One of the most challenging aspects of goals is selecting them. Where do you start? Sometimes, it’s pretty easy to spot a goal that makes sense for the organization. For instance, the organization might set a goal of an increase in total revenue of 10% over last year.If the market conditions and overall economy are reasonably sound, and the internal capabilities of the companyare in place, such a goal might even be on the conservative side. It’s the total context in which the organizationsets the goal that is crucial. So if the goal is wise, it’s a goal that the organization could use to build cascadinggoals to other departments, teams and individuals. But what if the economy isn’t doing very well? And to make things even more challenging, let’s assume the market we are in is more distressed than the broader economy. Under these circumstances, does a goal of increasing overall revenue of 10% over the prior year seem wise? If the organization went ahead and set that goal, would we be able to set realistic and attainable department, team and individual goals? Would we encourage risky behaviors and even riskier decision making?The selection of goals is crucial. We have to get the process started on the right foot, or we can end up withgoals that might sound great (“Let’s increase revenue by 10% over last year!”), but actually hurt theorganization, because we end up encouraging risky decision making and counterproductive behaviors. Settinggoals should achieve exactly the opposite results. Goal setting should make the organization more focused,provide a framework for sound decision-making and provide the basis for employee motivationand engagement.
The problem arises when organizations assume that because a goal fits the SMART criteria, it’s a well-chosen goal. That’s notalways the case. We came across a great illustration of this point in our research related to President Kennedy’s 1961 promise toput an American on the moon by the end of the decade.There were many benefits to the project, and the benefits are not disputed. But at its core – was the goal of placing a man on themoon by the end of the decade a wise goal? Perhaps. Perhaps not. But this is the difficulty of measuring every goal we set for ourorganization by using SMART. We can easily skip the more fundamental question of whether or not the goal itself is a wise one. Wecould end up shooting for the moon and miss opportunities to select goals aimed at building more foundational elements of asustainable organization.
Sometimes we can find wise goals by looking carefully inside our ownorganizations and asking ourselves can we do somethingbetter/cheaper/faster? These types of introspective goals related toimproved productivity almost always fit into the “wise” goal category.The real test of wisdom in this area is to honestly evaluate yourorganization’s internal capabilities to deliver on the goal and theincremental improvements needed to achieve the stated goal.
The organization’s mission, vision values statement can sometimes provide inspiration for effective goalselection. Some organizations state they want to be “The Number One Provider of Widgets to XYZ Market” as acorporate mission. The organization might be number five in its market today, so this might serve as an excellentgoal for the coming year to improve to number four. Many organizations have missions that are similar in termsof client or customer retention or service, product service or quality, etc.
• Goals from previous review period – can these goals be updated or improved upon?• Job description and critical job responsibilities – what are key job responsibilities? What are the key indicators of success in the job role, and how is that success measured?• Comments and suggestions from previous performance appraisals – have employees and managers added or discussed new ideas for the job that could serve as goals?• Managers’ objectives and items listed on executives’ Balanced Scorecards – how can employee goals support the broader goals and objectives of the department or team?• Division/department plans and strategies – can employee goals cascade effectively from department or team goals?• Discussions with colleagues/more senior managers/internal clients/customers – what do other stakeholders suggest or say about goals or objectives? Look at your organization’s customers and clients! Asking clients for ideas and suggestions could lead to goals that include things like: • New products • Improved service standards • Customer retention rates The problem is – you won’t know unless you ask them.
Now that we’ve made wise decisions and selectedour organizational, department, team and individualgoals, we’re ready to test these goals to ensure wecan measure and effectively manage theirsuccessful completion. This is where SMART goalscome into play.There are many articles written about SMART goals,and a lot of the literature represents substantial andimportant contributions to the whole area ofperformance management. We need goals.
Think about how human nature works related to goals and aspirations. Let’s say we want to lose weight.Research proves fairly conclusively that setting broad, general goals are not effective at motivating people. So ifthe goal, “I want to lose weight” is what we are working towards, how do we know we’ve been successful? Theanswer is, we don’t. On the other hand, if we set a fitness goal that says we want to lose 10 pounds in sixmonths, we can track our monthly and weekly progress towards that goal. Additionally, we can look at otherfitness related goals around specific activity we know will promote success of reaching our primary goal. So we can track things like: The number of steps we walk per day Our calorie intake per day The minutes per week of aerobic exercise we get Each of these supporting activities helps us achieve our overall goal of losing 10 pounds in 6 months.Look carefully at the overall goal we used in our example above. It is a good illustration of a SMART goal.• Specific – 10 pounds• Measureable – yes, by our weight on a scale using our current weight as a benchmark• Attainable – yes (with a doctor’s supervision, of course!)• Relevant – if we are trying to improve our fitness, yes• Time-bound – yes – we’ve set a six-month targetSo we have set a wise fitness goal, used SMART to ensure it can be measured and we can work effectivelytowards it. We are now good to go!
Organizational Goal: Maintain an 85% Client retention rate for 2013. Department Goal: Improve performance in handling of customer complaints within 90 days.Success Criteria: Transfer of knowledge and/or skill back to job.Measurement: Positive feedback on applicability of learning to jobresponsibilities with greater than 70% approval rating.
Cascading goals, like the example on the previous page, will work. But simply setting up cascading goals onlygets you started. There is some data beginning to emerge suggesting organizations that use cascading goalsare not seeing the results this approach promises. The most current research by David Norton and Robert Kaplan of the Balanced Scorecard Consortium from the Harvard Business Review shows that nine out of 10 companies fail to execute their strategy. The reasons for this significant disconnect between execution and strategy are likely going to prove to be very complex, but Norton and Kaplan’s preliminary findings offers a glimpseinto some explanations that show the employees in many organizations do not understand their organization’sstrategy,
It’s not that alignment of goals from the organization through departments, teams and then to individuals is a bad thing. In fact, it’s quite the opposite. But it turns out that the key to making alignment work for your organization does not end with creating a cascade goal structure. That is simply the beginning. What is required next is a relentless commitment to effective communication from senior leaders directly to employees. The chart below reproduces “The Trouble with Cascades” from the Galunic/Hermreck article with suggested solutions to each of the three “troubles.” Trouble Proposed SolutionOnly top leaders can give strategic communications the Set regularly scheduled meetings for the entire staff whereappropriate weight. senior leaders address strategy, progress towards strategic goals, and organizational plans to achieve them.Strategy involves trade-offs, which are more easily accepted Set strategic objectives with broad input from multiplewhen put into a broad perspective, without parochial filters. members of leadership team and employees. But ensure that decisions are explained in the context of high level goals and long term objectives.As in the game of “telephone,” messages passed from Use multiple channels for direct communication from seniorperson to person seldom arrive intact. leaders to employees. Social media inspired tools offer great promise for much more direct connections, questions and answers and engagement.
Performance management is the process by which we gauge, encourage and facilitate the success of employees and the organization towards the achievement of predetermined set of goals.We’ve already covered the first two elements as stand alone sections of this brief e-book. Performance management is the day-to-day, tactical step where so manyorganizations fail to fully execute well developed strategies.If we think of performance management as a process designed to help us hitpredetermined goals, many of the more theoretical and confusing aspects of theentire process simply melt away. We are left with a process that helps us focus onresults and gives us practical guidance in improving the performance of ourorganization and our employees’ performance.
The key for our conversation here is to learn a little more about how to effectively manage to the goals weselected. That means we have to make the performance measurement of our employees tied directly to theachievement of goals. That also means we have to do a better job with our performance reviews. Here are thetouchstones of effective goal management (performance reviews) once we’ve made wise selections and testedthe goals using SMART.None of these steps are simple, easy or can be accomplished overnight. But each of these steps can beachieved by those organizations that are committed to success and willing to embrace change.
Setting clear goals actually has two equally important components. The first is to make sure the goals you areworking towards meet the SMART criteria. If the goal is specific and measureable, there is a very stronglikelihood that it is reasonably clear. But the other part of clarity is the need for high level, persistent andconsistent communication. We mentioned the great research being conducted and reported from the HarvardBusiness School about how employees come to understand strategy, and we know that simply having well-aligned goals is not enough.Think of it this way. If your senior leaders rely upon layers of management to effectively communicateorganizational goals to employees, it is inevitable that something will be lost in the next level of communication.It’s like the old party game where you start with a short story at one end of the room. By the time the story getsto the other end, it’s completely different. Senior leaders are far more invested in the organizational level goalsthan anyone else. So they are going to be the best at communicating with enthusiasm, urgency andaccuracy to employees about these goals. Take advantage of regular staff meetings, make shortvideos, use newsletters or any other form of communication that will reach your employees. But no matter howyou do it, make the communication come directly from senior leaders. We strongly advocate for personalcommunications as the best way to engage employees so employees can ask questions and express concerns.
One of the most commonly cited issues with employee performance appraisals is they are not frequent enough.The old-fashioned annual performance review does not work in today’s marketplace. The pace of change issimply too fast and we need to adopt our performance management thinking to this new market reality. One ofthe reasons organizations that manage to goals on at least a quarterly basis are so much more successful isthey are meeting this new market reality head on. They aren’t waiting a year to review progress towards goals.We need to look at how we are doing every day, each week, each month and compare our progress to thebenchmarks we’ve established that help show us if we are on track or off track. It’s this type of performancereview that creates the type of agility organizations need in this new, rapidly changing market to be competitive.If we know in February we are trending behind to hit our year-end sales goal, we have 10 months to makeadjustments to get back on track. That’s how successful organizations beat their competition today. They are notwaiting and reacting. They are getting ahead, and they are getting their employees ahead so they can anticipatethe need to make changes to impact results in the future.. Here at BizLibrary we are big believers in the value and power of “crowd wisdom.” Automated tools inspired by Web 2.0 and social media and social networking allow organizations to tap into the knowledge and information widely dispersed among the entire workforce about everyone’s performance and contributions. For instance, if an organization uses such a tool, supervisor and employee both could make social media styled journal entries about events as they unfold and projects, successes and changes during the course of the year. This sort of “real-time” data and information substantially reduces the need to rely on memory at the end of the year (a common problem with annual reviews). Further, these types of tools can also facilitate other employees offering praise, support and positive feedback about an employee’s contributions as they occur.
The logical extension of more frequent reviews of performanceis that we are evaluating progress towards goals using reliabledata. We know employees get frustrated, and justifiably so,when they believe the performance is reviewed subjectively orunfairly. Further, as an organization we want to make sure weare making decisions based upon good information. This isanother place where SMART goals help us make sure we’veset our goals well. If the goal is measureable, this is generally agood indicator that we have or will have data to use to look atprogress during the course of the year..Don’t make the mistake of thinking objective means 100%, completely filled in with data, no gaps. It doesn’t. Asmanagers, we are expected to make decisions with the best information at our disposal, and many times thismeans we are working with incomplete information. This is when we are expected to apply our professionaljudgment. These types of decisions are still “objective.”In the world of performance appraisals, our employees likewise expect objectivity. Sometimes this means wecan’t always measure – exactly – how an employee’s skills and talents contribute to the organization’s bottomline. In this knowledge-based economy the contributions of knowledge-based employees are not always easy to“measure” in the traditional sense. That’s okay. Objective means “fair.” Try and use as much data as possible,and make sure your managers understand that the exercise of their professional judgment is expected whendata isn’t available..
Every employee’s job description has numerous “key competencies” or “critical job roles” listed. Which onesreally support the achievement of the goals that have been identified for the employee? Is it all 22 or are therethree to five that really matter? The answer is much more likely there are three to five that really matter. So useonly those competencies and job roles for the purposes of evaluating performance and employee development.By tying the employee’s performance to these key areas, you’ve taken important steps to. Core Competencies Cultural or organizational Job-Family Competencies Sales, operations, administrative functions, customer service Job-Specific Competencies Perform a particular job at a successful level
Effectively managing to goals is a proven strategy to improve your organization’s overall performance. But it takes more thansimply setting goals. What is emerging in the research about organizational success in today’s market are some fairly clearindicators of what it takes to effectively manage goals. The three steps are not mysterious, nor are they theoretical. The threepractical, actionable steps any organization can take to effectively manage to goals are: - All of the great results you can expect from managing to goal, however, fall flat if the goals are not selected wisely at the beginning. So, selection of goals is a foundational and critical first step. Once goals are wisely selected, you need to ensure that you can, in fact, manage toward them and you can use the SMART goals test to ensure your chosen goals will be effective. – Most organizations fail to execute on strategic initiatives. It’s not because most organizations are failures, or that they don’t want to succeed. The failures are almost always attributed to a failure to effectively communicate a strategic vision to all of the employees. Communicating the strategic goals to employees so they understand them helps provide the necessary framework for their own goals, gives them context and creates a decision-making point of reference. Effective communication then sets the stage for the final step. - Your organization has to make management of performance tied to goals for the entire organization a routine part of the day-to-day work culture. Those organizations that are looking at goals, measuring progress at least quarterly and adjusting their performance to stay on target are more profitable, more sustainable and have more engaged employees. Performance management can no longer be left to a one-time-a-year meeting. When our employees understand what we expect, can see on an ongoing basis how they are doing and can quickly find information and data about their performance they can make informed choices and decisions to either stay or get back on track to hit their goals. It is that type of agility in this rapidly changing market that will ultimately separate sustainable long-term success from flashes of short term success and then failure.
According to Bersin by Deloitte, Predictions for 2013Effective goal management requires organizations to incorporate goals into the day-to-day work flow and cultureof the entire organization. BizLibrary’s cloud-based Performance Solution provides a systematic way ofevaluating performance based upon goals supported by data and alignedacross the organization.As managers and employees work together on goals, employees can get thedevelopment they need when gaps arise or managers can add resources toensure teams hit targets. This sort of real-time access to data and informationcreates agility and forms the basis of goal management and achievement inthis fast-paced market.www.bizlibrary.com/performance