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HR POLICIES & PRACTICES
Jan 15, 2013

Performance reviews: Do we need ‘SMART’ goals and objectives?

Dealing with the rigidity inherent in the goal-setting process
    

By Brian Kreissl

It’s time once again in many organizations for managers to complete performance reviews with their direct reports, followed shortly by the goal-setting process for the coming year.

As a manager, I’m required to review how my direct reports did in relation to the goals they set out to achieve in 2012. I will also shortly be working with them to draft and finalize goals for 2013 — preferably ones that relate to my own goals and those of my team, as well as broader organizational goals and objectives. As an individual, I also have to provide my self-assessment based largely on how I did vis-à-vis my goals and objectives and then draft new goals for 2013.

This is an application of the Management by Objectives (MBO) methodology, which most organizations use in one form or another for performance management purposes — especially when it comes to cascading organizational goals and setting individual goals and objectives for the coming year. The idea is individual goals should relate to broader organizational goals and objectives and strategic priorities.

Advantages of setting performance goals

The main advantage of using an MBO approach is it facilitates congruency of individual goals with departmental and organizational goals and objectives. And, since individuals have a hand in drafting their own goals, the theory is such goals are more likely to be achieved.

It’s also important to ensure goals aren’t completely nebulous and subjective, and don’t consist of platitudes such as: “I will provide excellent customer service.” How is a manager supposed to assess something like that?

Therefore, part of the process is to create what are generally referred to as “SMART” goals. While there are several slightly different versions of the model defining what the SMART acronym actually stands for, according to one popular version, a SMART goal is one that is “specific, measurable, attainable, relevant and time-bound.”

When using this approach, specific objective measures are tied to goals. In such a case, managers and employees alike can then easily determine objectively whether or not they’ve met or exceeded their goals.

Problems with ‘SMART’ goals

The SMART goal methodology is prevalent in most organizations today. However, I recently came across this blog post questioning the prevailing wisdom around the need to create so-called SMART goals.

The author of the post, Duncan Brown, argues “the evidence is mounting that the downsides of over-prescriptive goal-setting outweigh the potential benefits.”

Citing several studies, Brown believes insisting on SMART goals isn’t practical in an environment where business is constantly changing, with less direct management supervision and an increasing use of various performance metrics. He also argues excessive focus on goals can lead to unethical behaviours and people becoming too narrowly focused on their goals and objectives.

While Brown’s comments got me thinking about some of my own observations relating to the limitations of the goal-setting process and the MBO approach to performance management in general, I still believe there’s value in setting SMART goals and objectives. I have outlined below how I believe some of those limitations can be overcome.

Making the most of ‘SMART’ performance goals

• In addition to the accomplishment of goals and objectives, performance appraisals should be based partially on corporate values and/or the demonstration of core competencies. In other words, employees should be assessed not only on the goals they achieve, but also how they achieve them.

• Performance management systems should be structured so goals and objectives can be changed partway through the year if circumstances change.

• Employees should be allowed to swap one goal for another where business priorities shift during the year or new opportunities arise.

• Depending on the role, employees should be assessed on one or more ongoing accountabilities in place of goals or objectives (for example, “business as usual” responsibilities).

• Employees should have ongoing performance discussions and mid-year check-ins with their managers to ensure they remain on track to complete their goals.

• Managers should ensure employees at the same level (especially those in the same or similar roles) are drafting similar numbers of goals that have similar degrees of challenge and complexity built into them. Alternatively, someone with relatively modest goals could be judged to a different standard than someone with more numerous and/or challenging goals.

• Employees should be cautioned against biting off more than they can chew when it comes to goal setting, or be required to add additional goals when they’ve set the bar too low.

Brian Kreissl is the managing editor of Consult Carswell. He can be reached at brian.kreissl@thomsonreuters.com. For more information, visit www.consultcarswell.com.  

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