HR leaders are often tasked with creating, or revising/overhauling their organizations' performance management metrics strategy, and making recommendations to senior leadership about what they feel needs to be done. That can be a daunting task. Today’s HR professionals, fortunately, have access to the data and technology they need to help them not simply “come up with metrics,” but to design a performance management strategy aligned with corporate goals and strategic objectives. That’s the way to earn that coveted seat at the table and the respect of senior leaders and board members.
So how do you get there? Here we take a look at some best practices for building a performance management metrics strategy that will resonate with senior leaders.
This is where it all begins—or where it should. What your organization is trying to achieve should serve as the starting point for your consideration of the metrics to be used in performance management. Where can you find this information? In your annual report or strategic plan if your company has one. If not, through conversations with your CEO, CFO, and other members of the leadership team.
What is the organization’s mission, vision, and values? What’s important to the organization? How does it make money (this is important for not-for-profit as well as for-profit organizations)? Unless you understand the answers to these critical questions it will be literally impossible to develop a performance management system that matters.
Organizations long ago learned that they could quickly focus on tactical metrics to measure performance—things like absenteeism, showing up on time, etc. Some even progressed into more business-related metrics like sales, customer satisfaction scores, etc.
There’s nothing inherently wrong with these types of measures. However, they don’t really give a full picture perspective of performance. Worse, they don’t provide any insights into to what extent the organization is building capabilities for innovation and future success. These are adaptative performance measures which high-performing companies have learned to build into their performance management metrics strategies.
Are you looking for people who just show up consistently? Or, are you looking for people who can adapt to a dynamic environment? Only you can answer those—or other—questions to help you determine what it is that your organization truly values in employees. Based on the answers, you would then come up with metrics to help you measure how well your employees are delivered on that value.
What constitutes a great employee in your organization? What are the core competencies and capabilities they possess that leads them to perform well? Do you know?
Many organizations manage performance at an overall level. This is the most simple way to manage performance and, again, there is nothing inherently wrong with taking this approach. However, the more you can drill down into the sub-elements of performance that really drive success, the more you can customize metrics across divisions, departments, roles, etc.
Another approach that organizations take to performance management is evaluating performance based on goal attainment. Those goals might be organization-wide (e.g., quarterly sales goals), division or department-specific (e.g., error rates, quality outcomes), or individual (e.g., achieving specific outcomes or deliverables).
Your company and its strategic priorities, as well as your internal capabilities to gather and analyze various metrics, will determine the appropriate approach for you. There is no handy “one-size-fits-all” solution. And, in fact, despite widespread coverage of trendy performance management approach—like OKRs or “objectives and key results”—there is no one “right” approach, there is only your approach.
It can be helpful, though, to consider how other organizations have approached performance management, and the approaches they use to identify and use meaningful metrics while monitoring performance over time.
Wells Fargo is an example of an organization that once focused on tactical execution. An overly aggressive and singular focus on earnings led employees to take any means necessary to meet their numbers—including opening accounts without customer authorizations. That was in 2016, when the company agreed to pay $185 to settle a lawsuit with federal regulators and the county of Los Angeles. Over time, Wells Fargo has changed its approach to performance management. They provide a good example, unfortunately, of what can go wrong when companies focus only on tactical metrics.
Netflix is an organization with a strong commitment to culture. So strong, that back in 2009 then Talent Officer Patty McCord and CEO Reed Hasting, published a Netflix Culture Deck to provide clarity to the organization—all members of the organization—around what Netflix valued. They then took what some believe to be a radical approach to performance management—they were one of the first companies to boldly do away with the traditional annual performance review. Instead they shifted to a performance management process that focused on what they felt was most important—their cultural norms—and created a 360-degree, transparent (reviews are made public), and ongoing form of evaluation.
Deloitte approaches performance management somewhat differently. Like Netflix, they also eliminated annual reviews, and they eliminated cascading objectives. They shifted to a new approach that, according to an article in Harvard Business Review, has hallmarks that include “speed, agility, one-size-fits-one, and constant learning.” It’s an approach made possible by the availability of reliable performance data.
Keep in mind, though, that the approaches that have worked for these organizations may not work for yours—in fact, what worked for them probably won’t work for yours. Why? Because you’re different. You have a unique culture, unique market, unique product or service, unique vision/mission, and unique strategic objectives.
In determining the right approach for you, there are some important things you need to consider.
So once you’ve considered all of these factors and come up with a performance management metrics strategy, your job is done, right? Wrong! Performance management isn’t a static organizational function. It’s iterative and ongoing. As you monitor metrics and have discussions around them, and as your internal and external environment changes based on anything from new emerging competition to global pandemics, your metrics will need to change. What’s important today may not be important tomorrow.
Having a process though for clearly and carefully considering the tie between performance metrics and organization performance, the options available to you, what your organization needs, and your organization’s capacity to capture the right information will help you develop a flexible approach for today and tomorrow—an approach that your organizational leaders will clearly see the value of.
SMART is great, but it has become cliched. Many people assume they know what it means without ever thinking very carefully about it. That said, the science behind SMART is as relevant as ever.
The majority of the great discoveries on goal setting came from Professors Edwin Locke and Gary Latham. After two lifetimes of research these men partnered on a seminal book released in 1990 that summarized the science of effective goal setting. It is called “A Theory of Goal Setting and Task Performance.”
The book is full of insights and well researched ideas, but it doesn't have any catchy acronyms. Here is what the professors say about setting effective goals regardless of the methodology or acronym you choose.
Great goals don’t leave any room for interpretation. There should be no ambiguity in what accomplishing the goal will look like. This is because corporate goals are a form of communication, they are about two or more people agreeing on a shared destination. If the goal isn’t clear it may not be aligning everyone in the same direction.
Additionally, unclear goals can have a negative impact on persistence. People will reinterpret an ambiguous goal to make their life easier just when things start to get hard. The S, M, and T in SMART all relate to having unambiguous goals.
A person should see their goals as difficult but achievable. This leads to the greatest efforts. When we believe we can achieve a goal but know it will be hard, we feel energized and excited about the prospect of succeeding at something meaningful. Conversely if we don’t see the goal as difficult we won’t be inspired by it, and if we believe a goal is too difficult we can become overwhelmed by it and give up before starting.
Note that all of this is about perception. Great leaders often convince the people around them to believe in audacious goals they might never have tried on their own.
Part of the power of goals is that they focus our attention and increase our persistence. We are more likely to follow through when things get difficult if we’re trying to accomplish a goal. However, this is only true if we’re committed to that goal.
Organizations drive goal commitment in many ways, but the best option is to inspire employees to believe in the importance of their goals. When NASA was shooting for the moon, no one had to post the junior engineer’s goals on the bulletin board to keep him committed to the mission.
How much a goal impacts our performance is partly related to whether or not we already have the skills to achieve the goal. Goals are great at driving persistence, but they are not as good at driving creativity and learning. The impact on performance of a goal will be moderated by how capable we already are at achieving it.
The more we know about how to achieve a goal, the greater the impact goal-setting will have on our performance.
Goals can be too effective. They can become so motivating that they drive your employees to cheat.
That is why it is important for goals to come with control systems. It is not enough to achieve our goals, we must achieve them in the right ways. Effective control systems include a strong culture, well-articulated expectations, or oversight.
Whatever framework you choose, be sure that your goals include the scientific fundamentals of effective goal setting. Locke and Latham have much more to say about goals in their book, it's worth a read.
Management by objectives is a system for improving employee performance where management and employees jointly create objectives.
According to the theory, having employees offer input on goals and action plans is a way to encourage higher performance and commitment. The idea was first outlined by Peter Drucker in his 1954 book, The Practice of Management. Drucker pointed out that employees often lose sight of their objectives because of an “activity trap”. When we get too involved in our current activities, we forget the original purpose. With MBO we jointly agree on common identified goals, which helps to eliminate the activity trap and keep us focused and aligned to our goals.
MBO is a results-driven strategic approach to goal setting. The process begins by defining specific objectives through shared discussion, then collaboratively deciding on how to achieve them in sequence. This would allow managers to pace work accordingly and create a more productive environment. As a result, employees see their own accomplishments as they complete each objective reinforcing a sense of achievement. Ideally, employees will fulfill their responsibilities because they have personally been involved with the goal-setting process as well as brainstorming with management on how to reach them. Meeting objectives is later graded with group input and often incentivized.
MBO’s success can be attributed to several important features. The first one is the equal participation of both managers and subordinates. This model cannot function properly unless both parties are aware of their roles and participation. Secondly, MBO emphasizes a joint goal-setting and joint decision-making feature. Superiors bring their knowledge and experience to the table, while subordinates help determine the speed and capacity in which goals can be reached. Lastly, the MBO model ranks high on support levels. Because of its dynamic, managers and employees are forced into effective communication resulting in stronger relationships and positive work environments.
There are several steps to the MBO process:
Management by Objectives has a variety of benefits. The most obvious one is the amount of employee participation and engagement. Increased participation creates a positive work environment as employees feel the direct impact of their mutual work effort. This leads to more motivated employees and a higher level of job satisfaction. Another benefit of MBO is it develops stronger communication skills. The model requires a substantial amount of input and feedback which helps everyone to improve their exchange of ideas. Better communication equals better relationships and clearer direction. Lastly, and probably the best pro to consider, MBO is easily applicable to any organization at all. It is not difficult to implement, no matter the type of industry or size. It can truly suit the needs of most organizations without incurring major costs.
Criticisms however do exist. The most criticized issue of Management by Objectives is its short-sightedness. Some believe MBO has the tendency to consume an entire organization’s resources solely towards achieving goals, overlooking other important needs. This produces the mentality of achieving goals “at all costs” where employees are tempted to focus only on the finish line without considering the quality of their work. If the employee is a manager, this stifles leadership as well. Efforts become polarized as employees begin to focus only on their own set of objectives instead of the bigger picture. Another criticism is the joint approach doesn’t work well when challenges concerning incompatible needs arise. Some would say it is too time consuming and difficult to sustain over time. The most interesting criticism might be that MBO misses the human point. Because it is organization-centric, questions regarding the managers’ personal objectives, needs, and relevance are many times left unanswered.
Management by Objectives is now a popular and widely used management theory. I believe its appeal to conduct business in a positive, productive work environment would catch anyone’s attention. Decisions don’t feel top-down and each member of the organization contributes equally. The synergetic approach does not lack in benefits and implementing this system is straightforward and clear. Ultimately, keep in mind that MBO leaves behind a demand to meet both organizational and individual purposes, which can easily become problematic without proper leadership.
The ideas behind SMART are timeless, however if you simplify complex ideas into simple acronyms a lot is lost. That is why we think it is time to go back to the source, and explore exactly what makes SMART goals smart.
We looked at what goal science has to say about the S-M-A-R and T. SMART is still very important, but it might not be for the reasons you've been told.
The reasoning behind setting “specific” goals is that we perform better when we know what to do. Think about your to do list. Which are the items that get done quickly and which are the ones that seem to stay on your list forever? If you are like me, something like “Buy a dozen eggs” will get done quickly while “Buy a chicken” might stay on my list for weeks. I have lots of experience buying eggs and can get right on it without much thought. I have never bought a chicken and having lived in the city most of my life I’m clueless about where to start.
There have been several studies that prove this. One study, out of Stanford, created two versions of a reward card for a frozen yogurt shop. The first version offered 1 free yogurt after purchasing any six flavors of yogurt in any order. The second version required ordering banana, apple, strawberry, orange, mango, and then grape in that order to receive the free cup.
The customers given the more specific version of the rewards card were 75% more likely to return to the store 6 times, complete the card and get their free cup of yogurt.
Professors Edwin Locke and Gary Latham have also written about this phenomenon. They found that as we move further outside our own area of expertise we have to engage in more and more problem solving to understand how to approach a goal. This can have negative consequences on our ability to stay motivated and complete our goals quickly.
It is a logical idea. If buying eggs is my goal I can move right to completing it. However if I am tasked with buying a chicken I will first have to engage in some problem solving, starting with my very minimal knowledge of chickens and expanding on that knowledge until I know enough to complete the task. This second process involves a lot discovery and does not always happen in a predictable way. The less I know about chickens at the start the longer and more unpredictable the process of buying a chicken will be.
You might have already noticed that buying an egg and buying a chicken are equally specific sentences. Which I did to make the point that just because you give someone a goal that sounds specific does not mean you are living up to the reasoning behind SMART goals. Specific goals should have a clear path to success for the person receiving the goal. If you’ve ever worked with a young intern, you know that specific goals mean different things to different people. For the lowly intern even getting a cup of coffee requires tremendous problem solving.
Lets return to the frozen yogurt example for a moment. There is something I didn’t tell you. The researchers also measured how many people wanted to take part in the rewards program. They presented one of the two versions and asked if the customer would like the rewards card.
Customers presented with the more flexible version (any yogurt in any order) signed up two and a half times more often than customers presented the very specific version!
We are great at completing specific goals, but we want flexible goals. This leaves us with a conflict. On the one hand employees are more likely to want to take on flexible goals that give them autonomy and let them do a little learning and problem solving. On the other hand employees will be most successful with a specific set of goals that requires no thinking, just rote action.
As a manager then we must balance these two forces. Generally goals that push employees slightly beyond their existing skill set, so that their skill set can still be applied to solving the new problem will be both quickly achieved and stimulating for the employee.
Another approach is to ask yourself, am I trying to get buy-in on a new goal or am I trying to get a difficult goal completed? If you want your team to embrace an easy but unpopular goal, consider making it a little less specific and a little more flexible so the team can embrace it and make it their own. If you already have lots of support but the goal is very difficult, consider being very specific so the team can apply their energy to exactly what needs to be done.
All that boiled was down to an "S." Before reading this you might have been forgiven for wondering why your intern still hasn't bought you a chicken.
In summary, the S in S.M.A.R.T. stands for -
A measurable goal includes a metric or metrics that can be tracked so those involved know when the goal has been achieved. Many of us are guilty of setting goals that can’t be measured. For example maybe you have wanted to “be healthier.” Without metrics to quantify that goal it will be very difficult to know how much progress you are making or when you finally achieve "healthier." The unmeasurable goal is also an unclear goal, healthier could mean weighing less, but it could also mean running more.
When we make goals more measurable we also make them more motivating. From the last example, we might decide to throw out our goal to be healthier and replace it with a goal to complete a 5k race in under 30 minutes. This new measurable goal allows us to calculate exactly how much time we need to improve, and there is no ambiguity around if or when we achieve it. In fact there will be a triumphant moment when we cross a literal finish line.
The value of measurable goals is well understood, and Measurable is probably the most popular of the five characteristics of a SMART goal. So rather than convince you to make your goals more measurable, let me make the case that maybe your goals are already too measurable.
George Doran coined the acronym S.M.A.R.T. back in November of 1981, and in his original definition Doran is far less insistent on measurability than many of us are today. Doran said, “Notice these criteria don’t say that all objectives must be quantified...managers can lose the benefit of more abstract objectives in order to gain quantification.”
"Blasphemy!" I hear you say. But Doran is not the only one.
Drs. Edwin Locke and Gary Latham are the grandfathers of the study of modern goal-setting. These two scientists do not even include measurability in their 5 Goal Setting Principles. Instead measurability is discussed only as a way to give your goals more Clarity. For Locke and Latham measurability was important only as much as it made goals more clear, because clear goals are more motivating than ambiguous goals.
Now you might be thinking that Doran, Locke and Latham are luddites from another time. A time before big data, sensors, and tracking everything. Modern companies like Intel, Google, Uber and Twitter only care about things that are totally measurable.
Well lucky for us we know how Intel, Google, Uber and Twitter set goals. They all use a popular framework called OKRs. OKR stands for Objective and Key Results. The objective is a qualitative goal (ie not easily measurable) and the key results are several metrics that will be used to determine if the qualitative goal was achieved. Notice how the squishy unmeasurable goal come first in their framework.
The thing that Doran, Locke, Latham, Intel, Google, Uber and Twitter all have in common is that they don’t choose goals based on measurability. They set the goals that are most important for their companies first then they figure out the best way to measure them.
It is important to separate the goal and how we measure it because when we focus just on hitting certain metrics it can create perverse incentives. For example, maybe as a way to run that 5k race in under 30 minutes we drink a ton of caffeine and take a dangerous supplement. Sure we beat hit our metric, but we definitely did not achieve the original spirit of the goal which was to be healthier.
So by all means keep making your SMART goals measurable, just don’t compromise on what matters just so you have an easier time measuring. The OKR framework is helpful here. Set your goals first and let them be unencumbered by how easy or hard they are to measure. Then figure out how to make them measurable.
Oh “Achievable.” How did you get such a prominent position in the most well known framework for creating effective goals?
George Doran’s original SMART had “Assignable” as the A... but he did use “Realistic” for the R. Today the most common SMART acronym uses “Achievable.” But still, whether it is “Realistic” or “Achievable” how is this one of the 5 most important characteristics of an effective goal?
Can you imagine the conversation a rocket scientist who recently read Doran might have had with President Kennedy in the Fall of 1962?
Rocket Scientist: Mr. President I don’t feel like putting a man on the moon in this decade is realistic. What about a more achievable goal like sending a little robot up there?
President Kennedy: We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills.
The president knows what he’s talking about, and he’s backed up by the scientific research. In fact almost all goal research says that goals should be difficult or challenging in order to improve employee performance. “We choose to go to the Moon and do the other things...because they are hard.”
Unfortunately, SMART doesn't say anything about making our goals difficult. “Brush your teeth on the first Tuesday of every month,” is technically a SMART goal. However, since most of us are setting goals with the purpose of improving performance it seems like a strange omission.
For that reason I think it is important that we bring some nuance to the A in SMART so our goals will be better aligned with the scientific research.
For that lets turn to the work of the famous goal researchers Locke and Latham. They considered the idea of achievable goals, but only in the context of setting challenging goals.
One of the duo's most fundamental findings over their entire career was that, “the more difficult the goal, the greater the achievement.” This finding held true even when the goal was impossible.
But impossible is the opposite of achievable, what is going on here?
Locke and Latham explain it like this, difficult goals drive higher and higher performance as long as a person remains committed to those goals. For a person to be committed to a goal they must 1) believe the goal is worthwhile (we’ll cover this in the next post) and 2) believe the goal is achievable. Finally the word “achievable” in a scientific paper.
What Locke and Latham are saying is that when we set goals they should be the most difficult goal that our employees will believe is achievable, and therefore stay committed to. So yes, our goals should be achievable in the eyes of our employees, but our goals must first be challenging or they will not drive improvements in performance.
When Kennedy is giving his famous Moon Speech he is not interested in compromising on his audacious goal, he is trying to make the country believe in it, believe that it is achievable to go to the moon. Rather than making the goal easier, he is increasing the belief of his people.
Practically what this means is that when we look at the A in SMART it shouldn't make us want to set easier goals. Instead it should remind us to set the most difficult goals that we can then convince our employees are achievable. The A in SMART should really stand for “An almost impossible goal that your employees will believe is achievable.”
Subscribe to our blog to get our next post about the R in SMART - Relevant. We'll dive deeper into the idea of keeping employees committed to goals.
Remember Algebra homework? Or maybe your kid’s algebra homework?
When I think back to those days, there is one exasperated question that always comes to mind…
“But when am I ever going to use this stuff again?”
If you think for a moment about how you would answer that question from your teenage self or teenage child, you might just already understand the importance of the next component of SMART goals.
R is for Relevant, and it is the second “commitment modifier” we've talked about. Think of commitment modifiers this way…
You start a new project and you’re totally gung-ho, then things starts to get hard and the little voice inside your head says, “this is impossible” or “this is stupid.” That little voice is reducing your commitment to the goal because it isn’t achievable (impossible) or isn’t relevant (stupid).
The goal researchers Locke and Latham say "When goals are easy or vague, it is easy to get commitment, because it does not require much dedication to reach easy goals. When goals are specific and hard, the higher the commitment the better the performance."
So once we've crafted a difficult and specific goal the job is not over, we have to continuously maintain commitment to it if we want to keep performance high.
Back to the algebra homework, when the little voice inside our head was telling us that algebra is stupid. At this point a good leader, maybe a parent or a teacher, can help bring relevance to the goal by showing us why it matters. For example, “If you want to be an architect (or something else we feel is important) you’ll need to know algebra.” Or “You’re right, as a NFL player you might never use Algebra, but if you want to play in college you’re going to need to get good grades.”
One of the most important things to remember when creating goals for your team is that relevance is not intrinsic to the goal itself. People can find different relevance for the same goal.
Completing an algebra assignment could be relevant for one child because understanding and improving in math is important in its own right, while the same assignment for another student might only get completed because they seek the approval of their parents, and a third student may only do it because they’ve been threatened with expulsion if their grades don’t improve.
One of the most common mistakes managers and business leaders make when setting goals is thinking that a good goal is crafted on the page. They think, let me Google “writing good goals” and then take an hour to scribble down the team’s goals. What you can't write down is the relevance to each team member. The relevance the goal has for you is probably obvious -
“If we increase our Q4 numbers 10% I will look amazing to the boss and I will be in a good position for that promotion I want.”
But you have to remember that those things might not be relevant for everyone on your team. The algebra teacher might assign the night’s homework because “my students need more practice before they are ready for next week’s lesson.”
Meanwhile the students are doing the assignment for totally different reasons, or maybe they don’t have a good reason and aren’t doing the assignment because “it’s stupid.”
So while you might set the same goal for every person on the sales team, you may need to use several different techniques to create relevance.
Something I often hear is “because I said so," that should be relevance enough. That is true to a point, although over time your team’s commitment will start to slip if they don’t have more.
Our favorite goal researchers have a lot to say about this. From Motivation Through Conscious Goal Setting, “There are many ways to convince a person that a goal is important. In work situations, the supervisor or leader can use legitimate authority to get initial commitment. Continued commitment might require additional incentives such as supportiveness, recognition, and rewards.”
So get out there and spend a few moments with each member of your team, talk about the goals you set and help each of them find the relevance they need to succeed long term. Some will be motivated by the success of the company, others by personal power and riches, and a few may just want to avoid getting fired. Whatever it is everyone needs their own relevance or the positive impacts of your well crafted goals will quickly start to fade.
Time if the fourth dimension, it is a fundamental part of...of just everything. Everything you do happens over the course of time, so to set a goal and not talk about time is just crazy. Time is so fundamental to goals that you’d think we wouldn’t have to talk about it, but we do and we will.
A time-constraint is just a deadline. It could be one deadline, or it could be a recurring deadline. Maybe you don’t want to just complete 1 blog post, but you want to complete 1 every week.
Deadlines get their own letter in SMART, but in the science of goal setting deadlines are important for their impact on two other characteristics of effective goals, Clarity and Difficulty.
Setting clear goals helps us to focus our energy and motivation towards action. If a goal is unclear it can be very disorienting. Imagine you set a goal for yourself to complete a painting and sell it. On it’s surface that is a very clear goal, but if you don’t set a deadline all of a sudden the possibilities become endless. Should you practice for 1 month or 6 months before starting the painting you'll try to sell, how often should you practice, how good should the painting be before you try to sell it.
This is the type of ambiguity that tanks goals. As you start to work towards your goal, things will become difficult, your paintings won't be as good as you expected them to be and the ambiguity in your goal will become the room you need to start making excuses. "I'm still going to sell a painting, I just need more time to practice." "I'm still going to sell a painting, I just only have once-a-week to paint these days." The less ambiguity there is in a goal the less places there are for us to get lost in our pursuit.
If we imagine that our goal had been to sell a painting in 3 months, we can see how that would bring clarity and help us formulate a plan. We'd be able to start working backwards from that date and determining just exactly what we need to do to accomplish our goal. Eventually 3 months would come around and we would either succeed or fail, but either way we'd be futher ahead than if we hadn't set a deadline.
Everything you do is going to take place over time and so any goal you set needs a deadline to have clarity.
The other important aspect of deadlines is their impact on goal difficulty. Locke and Latham talk extensively about the power of difficult goals to increase output. It makes sense, if you think a goal is easy, you’re probably not going to work that hard to achieve it. If it seems really hard, but still achievable and worth doing, you’re going to give it everything you’ve got.
Time can act as a way to increase the difficulty of any goal. Think about it, almost all of us will cover 1 mile on our feet over the course of the next few days, but some people devote their entire lives to covering that same distance in under 4 minutes. It is something that all of us can do, but only becomes a motivating and difficult goal when we put a time constraint on it.
The easiest tasks benefit most from tight deadlines. This is because an easy goal can be made difficult with a deadline and therefore drive high performance. If you ask me to run a mile in the next week then I might not make any progress until the last few minutes of the last day of the week. If you tell me to accomplish the same goal in the next hour, I'm immediately kicked into gear and thinking about getting a change of clothes and some better shoes. If you tell me to cover a mile in the next 10 minutes I'm headed out the door now and I'll just endure the blisters and chaffing. The same goal with three different deadlines and therefore three levels of difficulty, drives three different amounts of effort.
The next time you set a goal don't forget time, it is inescapable.
Organizational alignment, also referred to as 'strategic alignment', is a company's ability to get everyone on the same page about what needs to get done and how.
But importantly, it's also about a company's ability to paint the bigger picture and get every individual within the business to see themselves in it. Or, as organizational strategists Jonathan Trevor and Barry Varcoe put it in their HBR deep dive, organizational alignment is how you bridge "the gap between ambition and performance."
And if you're not hitting efficiency benchmarks or reaching your potential as an organization, you could have an alignment problem. But don't worry, there are ways to fix it.
If getting your numbers back on track and fighting employee disengagement feels like an uphill battle, know that you're not alone.
Organizational alignment is an ongoing challenge for every business, regardless of shape or size. For example, investment tech startup Betterment changed their approach to organizational alignment and employee performance management three times on the road to reaching 100+ employees.
And since the beginning, massive household names like Starbucks have built their empires on organizational alignment systems in order to consistently hit growth targets and provide an awesome customer experience across some 25,000 stores in 62 countries.
With so many diverse individuals under one roof, true alignment is no small feat. But it's not impossible, either. Let's break it down to the core building blocks of a truly aligned organization.
Companies with strong alignment know their goals, actions and purpose. Here's what that means.
Goals: What are we driving the business towards?
Regardless of whether you're using annual revenue goals or departmental OKRs, an aligned organization puts the proven growth metrics first and foremost.
Depending on where you are and what you want for your business, your goals can and should vary. For more on the core elements that make a goal effective, check out our breakdown here.
Actions: How will employees achieve those goals?
Some 95% of a company’s employees are completely unaware of or confused about the business strategy. And only 7% know what's expected of them in order to help achieve company goals.
Once you're clear on the tangible results you want to see, you owe it to your employees to give them everything they need to make those results happen.
Clarify the specific day-to-day tasks, actions and behaviors at the individual and team level that, when compounded over time, add up to high-level success.
Purpose: Why is it important to achieve these goals, with this particular approach
Cautionary tales like that of Enron and Wells Fargo show us that breakdowns in organizational alignment often occur when employees are incentivized by the wrong things.
State your mission regularly and your values clearly so that every employee knows exactly what are your business goals and the behaviors that help you meet them.
We all dream of spearheading the kind of organizations that make business history. Organizations where every last individual is passionately pulling in the same direction. But the truth is, business is messy, chaotic and fraught with change — and there's no magic formula that can ever make it otherwise.
But luckily, there are many ways to make sure that the above three performance points are always being met at every level of the organization. Cascading goals is a classic approach used by many — but even companies who reject the classic hierarchy (like Asana and their AOR model), can create an approach that makes sense for their unique business culture.
What matters is that you're willing to learn and adjust as you grow.
Because as tempting as it is to blame employees for angry customers or unmet targets, the reality is it's every leader's responsibility to be the guiding force that lights a clear path forward for the business, and everyone in it. After all, how can we expect employees to support a strategy they don't know exists?
The idea of using goals as the lifeline between a company's grandest vision and an individual employee's daily actions has been around for decades.
So why is it that only 14% of employees know their company’s objectives?
It's not like organizations don't bother to set goals — 65% of organizations have an agreed-upon strategy. But creating a strategy is easy — executing it is a whole other ball game. Less than 10% of all organizations succeed in executing their strategies.
And executing strategies consistently?
We don't have exact numbers on that, but you can bet they're pretty minimal. The ability to deliver solid results over the long-term is undoubtedly what makes a company (and its leaders) great. But the secret to consistent performance at the company level, is all about the people who make the strategy happen at the ground level.
That's where cascading goals can help...IF you use them right.
Cascading goals are goals that are translated from one level of the organization to the next. The point of a cascading goal is to get everyone from top to bottom completely aligned with the big picture organizational goal, and to make 100% sure they know exactly what to do by breaking that strategy down into clear tasks and deliverables that can be easily communicated and tracked.
Goals can be seen in a "cascade" — with a clear set of objectives at the individual, departmental and company levels. This can make it much easier to communicate and document your strategy, while eliminating any confusion over who owns what, when a goal needs to be accomplished, or even how to achieve a goal at the task level.
According to Billy Elliott, Country Manager of the Top Employers Institute in Africa, “Unless organizations take specific steps to cascade goals throughout the organization and align these with employee goals, the best laid plans will come to nothing. To drive true purpose and effectiveness in the everyday lives of employees, the company strategy needs to be filtered down to each level of staff."
Cascading your goals is how you achieve that "filtering down" so that no one in the organization is ever confused about what to do or when to do it.
Like all things in life, business and HR, there are two sides of every story. The magic of cascading goals will be quickly lost, if you fail to use them intentionally.
While cascading goals are a great way to break down your company's vision into actionable chunks employees can bite into, they're also inherently hierarchical and can become prone to the kind of bureaucratic workflows and tunnel vision that have upended many an industry dinosaur.
Stuart Hearn, commercial director at HR software company Vaado Software (previously HR director at Sony Music Publishing) sums it up perfectly in an interview for HR Magazine:
"If performance management is taken seriously within the senior team and they lead by example, then this tends to cascade through the organization. In organizations where the process is HR-driven and senior management is not committed to performance management, it tends to be more of a box-ticking exercise."
With cascading goals, any attempt to "set it and forget it" will backfire. Let's take a closer look at how to use cascading goals for good (rather than superfluous HR "box-ticking").
If you're doing it right, your cascading goal process won't stop after the CEO sets those initial goals.
Here are a few ways to break free of the linear approach and make your cascading goal setting process equally as dynamic as your business (and the people in it).
1. Get real about your goals
Don't overload your performance management process with too many organizational goals — but don't force autonomous departments to adopt one blanket goal, either.
Think about the top 3 things you really want to achieve and be SMART (e.g., Specific, Measurable, Achievable, Realistic and Time-Based) about how you set out to achieve them at every level of your cascading goal process.
2. Check your alignment
Alignment is key. Rather than investing all your energy at the front-end (setting up a strategic top-level goal and then walking away), give each department and employee some autonomy in setting the goals that make the most sense for them.
Make sure everyone is completely clear on what tasks are assigned to each goal, then set firm deadlines, performance metrics, and dates and reminders for check-ins.
3. Always follow up
Creating a strategic goal may feel like a lot of work for your CEO, but it's nothing compared to the burden your employees will feel if they don't have the tools and support they need to achieve those goals.
Always align goal reviews with performance reviews and make it a point to ask your people if they're getting the resources they need (including training, mentorship, and clear and specific feedback) in order to keep moving toward their goals.
Goals are an elusive subject. Research on how to set them, track them, and of course achieve them has dominated both the personal and business spheres for decades, maybe even centuries.
According to some of the crème de la crème goal-setting researchers, a goal "is the desired outcome of a particular behavior or set of behaviors, and therefore goal setting involves specifying the level or standard of performance to be attained, usually within a predetermined time frame."
Let's think about that last part for a minute. Goals can be incredibly motivating, but only if the time period makes sense. If a goal cycle is too short, we don't get the rush of taking those giant performance leaps. Too long and we risking working on outdated, ho-hum goals that no one takes seriously.
But how do you really know when one goal should end and the next begin?
Spoiler alert: As much as we'd love to give you one, there is no magic formula for setting the perfect goal cycle.
In today's rapidly-changing business climate, even the time-honored quarterly goal has come under scrutiny. At the end of the day, establishing a relevant end date for your business goals is about asking yourself the hard questions, things like:
One way to simplify the process is to start by drawing a line between your long and short-term goals. Again, this will look different depending on what business you're in.
A startup may have vastly different long-term goals than a centuries-old business that functions in a slow-moving industry. For example, 10x growth within 5 years might be the kind of high-stakes long-term goal that makes sense for a sparkling new tech company. But without clear criteria for how that goal will break down in the day-to-day, you could be putting your business at risk for the sake of pleasing investors.
For a 3-5 year goal, you might need performance reviews every month, or even week to keep your teams on track. But what if you're a major contractor who's just won a big-ticket infrastructure project that will take a decade or more to complete? In that case a long-term goal might be a 20-year goal broken down into "short-term" annual or biannual goals based on project specs that are already fully fleshed out.
Here are a few examples that can help give a little more context to how you think about the right goal cycle for your organization.
Apple - 3 Annual Objectives
"I want to put a ding in the universe.” – Steve Jobs, Former CEO, Apple
Steve Jobs was known for setting massive goals. Every year, Apple hosted a strategy meeting where the famed CEO would gather dozens of yearly objectives from key staff, then narrow them down until they were left with just three. Τhose 3 goals then became the core goals for the next year.
Jobs also set expectations for how those goals were to be reached. Focus was big. He was known for demanding zero distraction. Every activity his teams undertook either supported the annual goals, or simply weren't a priority. Apple even assigned a DRI (Directly Responsible Individual) to every project to make sure their teams stayed on track to hitting their yearly goals.
Starbucks - Why over when
“These goals represent our aspiration to create impact on the issues that matter.” - John Kelly, SVP of Global Social Impact and Public Policy, Starbucks
For Starbucks, social responsibility is the north star. The coffee giant's 2020 vision for social responsibility has clear guidelines and expectations. Starbucks breaks down their 2-3 year responsibility vision to smaller, more actionable goals under following headings:
By stating that these are the goals for 2020 "and beyond", they're letting stakeholders know that this is an ongoing, long-term goal that they're committed to setting and resetting every couple of years.
Facebook - Non-goals take you farther
"Lots of times you have very good ideas. But they're not as good as the most important thing you could be doing. And you have to make the hard choices." - Sheryl Sandberg, COO, Facebook
At the end of the day, there isn't enough time to do it all.
Sheryl Sandberg has a great trick for choosing which goals really matter. Non-goals are secondary goals employees should focus on only after the main goal has been met. "You have your goals and non-goals. The non-goal is the next thing that you would do, because it's a really good idea," she says.
A rule like this might make more sense for a 20,658-person company like Facebook than a ruthlessly determined startup, but it's a form of prioritizing we could all learn from — both for the big picture long-term goals and the smaller day-to-day actions that get you there.
We've all heard the mantras: "A goal without a plan is just a wish," "Goals are dreams with deadlines," and the shamelessly cloying, "Reach for the sky!".
Those are great for social media memes and personal development book covers, but what should goal setting actually look like at work? You know, in practical terms.
We all know we should be setting big, juicy, inspiring goals for our companies and people, but because of the sheer size of this topic, we have no clue where to start. SMART goals, OKRs, Golden Circles, etc. — there are so many ways to break down a goal. But beyond the HR headlines and endless acronyms, what do these goal-setting frameworks have in common?
Let's get back to basics and take a deeper look at the core fundamentals that make a goal great.
Most of us think we know the purpose of goal setting, but unfortunately, life, business and bureaucracy have a way of consistently muddling the water. In fact, experts estimate that only 36% of organizations have a company-wide approach to goal setting.
Those of us who have attempted to set goals in the past — whether that be departmental revenue targets or those infamously doomed New Year's weight loss resolutions — would likely agree that setting the goal is the easy part. The brutal truth is that for a goal to make it beyond lip-service status, it must be adopted and upheld at every level of the business.
Here are the basic principles behind every great goal-setting framework.
Now that you know the fundamentals of why, let's dive deeper into the how and which.
You may already have a hunch that what works for Google may or may not be what's right for your company. Still, we now have more options for goal-setting than any other generation in business history, and deciding on something as powerful as THE north star for your entire company is a critical call to make.
After all, it may look great on paper, but what if it stops making sense as soon as the rubber meets the road? Luckily, there are some shared characteristics between the majority of proven goal frameworks.
The decision to choose OKRs, OGSMs or BSQs isn't what matters most. Any good goal/ goal-setting framework will have the same fundamental characteristics built in. The important part is not to cut any corners when it comes to executing these elements in the day-to-day.
When setting a good goal for your company and the individuals who make it run, make sure your goal ticks the above boxes.
But don't forget that, as with every other element of your business, goal setting is a living, breathing process. There may be times you have to step back and really think through what works for your unique culture and business.
Tomas Tunguz, co-author of Winning with Data: Transform Your Culture, Empower Your People, and Shape the Future says it best, “Ultimately, logic and clear thinking are probably the best tools for setting goals, and motivating an organization properly.”
At times, applying those tools may require you to adjust your expectations. Or, in the words of another goal-setting pro, Bill Gates once famously said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” (And Bill's a guy who really gets stuff done.)
If you want to go after those BHAGs (that's Big Hairy Audacious Goals, in case that one escaped your radar), more power to you! Just create a goal-setting rule that in your organization, goals are meant to be pursued, not reached. Then align that in your metrics and feedback guidelines to support that goal across the org chart.
Because at the end of the day, the most important aspect of goal setting isn't a flashy acronym or perfectly-crafted memo, it's that you and your people all have a clear target to act on.
Is there a difference between goals and expectations?
Surely, there is, but it can be hard to articulate.
According to a 2015 survey from Gallup, roughly half of employees say they know what is expected of them at work. That can wreak havoc on employee productivity.
In fact, in another survey from ComPsych, 31% of respondents named “unclear expectations” as their biggest stressor at work. Clearly, it's time to recognize that expectations matter. Here's why.
Goals give us a challenge to help bring out our best.
Expectations give us simple habits and a professional code of conduct. Good expectations should also help us reach those goals — in the right way.
Think of a goal like the finish line. Expectations are the the daily actions, attitudes, practices that help you get there.
But how much do expectations (which can be anything from your tardiness policy to unspoken collective judgments on an employee's level of dedication) impact your team's ability to meet a goal? And how far are you willing to go to uphold your expectations?
Expectations are critical because they lay the groundwork for your company's culture. And what works for the Netflix, Amazon or even "lovey-doveys" like Zappos and Asana, may not work for you.
Sometimes expectations are documented in black and white "rules" or "guidelines". Many times they're completely unspoken. Either way, they send a clear message about what's important to you as a company.
And while they may seem like simple things we can expect from any job, they’re actually much bigger than that.
They're the basic rules for the entire social system that keeps the office running.
In many cases, it's a system that works just fine. But what happens when your top performer violates the dress code? Do you let it slide or do you stick your values and address it?
Recently Wells Fargo has gotten in a lot of deserved hot water for the Fake Account Scandal. The rampant fraud that occurred across the organization shows what can go wrong when leadership sets very aggressive goals and then has very lax expectations of how employees reach those goals. Before long the implied expectations can become, meet your goals at all costs...even fraud.
Aggressive goals are important, but an organization also needs expectations if it is going to remain true to itself as it pushes to meet difficult targets.
CEO of education platform Varsity Tutors, Chuck Cohn suggests making your expectations crystal clear (and well-documented).
"Creating a cultural identity can seem like an amorphous task that is potentially boundless in scope. Step one to push through this challenge is creating a simple and easy-to-articulate vision for what you are trying to accomplish and what sorts of behaviors, attitudes, and approaches are (and are not) valued by your organization. Try to explicitly describe, both to yourself and your team members, the culture you wish to create. This should exist in written form so as to prevent the message from being distorted."
Many leaders’ identities are so intertwined with their business that they don’t see the need to articulate company values. But employees have a different live experience and won’t share a leader’s values perfectly. It's unfair to assume that they should just "get it".
Keep your expectations clear, simple and documented (or frequently communicated) so everyone knows what matters. Or at least, so they can see where you're coming from when you pull them aside for a one-to-one.
Finally, your expectations shouldn’t be yours alone.
Much like goals, expectations are a moving target. They need to be set and reset in tandem with your employees and managers. Regular check-ins and reviews can help you keep your finger on the pulse of the values and expectations that are effectively moving your teams toward their goals, and alert you to those that could use a little rethinking.
While expectations can definitely be personal and tricky, they cut to the core of what a business does and who its people are. The good news is, we can choose to be just as intentional about setting and resetting high-performance expectations as we are about setting goals.
Google is the most audacious company in the world. Their new projects are often so ahead-of-the-times that it can be hard to differentiate a google press release from a blurb for a sci-fi novel. Google is currently
Maybe you work for a company with goals as big as Google’s, but you probably don’t, and that’s ok. Most of us are working on goals like “Increase employee retention 12%.” Steady, incremental improvements designed to help us get a little bit better or even just keep the lights on another year.
There is nothing inherently wrong with incremental goals, but maybe we can also learn something from being a little more like Google, being a little more audacious.
Hunter Walk use to work at Google, but these days he invests in startups and writes a great business blog. Hunter recently shared a post about a meeting he once had with Larry Page the founder of Google.
“Larry, this quarter we’re going to aim to reduce buffering events from X to 90% of X through…,” our engineering lead started explaining before Larry looked up from the paper we’d given him.
“You should have zero buffering,” the Google cofounder suggested.
As we detailed why of course that would be impossible because of all the things we can’t control for and the desire to manage our own bandwidth costs, I saw a familiar look settle on Larry’s face. Half-impish (as in “oooh, you really want to go down this rabbit hole with me”) and half-incredulous (as in “Each day I awake with my mind wiped of the fact most people aren’t as smart as I am and then progressively discover during the course of my meetings that you’re all idiots”).
“You should come back with a plan for zero buffering.” End of meeting.
Hunter’s team went back to the drawing board, and something amazing happened. Before, the team had been “tracking occurrences of buffering in the player and browser, trying to categorize the causes (insufficient steady state user bandwidth, connectivity interruption, overworked client CPU, etc) and prioritizing which we could intelligently solve for.” Now with this audacious goal in front of them they were forced to think differently about the problem.
They started by just finding solutions, no matter how impractical they were, for example “A totally private, worldwide high-speed internet with locally cached video and free state-of-the-art PCs for every end user.” They also considered approaching the problem from a different angle, “what if it was more of a design challenge? Imagine a quick transition animation which played when you pressed the Play button that seemed to be a UX affordance but actually allowed us to start caching the video locally so we could tolerate connectivity interruptions in the post-play experience.”
Hunter’s team never achieved the zero buffering goal that Larry had set, but they did radically change their approach and achieve much more aggressive targets then they had originally thought possible, “the nature of the discussion was changed by a simple stretch goal exercise.”
Larry’s insistence on zero buffering is called “10x Thinking.” It is Google’s first of 8 principles for their innovative culture. “To put the idea simply: true innovation happens when you try to improve something by 10 times rather than by 10%.”
It is very easy to try. Take whatever it is you are setting a goal for and instead of multiplying it by 1.10 multiply it by 10. Look at that new audacious, Google-sized goal and ask yourself, “how would we do it?”
The beauty of 10x thinking is that there is no way you will be able to reach your 10x goal by just improving what you’re already doing. The exercise forces you to totally rethink your approach, maybe even rethink the problem.
Hunter Walk says “when I talk with any startup – Google scale or not – my easiest recommendation in brainstorming and goal-setting is to not get caught up in just local optimizations, not to stay exclusively in the land of reasonable, but devote some time to 10x Impact conversations.”
So even if you’re just trying to keep the lights on it might be worth thinking in terms of 10x rather than 10%.