#206 Aligning Objectives with Strategic Direction

The importance of setting key objectives can’t be understated. They help drive continual improvement and reflect a business’s key metrics for success in various areas.

They are also a key aspect of implementing an ISO Standard, with most specifying a dedicated Objectives clause. While most businesses will have objectives irrespective of any ISO certification, many may fall into the familiar trappings of having separate objectives for different departments, which only serves to fragment your measurement of success.

In this episode Ian discusses the importance of setting key business objectives, and why you should be aligning these with your strategic direction.  

You’ll learn

·      What is the Annex SL format and why was it introduced?

·      What is meant by ‘Strategic Direction’?

·      The importance of risks and opportunities in objective planning

·      Who are setting key business objectives important?

·      How can you align objectives with a businesses strategic direction?

 

Resources

·      Isologyhub

 

 

In this episode, we talk about:

[02:05] Episode Summary – Ian discusses how to align objectives with the strategic direction of the business, and why it’s important to do so.   

[02:55] What is the Annex SL format and why was it introduced?: The Annex SL format refers to the standard 10 clause structure that we now see in most ISO Standards. Introduced back in 2015, it sought to address the issues with integrating multiple Standards, in addition to making them more accessible to every sector.

Prior to 2015, many ISO standards were designed with specific sectors in mind, using terminology that would make sense to them, but perhaps not to others. The Annes SL format now uses the same language across all ISO’s, making It easy to integrate multiple ISO compliant Management Systems.

[06:10] What is meant by the term Strategic Direction? Leadership: This is a term that appears in ISO 9001 5 times.

We first see it in Clause 5 – Leadership, where it states:

“Top management shall demonstrate leadership and commitment with respect to the management system by ensuring that the policy of objectives are established for the management system and are compatible with the context and strategic direction of the organisation.”

This is where it’s made explicitly clear that leadership / management are responsible for ensuring the Management System aligns with the way their business runs, in addition to integrating it into existing processes.

[07:05] What is meant by the term Strategic Direction? Management Review: It also appear in clause 9.3 Management Review, where it states:

“Top management shall review the organisation system at planned intervals to ensure its continuing suitability adequacy, effectiveness and alignment with the strategic direction of the organisation.”

Again, this reinforces the need for top management to be involved to ensure that the Management System is in alignment with their overall goals.

[08:40] What is meant by the term Strategic Direction? Context of the Organisation: It also appears at the very start of the auditable clauses, in Clause 4 – Context of the organisation, where it states:

“The organisation shall determine the external and internal issues which are relevant to its purpose and its strategic direction.”

This involves looking at issues from a legal, technical, competitive, cultural and economic point of view, and many of these will be determined by top or broader management within the business. They ultimately have the most influence in how a Management System is built, therefore have the most influence on how the policies and objectives are created.

[10:45] The importance of risks and opportunities in Objective planning – Clause 6 (Planning) is where we address risks and opportunities raised in clause 4.

It states that ‘Objectives must be established at relevant functions, levels and processes.”

For us at Blackmores, we directly relate the findings from a risks and opportunities assessment (such as a SWOT & PESTLE), and link these to our objectives to try and minimise those risks. We also leverage the opportunities, by making them real tangible goals to work towards – seems obvious but we often see businesses missing the link between these exercises!

[12:00] How can you set Objectives in alignment with Strategic Direction?: Many businesses now build their mission, values and strategic direction around sustainability and general ESG.

When building a management system, you need to consider how it affects those sustainability / ESG goals, because that is essentially the context of your organisation.

So, you’d need to consider:

How does environmental performance, health & safety performance or legal compliance contribute to the success of the management system as a whole?

You don’t have to be going for ISO 14001 or ISO 45001 for these things to matter, even a quality management system can contribute to sustainability goals. This can be through improving economic performance by reducing waste ect.

Also, don’t be afraid to relate economic performance to your management system. If you have a turnover goal of X, mention that in your context documentation, and also consider how the management system can contribute to achieving that goal i.e. through processes, controls, monitoring and improvement activity.

Also consider your client requirements, they may require an accident rate below X which can also be included in context documentation and can then be factored into your management system measures and objectives if need be to achieve that.

[16:55] How do you establish your objectives? – First you must establish context, and that context must be relevant to the purpose and strategic direction of the business. The context setting must include those who understand that context, strategic direction and the purpose of the business, the risks and opportunities must be assessed in relation to that context, which in turn is already aligned with strategic direction. Finally the objectives must be set in relation to those risks and opportunities.

It's all about having the right people to identify the relevant issues affecting the organisation, and setting concrete objectives in order to improve that.

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