goals and the strategies that will be adopted to achieve them.
How to adopt SMART goals?
You have learned what SMART goals are and the advantages they offer. Now it is time to learn how to implement them in your company. To do so, it may be worthwhile to break down the objective according to the five parameters listed throughout this content.
Here’s an example:
Specific
Imagine that you are looking for better financial results for your company. As you have seen, one specific path could be to reduce expenses by renegotiating with suppliers.
Measurable
You can make this goal even clearer by assigning numerical parameters to it. This way, it will be easier to know whether the purpose has been achieved. Therefore, one alternative could be to establish a 5% reduction in raw material costs.
Achievable
Now that you have determined the goal you want to achieve and how you will measure it, it is time to assess its viability. To do this, you can gather your purchasing department employees. After all, they will probably have contributions to make, since they deal with suppliers on a daily basis.
Furthermore, feedback from your team can help you calibrate your target. By following this example, your employees may consider a 10% saving to be achievable, rather than just 5%.Â
Relevant
If you, the other managers and your team confirm the viability of this measure, it is time to highlight its relevance. Show how reducing supplier expenses can improve the financial health of the business.
The amount saved can be used to buy better equipment or to speed up the payment of loan installments, for example. This will make it clearer that the company needs to achieve this goal.
Deadline
Ideally, this should be very clear, such as “last day of November”. As you have learned, setting deadlines increases the engagement of your employees and, consequently, the chances of achieving the goal.
It is worth remembering that technology offers solutions that facilitate the creation and implementation of SMART goals — including in the financial sector.
Have you seen how adopting SMART goals can contribute to the success of your business, engage your employees and enable the achievement of certain objectives in different sectors of the company? Then consider using them from now on!
