GOAL SETTING

Performance management offers visibility into the vast network of inter-connected goals that is the CEO’s execution plan. When asked to rank a list of business drivers for performance management, on a scale where 1 was most important and 7 was least no single response was the overwhelming winner. However, the closely related “Making business strategy transparent and clear at all levels” and “Creating a shared vision of the business strategy” ranked a very close first and second, underlining the importance of the goal setting process as a key to effective performance management.

When done well, organizations say the goal setting process significantly improves alignment from the highest level objectives to each employee’s specific work activities. The process can help widely dispersed teams maintain clear focus on top priorities.

The goal setting process may be analogous to directing an orchestra. The CEO needs to get everyone in the entire enterprise playing from the same page while doing work that is different but complimentary to the work of others. By driving the goal setting process throughout the organization, employees can see how their efforts contribute to team goals which contribute to department goals that roll up to division goals and to drive high-level objectives.

Corporate Planning Processes

All effective performance management processes start with the high-level goals of the organization, and a variety of techniques and planning processes are used to develop those goals.

A Balanced Scorecard typically illustrates a map of the business strategy to describe a causal relationship among performance indicators across 4 or 5 performance themes such as learning and growth, process improvement, customer satisfaction and financial results. The arrows connecting desired performance outcomes on a strategy map show how objectives are inter-related. Often, strategy maps are shared or distributed via technology so that business units, teams and individuals can write support goals designed to achieve performance targets.

Hoshin Planning

The Hoshin Planning process identifies long-range key objectives and what the organization must do to achieve break-through business results. It also addresses ‘business fundamentals’ required to successfully run the business on a daily basis and how those will be continuously improved.

Cascading Goals

Once those corporate goals are in place and clear, they have to be communicated to everyone as the basis for their own goals. The most common way for this to happen is through the process known as “cascading” goals. Seventy-two percent of CUX research participants said they cascade business goals.

This cascade ensures that the high level strategy of the organization is translated into and reflected in the specific goals of each business unit, team, manager and individual employee.

Goals That Work

Managers implementing the goal setting process must be able to clearly communicate company strategy and priorities to everyone. As the organization’s main change agents, managers must ensure there is a line of sight between each employee’s goals and important corporate initiatives. They do that by helping employees craft goal statements and by defining measures to illustrate individual and team progress.

The goal setting process requires employees to commit to delivering specific, measurable results within a given time frame. Through that statement of intention and by associating measurements that will be used to monitor results, the process establishes a mechanism of accountability – a way to know who is signing up to deliver which parts of the desired outcome.

Automated performance management systems can enable managers to automatically assign goals to their team members or to share their goals so that their employees can write supporting or derivative goals statements.

Study participants said they require managers and employees to apply the “SMART” acronym in writing goal statements. SMART says the goals must be:

Specific – A good goal statement should answer 5 questions: who, what, where, when, why and how. It provides a clear description of the business outcome the employee intends to accomplish.

An example is: Our solution sales executives will sell our new BPO Service to 10% of our existing account base (10 new customers) in Latin America using the solution selling methodology. We will increase the company’s BPO Market share in Latin America by 1 percent within one year.

Measurable – A performance goal must be able to be measured. By stating exactly how it will be measured, the employee and the manager know what success will look like without any ambiguity. The goal statement also should include the specific metrics that will be analyzed on a periodic basis to track progress toward the goal.

An example of a measurable goal statement would be: Conduct 5 sales appointments each week, deliver two proposals per month, negotiate 3 contracts each quarter and close 10 new BPO deals within one year. Metrics being tracked in this goal statement include: Sales call, proposals, contracts and closed deals.

Attainable – Employees should be stretched by their performance goals but not defeated by them. A good goal statement gives an employee something to shoot for and motivates a higher level of performance than in the previous performance period. However, goals should never be beyond the reach of the person setting them. When employees see at the outset that a goal is impossible, it gives them little incentive to try. When both manager and employee start the review process by admitting they never expect the goal to be achieved, any outcome is acceptable -- defeating the purpose of the performance management process.

Relevant – Relevance ensures that the goal relates to the team’s or organization’s higher level objectives. It provides the litmus test to ensure goals are adequately aligned to the larger mission. (Some organizations say “R” stands for Realistic. Because the word “realistic” also forces employees to set goals they can achieve, the word can seem redundant with Attainable.)

Time-based – Each goal statement should provide a deadline – a specific date when the goal will be achieved.

The process of setting goals builds an elaborate set of threads through the entire organization to tie plans of action for divisions, groups, teams and individuals to the stated objectives of the business for a given time period.

As organizations continue to push decision-making down to lower tiers in their organizations to create fluid, adaptable structures able to adjust quickly to competitive challenges, they must provide the context and a good framework within which people can make the right decisions. The goal setting process within performance management can provide the context and the framework. It also highlights the tension on precious resources by giving work teams a way to choose the key initiatives on which to focus.

For more Performance Management-related information, visit performance.corpu.com.