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As important as it is to set goals with your team – and this is important – the goals themselves are not the end game. The process of setting goals is more important than the goals themselves. In my experience, however, the goal-setting process is somewhat despicable and, unsurprisingly, rarely leads to meaningful change or behavior improvement.
I once had a boss who set goals that he thought were hard to achieve. But when I easily reached them, he went back on the promised bonuses. His reasons for doing so were understandable, but now he had a high performing employee who no longer trusted him. The poorly executed planning process left him in search of a new vice president.
I had another boss who set lofty goals that were so high that the whole exercise was pointless. People rolled their eyes at the documents he was so proud of. When goals seem impossible, what’s the point of trying?
Yet another company I worked for left the goal-setting process so subjective that it literally prompted employees to bribe their immediate superiors at the end of each year.
Related: Smart Tips for Setting and Really Reaching Your Business Goals
The system is the goal
What really matters in the goal setting process is the system put in place to achieve the goals. The path is more important than the destination. People need a how as much as they need a what. Goals therefore simply allow us to measure progress. They don’t advance.
The right system should provide incentives for people to work together towards the same overall goal. It should also be achievable given everyone’s best efforts. This means that anyone not doing their best should be called out by the system itself rather than pitting players against each other. If the system doesn’t call out unproductive team members, it will be up to other team members to pass judgment on their teammates, which never ends well.
How to create the system
Design the system based on the expectation that each member of the team will do their best. I say the best job because no one is hired to do less than their best. People should do their best. Doing less than their best should have consequences and doing better than their best should have rewards. Better than better implies that a person has taken it upon themselves to improve their overall ability to perform. A person seeking additional education and training, for example, would increase their performance capacity.
First step: the business objective
The overall common goal of the team should be the success of the business. So, the first step is to set an annual goal for the business. The company objective takes into account the capabilities of the team and does not take into account external shocks. Disregarding disasters is important because it eliminates excuses that can lead to poor performance.
The purpose of the business has several parts. The first part is financial and defines the success of the team. Success means the business is moving forward to create economic advantage by doing things the business meets or exceeds the economic advantage of doing other things. For example, if the company isn’t tracking the rate of return of an index fund, maybe you should invest in the market and find something else to do with your days. I realize this simplifies a bit, but make sure your team doesn’t waste their time. Failure to achieve the target may trigger corporate restructuring. Far exceeding the target will be cause for celebration and higher expectations next year!
The second part of the business goal is a momentum goal. Momentum implies that the company not only achieves its goal, but also does so in a sustainable way. This helps avoid overly rewarding bargains like huge government contracts that, if lost, could put the business at risk.
A business goal might look like this:
- Financial: $10,000,000 in revenue
- Momentum: 1,000 new customers
This would be a logical business goal for a company that sells technology that costs an average of around $10,000 per customer. Once the team agrees on the company’s annual goal, it is set in stone. The company’s objectives do not change!
Step Two: Individual Goals
With the business goal in mind, each member of the team will have their own role to play in getting there. Therefore, each person should be held accountable for goals that represent their best work. Set them quarterly so you can adapt the strategy over time. Annual goals have too long a timeline.
$10,000,000 in revenue breaks down into smaller chunks over the year and grows. So maybe Q1 is $1,000,000; Q2 is $1,500,000; Q3 is $2,500,000; and Q4 is $5,000,000. A sales team of four people might therefore each have a Q1 goal of $250,000 and 25 new customers. If the goal is missed, the team will have to shift more in the following quarters.
The sales team will need leads, of course, so marketing might be forced to hit a lead generation goal of 250 new leads per salesperson who should close 10%. If the marketing manager is tasked with generating a lot of leads, they may need IT to implement a new CRM program before the end of the first quarter.
And so on… each member of the team has their own role to play when it comes to achieving the company’s goal. At the end of the quarterly planning meeting, each team member should have two to four goals that add up to their share of the company’s annual goal. Each quarter, the team should assess its progress and adjust its goals accordingly.
Now I’m going to make it interesting…
Step Three: Milestones
A milestone is a checkpoint along the way to a destination, i.e. the goal. To create a system that calls in unproductive team members, you’ll need milestones. A milestone is a step towards a goal that can be owned by someone who is not the goal owner. The IT manager aiming to launch a new CRM program in the first quarter may need the sales process requirements of the person responsible for marketing. Thus, the requirements of the CRM sales process can be an important step belonging to the person responsible for marketing. Other milestones can be the CRM budget for the finance manager, the purchase decision for the CEO, the finalization of the contract by the legal department, etc. Milestones are measures of progress toward a goal.
Now here’s the best part: when milestones are missing, you have early warning that a goal is likely to be missed. If a goal is missed, the business goal is in jeopardy. Everyone knows who missed milestones, so missing them is a humbling experience – as it should be! If you are someone who usually misses milestones, maybe you should be replaced!
Even better, when milestones are reached, the team has reason to celebrate, hit high fives, and send good vibes to the milestone owner. There’s nothing like a good, concrete reason to celebrate that isn’t a birthday or a promotion. Doing the right things at the right time is cause for celebration!
Related: How to Create a Workflow That Will Get Employees to Reach You…
With a system in place that goes above and beyond, a young business can ensure that it stays on the path to success. Each person who is part of the system is part of the planning process and has the opportunity to negotiate their own success. They all agree on what they can deliver and when they will. This type of buy-in can be difficult to achieve with traditional top-down goal setting.
let’s keep it simple
A systems approach to goal setting is more complex than a single manager sitting in his office telling his underlings what to do. Complexity is what makes it work, where simplicity is often the fatal flaw of other approaches.
Goals are good, but they shouldn’t be the goal.
Related: The wrong way to set business goals