The Top 5 Performance Objectives (And Why You Need To Know Them)

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If you are in a management position or aiming to get into one, you’ll have heard about the 5 performance objectives. For an organisation, performance objectives are valuable ways to stay focused, achieve goals and be successful. 

In this post, we’ll give you a condensed guide to what five key performance objectives are and what they can bring to your business. These top five are objectives that you would learn about in business school.

What is a performance objective, anyway?

What exactly is a performance objective, and why should you care about it?

A performance objective is a fancy word in the field of operations management. At a company-wide level, a performance objective is a singular goal that enables the organisation to plan, organise and execute to achieve a predetermined result. They are mostly measured with quantitative metrics such as time or money. 

Think of it this way. If you’re a CEO and you want your business to succeed, what types of activities should you promote so that your company is financially viable and successful? What goals need to be met to produce a quality good or service?  The answers to those questions are your performance objectives.

What are the 5 performance objectives?

Over time, academics and experts have agreed about 5 performance objectives that apply to most organisations. To make this applicable to real life, we can use the example of a manufacturing company. Let’s get into it:


 You’re probably not surprised to find this financial indicator on this list. The lower the cost of business operations, the lower the price can be for customers. Cost is one of the fundamental elements of competition, and so it’s an attractive performance objective to almost every business model out there.

When a manufacturing company can decrease direct and indirect costs, they are able to provide their product at a lower price. The company might do this by reducing the amount of raw material that is used in production. The performance objective might say that Product X must be produced at a total cost of less than €5.00. This increases the profit margin and allows the business to invest in further innovation.


 It’s all about “doing things right.” Quality is how a company can maintain consistency in meeting customer expectations. It can make or break a company’s product or service because it’s frequently the thing that is most visible to customers.

In manufacturing, quality can be measured in the number of defects per batch, the amount of the product that fails inspection for the first time, or any other measurable factors. For a service company, quality can be measured many ways. For example, some customer feedback websites give stars for the quality of service, or allow customers to write their own review.


Speed is a massive part of a customer’s decision-making process. The faster they can receive a product or service, the more likely they are to purchase it. In that way, the speed at which a company can meet a customer’s needs can increase sales. It can also reduce the reliance on inventories and reduce other risks such as forecasting errors or costly inputs.

In manufacturing, speed is often a huge factor in the decision of which suppliers to buy from. Speed would refer to the time it takes from placing the order to receiving the shipment. The performance objective, in this case, could be measured in the number of shipments which fail to meet a deadline.


 When a company meets its promises and commitments, it is perceived as dependable. And that’s a great thing for a business to strive for – it increases trust with customers and saves time and money in operations.

Say a buyer orders a 500 piece shipment from the manufacturing company, and it is promised in 10 days or less. Is the manufacturer actually able to do what they have promised? This performance objective can be measured by the rate that the customer receives their exact order at the time and location promised.


 In business, flexibility means the ability to alter operations in response to changes. That could mean increasing production volume to meet a rise in demand or introducing new services to meet shifting customer preferences. Flexibility as a performance objective can speed up response time, save cost and promote dependability.

For a manufacturing company, flexibility would allow you to adapt to a customer’s orders on the fly. If you are all of a sudden unable to have incoming shipments of raw material (perhaps due to a global pandemic), can you still make enough products to complete a purchase order?

To read more about the 5 performance objectives, we suggest you pick up an introductory business textbook.

We chose Operations Management 5th Edition by Slack, Brandon-Jones and Johnston

business coach near me can help you identify what the performance objectives are for your business.

Related: What is performance coaching?

What happens when you don’t set performance objectives?

In reality, there are lots of performance objectives that can be a priority for your business. These 5 are just the ones that have been standardised by years of study and analysis by business schools and experts.

Whether you know it or not, you’ve probably worked in an organisation that used performance objectives in some way.

What would happen if a company did not use any form of performance goal-setting?

Without clear performance objectives, a company might exhibit some of the following consequences:

  • All business-related activities are done without purpose or meaning. Performance objectives give purpose to short term and long term tasks.

  • Managers do not understand how to prioritise the time of their employees. Performance objectives give structure to all operations in the business so that no time is wasted.

  • Management does not maximise the talent of key individuals. Performance objectives coupled with employee profiling make sure that each person’s talent is used effectively in the business.

  • Challenges are difficult to overcome because there is a lack of direction. By implementing performance objectives, there is more clarity on how to solve which problems.

  • Important operational decisions are made slowly. 

  • Promises to customers are frequently broken. Performance objectives ensure that some goals are not sacrificed to meet other goals.

  • Customers complain about price or quality. Performance objectives set standards so that price and quality can improve rather than worsen.

  • Collaboration with colleagues or other departments is challenging. Performance objectives are company-wide goals so that departments and colleagues work together, not against one another.

Unfortunately, these symptoms are all too common at many workplaces. If you find that your business is facing some of these challenges, a business coach may be able to help set performance objectives so that your company has a clear vision and a reliable plan.

Tips for using the 5 performance objectives in your business operations

What’s often overlooked by traditional instruction about performance objectives is just how important they are for a business’ day-to-day operations. A company is misguided if it hurriedly slaps together 5 important objectives into an annual plan and then puts them up on the shelf to collect dust.

Instead, performance objectives should be part of everyday business. Executives, managers and all other staff should have at least a cursory knowledge of the goal-setting process so that they can find value in their work and contribute to the company’s overarching goals.

Here are some of our favourite tips and tricks to apply performance objectives:

  • Create metrics and set targets to monitor your performance toward meeting your company’s main objectives.

  • Be transparent about your company’s performance objectives. Make sure every staff member is aware of how their efforts contribute to the goals.

  • Make sure there is a single “truth” about your performance objectives. Prevent variations from being created in different departments by publicising them to the entire organisation.

  • Continue the dialogue about performance objectives throughout the entire year. Ensure that executives and managers talk about objectives and make them a year-round priority.

  • Set up rewards (and consequences) for a meeting (or failing to meet) the objectives. Doing so ensures that the performance objectives are part of the daily operations, not just left to high-level strategy.

Making performance objectives work for your team

A basic understanding of performance objectives is an integral part of your daily professional life. That’s true whether you’re an entrepreneur who is interested in improving the operations strategy of your business, or a manager who needs to understand your company’s performance plan.

Just remember that while a business can emphasise a wide array of performance objectives, the top 5 most agreed-upon goals are cost, quality, speed, dependability and flexibility.

By integrating those goals into your business’ planning exercises, you’ll be well ahead of countless others. Just don’t forget to write them down, commit to them, and continue the dialogue about them as part of everyday company culture.

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MindShift Zone Team

MindShift Zone Team,

Our Mission MIndShift Zone is dedicated to making professional coaching accessible to everyone. Our mission is to connect you with ICF Certified coaches who can help you reach new heights in your care...

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