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 company

are in place, such a goal might even be on the conservative side. It’s the total context in which the organization

sets the goal that is crucial. So if the goal is wise, it’s a goal that the organization could use to build cascading

goals 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 with

goals that might sound great (“Let’s increase revenue by 10% over last year!”), but actually hurt the

organization, because we end up encouraging risky decision making and counterproductive behaviors. Setting

goals 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 motivation

and engagement.

The problem arises when organizations assume that because a goal fits the SMART criteria, it’s a well-chosen goal. That’s not

always the case. We came across a great illustration of this point in our research related to President Kennedy’s 1961 promise to

put 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 the

moon by the end of the decade a wise goal? Perhaps. Perhaps not. But this is the difficulty of measuring every goal we set for our

organization by using SMART. We can easily skip the more fundamental question of whether or not the goal itself is a wise one. We

could end up shooting for the moon and miss opportunities to select goals aimed at building more foundational elements of a

sustainable organization.

Sometimes we can find wise goals by looking carefully inside our own

organizations and asking ourselves can we do something

better/cheaper/faster? These types of introspective goals related to

improved productivity almost always fit into the “wise” goal category.

The real test of wisdom in this area is to honestly evaluate your

organization’s internal capabilities to deliver on the goal and the

incremental improvements needed to achieve the stated goal.

The organization’s mission, vision values statement can sometimes provide inspiration for effective goal

selection. Some organizations state they want to be “The Number One Provider of Widgets to XYZ Market” as a

corporate mission. The organization might be number five in its market today, so this might serve as an excellent

goal for the coming year to improve to number four. Many organizations have missions that are similar in terms

of client or customer retention or service, product service or quality, etc.

company values

• 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 selected

our organizational, department, team and individual

goals, we’re ready to test these goals to ensure we

can measure and effectively manage their

successful completion. This is where SMART goals

come into play.

There are many articles written about SMART goals,

and a lot of the literature represents substantial and

important contributions to the whole area of

performance 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 if

the goal, “I want to lose weight” is what we are working towards, how do we know we’ve been successful? The

answer is, we don’t. On the other hand, if we set a fitness goal that says we want to lose 10 pounds in six

months, we can track our monthly and weekly progress towards that goal. Additionally, we can look at other

fitness 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 target

So we have set a wise fitness goal, used SMART to ensure it can be measured and we can work effectively

towards it. We are now good to go!

Department Goal: Improve performance in handling of customer complaints within 90 days.

Organizational Goal: Maintain an 85% Client retention rate for 2013.

Success Criteria: Transfer of knowledge and/or skill back to job. Measurement: Positive feedback on applicability of learning to job responsibilities with greater than 70% approval rating.

Cascading goals, like the example on the previous page, will work. But simply setting up cascading goals only

gets you started. There is some data beginning to emerge suggesting organizations that use cascading goals

are 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 glimpse

into some explanations that show the employees in many organizations do not understand their organization’s

strategy,

Trouble Proposed Solution

Only top leaders can give strategic communications the

appropriate weight.

Set regularly scheduled meetings for the entire staff where

senior leaders address strategy, progress towards strategic

goals, and organizational plans to achieve them.

Strategy involves trade-offs, which are more easily accepted

when put into a broad perspective, without parochial filters.

Set strategic objectives with broad input from multiple

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

person to person seldom arrive intact.

Use multiple channels for direct communication from senior

leaders to employees. Social media inspired tools offer great

promise for much more direct connections, questions and

answers and engagement.

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.”

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 many

organizations fail to fully execute well developed strategies.

If we think of performance management as a process designed to help us hit

predetermined goals, many of the more theoretical and confusing aspects of the

entire process simply melt away. We are left with a process that helps us focus on

results and gives us practical guidance in improving the performance of our

organization and our employees’ performance.

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.

The key for our conversation here is to learn a little more about how to effectively manage to the goals we

selected. That means we have to make the performance measurement of our employees tied directly to the

achievement of goals. That also means we have to do a better job with our performance reviews. Here are the

touchstones of effective goal management (performance reviews) once we’ve made wise selections and tested

the goals using SMART.

None of these steps are simple, easy or can be accomplished overnight. But each of these steps can be

achieved 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 are

working towards meet the SMART criteria. If the goal is specific and measureable, there is a very strong

likelihood that it is reasonably clear. But the other part of clarity is the need for high level, persistent and

consistent communication. We mentioned the great research being conducted and reported from the Harvard

Business 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 communicate

organizational 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 gets

to the other end, it’s completely different. Senior leaders are far more invested in the organizational level goals

than anyone else. So they are going to be the best at communicating with enthusiasm, urgency and

accuracy to employees about these goals. Take advantage of regular staff meetings, make short

videos, use newsletters or any other form of communication that will reach your employees. But no matter how

you do it, make the communication come directly from senior leaders. We strongly advocate for personal

communications 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 is

simply too fast and we need to adopt our performance management thinking to this new market reality. One of

the reasons organizations that manage to goals on at least a quarterly basis are so much more successful is

they 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 the

benchmarks we’ve established that help show us if we are on track or off track. It’s this type of performance

review 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 make

adjustments to get back on track. That’s how successful organizations beat their competition today. They are not

waiting and reacting. They are getting ahead, and they are getting their employees ahead so they can anticipate

the 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 performance

is that we are evaluating progress towards goals using reliable

data. We know employees get frustrated, and justifiably so,

when they believe the performance is reviewed subjectively or

unfairly. Further, as an organization we want to make sure we

are making decisions based upon good information. This is

another place where SMART goals help us make sure we’ve

set our goals well. If the goal is measureable, this is generally a

good indicator that we have or will have data to use to look at

progress 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. As

managers, we are expected to make decisions with the best information at our disposal, and many times this

means we are working with incomplete information. This is when we are expected to apply our professional

judgment. These types of decisions are still “objective.”

In the world of performance appraisals, our employees likewise expect objectivity. Sometimes this means we

can’t always measure – exactly – how an employee’s skills and talents contribute to the organization’s bottom

line. 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 when

data isn’t available.

.

Every employee’s job description has numerous “key competencies” or “critical job roles” listed. Which ones

really support the achievement of the goals that have been identified for the employee? Is it all 22 or are there

three to five that really matter? The answer is much more likely there are three to five that really matter. So use

only 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 than

simply setting goals. What is emerging in the research about organizational success in today’s market are some fairly clear

indicators of what it takes to effectively manage goals. The three steps are not mysterious, nor are they theoretical. The three

practical, 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 2013

Effective goal management requires organizations to incorporate goals into the day-to-day work flow and culture

of the entire organization. BizLibrary’s cloud-based Performance Solution provides a systematic way of

evaluating performance based upon goals supported by data and aligned

across the organization.

As managers and employees work together on goals, employees can get the

development they need when gaps arise or managers can add resources to

ensure teams hit targets. This sort of real-time access to data and information

creates agility and forms the basis of goal management and achievement in

this fast-paced market.

www.bizlibrary.com/performance