Types of Business Objectives: Qualitative and Quantitative

Posted by: Nigel Girling Post Date: 27th July 2015

Business objectives can be broadly split into quantitative and qualitative, and it’s important you find the right blend, based on your context and requirements.

Types of Business Objectives: Qualitative and Quantitative

In this article, I’ll be looking at the main types of business objectives for a team, unit or organisation, and looking at the pros and cons of each.

Quantitative objectives

Probably the most frequently used type of objective, quantitative objectives are those that can be tracked and evidenced by data. They are designed to satisfy our need for certainty and measurability, and are the easiest form to tabulate or represent graphically (both popular obsessions at management level!). So, what are the pros and cons?

Pros:

  • Easy to measure and report on
  • Easy to cascade into subsets of contributing objectives for individual targets
  • Easy to show variance from target or to compare one team or period to another

Cons:

  • Can be overly simplistic, and tend to lack the depth of a qualitative objective
  • Can be misleading if taken in isolation
  • Require support of more detailed narrative to explain what figures mean

Setting effective team objectives

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Qualitative objectives

Less prevalent due to the relative complexity that is typical of this form, qualitative objectives are more common in service business, especially those with a high degree of creativity.

Pros:

  • Tend to present a richer picture and encourage a deeper understanding of the performance being measured
  • Tend to enable more detailed discussion about performance and improvement actions

Cons:

  • Can be overly complex
  • Can be opinion-based or subjective
  • Typically more difficult to measure
  • Hard to represent or report on
  • Often need to be underpinned by several quantitative measures

What should you be using?

As with most things in leadership and management, the secret lies in making good decisions about the type of objectives and measures that will enable an accurate picture of performance, and drive effective action.

It goes without saying (or maybe it doesn’t, judging by some of the issues that seem to arise routinely in big corporations) that an objective is really just a benchmark against which one can measure progress and achievement. While measures are an essential guide to action, they can’t exist in isolation, or be used as a substitute for intelligence.

What we really want from our objectives is insightful information about our progress towards them, so that we can make intelligent decisions about what we need to do next. We might set ourselves the qualitative objective of becoming the number one organisation in our field, but we’ll need a range of quantitative measures of things like sales, customers, market-share, profitability, innovation or growth in comparison to our competitors, in order to know whether we’re moving in the right direction.

Perhaps the most effective way of setting objectives is combining both quantitative and qualitative measures. Effective goals often consist of a few qualitative objectives, underpinned by a range of ‘performance indicators’ that are most likely to be quantitative.

The key is to remember why you are setting the objective, and to be clear on the information you will need about progress and achievement in order to really know how you are performing, and what you need to do next.

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