Four keys to goals and performance

Alice came to a fork in the road. “Which road do I take?” she asked.
“Where do you want to go?” responded the Cheshire cat.
“I don’t know,” Alice answered.
“Then,” said the cat, “It doesn’t matter.”
— Lewis Carroll, Alice In Wonderland


When it comes to driving organizational performance, it’s good to heed the wisdom of the Cheshire cat.

While any road may do for an organization not particular about where it goes, for those trying to achieve specific business objectives, it’s essential to have everyone paddling in the same direction.

That’s why an effective goal-setting process is so critical. It helps prioritize and harmonize employee efforts to ensure everyone is focused on what matters most to achieving business success.

An effective goal-setting process has four key elements that together create a powerful performance engine:

•business context;

•alignment of business objectives;

•effective measures; and

•links to rewards.

A goal-setting process that embraces these elements enables an organization to fire on all cylinders and leverages its employee-base in a way that maximizes its competitive advantage.

Business context

A thorough understanding of the competitive environment — and what the organization needs to succeed — forms the nucleus of an effective business strategy. The key objective of the goal-setting process is to drive that understanding through the organization — into the hands of the people who can bring the business strategy to life.

The business strategy and overarching business goals provide the context for performance goals at the unit, functional area and individual level. It provides a framework for addressing such questions as:

•What are the implications of the business strategy for our company?

•What do we need to do to achieve it?

•What happens if we don’t?

•What opportunities can we capitalize on, both this year and beyond?

•What does this mean from a unit, functional-area and individual perspective?

The business context informs goal setting and paints a picture of what is expected and what can be achieved. It serves as a form of rallying call that can fuel motivation and generate momentum. The business context creates a sense of shared destiny that can help inspire employees to deliver their very best, because it presents a compelling vision of the future that they can help to create and sustain.

But to be of most value, business insights must be integrated into everything every employee does. This is achieved through regular communication about business priorities, market developments and progress against targets.

It also includes education to ensure employees understand the business, the customer value proposition and the measures used to assess organizational health.

There is an opportunity, at the very start of the goal setting process, for leaders to focus and inspire employees by defining how each person can contribute to the achievement of the organization’s objectives.

To really engage the hearts and minds of employees in delivering results, an organization must explain not only what is expected of employees, but also why what they do matters and how their contributions will be recognized and rewarded.

Alignment of business objectives

Once employees are given the big picture, broad strategic goals need to be translated into specific unit, function and individual goals. It is important for different areas of an organization to be clear about priorities, budgets and expected timelines.

If objectives and priorities are not appropriately integrated, then the ability of different groups to perform and deliver will be jeopardized.

By starting with the broadest organizational objectives and then drilling down through the functions that can affect their achievement, employees can be reminded that all goals are interdependent across organizational units and levels.

For example, an organizational objective to expand market penetration of a given product can be translated into specific goals for employees in sales, marketing, research and development, customer service, information technology and training.

Someone’s ability to describe how his goals align with the broader organizational strategy is a good litmus test for how well goals have been articulated and cascaded through the organization.

Effective measures

Setting goals that can’t be measured is akin to playing competitive sports without a scoreboard. It’s hard to motivate a team to win or to change the game plan when the players and coaches don’t know the score.

Measures are what make or break a goal-setting process. Yet effective measures remain an elusive element in many organizations. What does it really mean to “improve” performance? How much is enough? And how does an organization find the right balance when setting targets for potentially conflicting measures — such as targets for cutting costs and increasing customer retention rates?

The best measures can be both defined quantitatively and tracked. The ability to evaluate performance against established targets is essential, so an integral component of a good measure is whether it can be supported by the organization’s information technology.

One might be able to describe a potentially great measure, but if one can’t pull the data to measure progress and actual results, the measure will have limited utility. Measures need to be supported by information that is readily available, circulated, discussed and addressed.

Returning to the sports analogy, a scoreboard would have little utility if it couldn’t be seen until after the game was over. Just-in-time information reporting enables an organization to take corrective action in a timely manner, before the customer, business opportunity or game is lost.

Links to rewards

Well-defined links between the achievement of goals and specific reward programs is essential to a meaningful goal-setting process. Linking the achievement of goals to rewards focuses people’s attention. Stretch goals provide the roadmap to move organizational performance forward, but they need to be realistic and achievable. A rewards link serves to reinforce that the achievement of goals is important and that when they are achieved, both the organization and the individual will prosper.

It is also important to define how the achievement of a goal will be rewarded. Will it be reflected in a base pay increase? Does it impact the size of an incentive award? The rules of the game for earning rewards need to be clearly and consistently defined at the outset to get the most value from the goal-setting process.

Weak or misaligned links between pay and results, on the other hand, can undermine organizational and individual performance. For example, incentive plans that pay out even when results fall well below the target level can serve to lower the performance bar while undermining the credibility of the goal-setting process. On the flip side, unachievable targets will yield the same results — employees will realize that the likelihood of a positive outcome is minimal and may limit their efforts accordingly.

Claudine Kapel is a principal of Kapel and Associates Inc., an HR and communication consulting firm based in Toronto. She can be reached at (416) 422-1636. Catherine Shepherd is a principal of Shepherd Widdoes & Associates Ltd., an HR and labour relations consulting firm based in Calgary. She can be reached at (403) 238-8840.




Tips for goal setting

Any organization creating or revising its goal-setting process should consider the following guiding principles.

Keep it simple: Resist the temptation to translate every job activity into a goal. Goals aren’t meant to capture every nuance of a job description. They’re meant to highlight the few key results that correlate most strongly to the success of the unit, the functional area or the company. Employees can only focus on so many things at the same time, so make sure the goal-setting process keeps their attention on what matters most.

Keep the lines of communication open: Open and constant dialogue is a key success factor for both goal setting and goal attainment. Goal setting enables an organization’s vision and objectives to converge with those of individual employees. As a result, there needs to be plenty of communication about what the organization seeks to achieve, and how this translates into performance expectations.

By engaging people in the process, an organization can foster an environment where employees feel a sense of ownership for results and are motivated to deliver their very best.

Be flexible: Sometimes unexpected events require changes to organizational priorities. That may result in the need for some goals to be changed or adjusted, to ensure that new circumstances are addressed in a timely manner.

Be cautious, however, about lowering the bar simply because employees are not delivering against seemingly reasonable performance expectations. The reality is that in tough market conditions, some goals may not be fully achieved. It’s a question of striking the right balance between being firm and flexible.

Manage performance: While an effective goal-setting process sets you in the right direction, attention to performance management is required to stay on course. That means ensuring employees receive coaching and feedback and that their input and ideas are sought on how to improve the way work is done or the way customers are served.

Reward systems such as opportunities to earn base pay increases, incentive awards or stock options can help focus and motivate employees. But such programs are no substitute for leadership and performance management.

Recognize and celebrate achievements: Don’t overlook the motivational value of recognition. Whether it’s the subtle gesture of acknowledging a job well done, or a more elaborate celebration of a milestone attained, recognition helps nurture motivation while fuelling the will to succeed.

Evaluate results versus goals: It’s not enough to simply set goals. It is essential to review progress during the year to identify the need for corrective action in a timely manner. Equally important is a thorough and consistent performance appraisal process that examines how employees have actually delivered versus their objectives. A candid and thoughtful review process reinforces that the organization is indeed serious about achieving its overall goals, while supporting related objectives around continuous improvement and organizational learning.

In addition, a sound appraisal process is critical if the organization seeks to make meaningful links between pay and performance.

In today’s challenging business environment, organizations need to capitalize on every opportunity to enhance organizational performance. A thoughtfully developed and well-executed goal-setting process can help an organization achieve that edge.

To read the full story, login below.

Not a subscriber?

Start your subscription today!