BUS 692 WEEK 2 WORK

BUS692Chapter5.pdf

Home >Human Resource Management homework help >BUS 692 WEEK 2 WORK

101

 Doing the Right Things Becoming a Goal-Driven Organization

Focusing people on the right things is basically about good goal management, which is among the most powerful methods com- panies have to execute business strategies. Hundreds of studies have examined the impact of goal management on workforce productiv- ity (see the discussion: “Goal-Setting Theory and Research: A Three- Hundred-Word Summary of More Than One Thousand Empirical Research Articles”). The common finding from this research is this: Employees assigned specific, difficult, yet achievable goals consistently outperform employees who are given no goals or nonspecific goals encouraging them to “do their best.”

F I V E c h a p t e r

G O A L - S E T T I N G T H E O R Y A N D R E S E A R C H : A T H R E E - H U N D R E D - W O R D S U M M A R Y O F M O R E T H A N O N E T H O U S A N D E M P I R I C A L R E S E A R C H A R T I C L E S

There are relatively few widely accepted truths in the field of industrial-

organizational psychology. But one finding that is almost universally

agreed on is that employees who are assigned specific, difficult, yet

achievable goals consistently outperform employees who are given no

goals or nonspecific goals encouraging them to “do their best.” This

finding was not arrived at without considerable controversy and empiri-

cal investigation. More than one thousand empirical, peer-reviewed

Hunt, Steven T.. Common Sense Talent Management : Using Strategic Human Resources to Improve Company Performance, Center for Creative Leadership, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=827115. Created from ashford-ebooks on 2020-03-31 02:42:32.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management102

research articles have been published on the topic of goal management

and its impact on employee performance. People have examined almost

every aspect of goal setting, ranging from the optimal number of goals

employees should have to whether the value of goals varies depend-

ing on an employee’s personality traits. Hundreds of studies have been

conducted to test the boundaries of goal setting and find places where

goals may not work well. This research has identified goal-setting tech-

niques that enable or limit goal effectiveness and certain situations that

mediate the value of goals, but the fundamental premise of goal-setting

theory has remained intact: if you want to maximize employee perfor-

mance, invest time in setting clear employee goals.

Following are some of the more influential publications in the field

of goal-setting research—just the tip of the iceberg when it comes to

this research topic:

Kanfer, R., Chen, G., & Pritchard, R. D. (2008). Work motivation: Past,

present, and future. London: Routledge.

Kernan, M. C., & Lord, R. G. (1990). Effects of valence, expectancies, and

goal-performance discrepancies in single and multiple goal environ-

ments. Journal of Applied Psychology, 75, 194–203.

Klein, H. J. (1991). Further evidence on the relationship between goal

setting and expectancy theories. Organizational Behavior and Human

Decision Processes, 49, 230–257.

Latham, G. P. (2004). The motivational benefits of goal-setting. Academy

of Management Executive, 18, 126–129.

Locke, E. A., Chah, D. O., Harrison, S., & Lustgarten, N. (1989). Separating

the effects of goal specificity from goal level. Organizational Behavior

and Human Decision Processes, 43, 270–287.

Locke, E. A., & Latham, G. P. (1990). A theory of goal setting and task

performance. Englewood Cliffs, NJ: Prentice Hall.

Manderlink, G., & Harackiewicz, J. M. (1984). Proximal versus distal goal

setting and intrinsic motivation. Journal of Personality and Social

Psychology, 47, 918–928.

Seijts, G. H., & Latham, G. P. (2005). Learning versus performance goals: When

should each be used? Academy of Management Executive, 19, 124–131.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 103

Shaw, K. N. (2004). Changing the goal-setting process at Microsoft.

Academy of Management Executive, 18, 139–142.

Tubbs, M. E., Boehne, D. M., & Dahl, J. G. (1993). Expectancy, valence,

and motivational force functions in goal-setting research: An empiri-

cal test. Journal of Applied Psychology, 78, 361–373.

The basic concept of goal setting is so straightforward it almost seems silly: employees are much more likely to do what you want them to do if they (1) know exactly what it is you want them to do, (2) believe they can do it, and (c) are moti- vated to do it. Yet virtually every employee can tell stories about jobs where they were not sure exactly what they were supposed to do or why it mattered.

The effective use of goals can increase performance levels by 25 percent or more.1 The financial value of goal management is staggering given the relatively low cost associated with implementing goal management methods. Because the value of goals is tied to fundamental psychological principles of employee behavior, the benefits of goal management do not depend on being in a cer- tain industry or market. Every company that employs people benefits from goal management. Effective use of goals provides a means for:

• Setting direction. Goals clearly define what employees are expected to accom- plish. When used correctly, they create clarity around the role and impor- tance of a person’s job. They let employees know what it is they are supposed to be doing and why that work is important to the company.

• Providing feedback. Goals allow employees to track their own progress. If employees have clear goals and access to metrics that measure these goals, they can accurately assess their performance without asking for feedback from their managers, peers, or customers. This allows employees to self- manage performance more effectively.

• Creating intrinsic motivation. Simply having a goal can motivate people to accomplish it. People often draw satisfaction merely from knowing they com- pleted a goal, that is, achieving the goal is its own reward. Goals that have this property are said to provide “intrinsic motivation.”2

• Creating extrinsic motivation. Goals provide a means to link work accom- plishments to other rewards, such as pay and promotions. Tying goal achieve- ment to external rewards is referred to as increasing the level of extrinsic

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management104

motivation associated with a goal. Goals are particularly important for creat- ing pay-for-performance processes because they provide a clear set of agreed- on standards for determining compensation decisions.

• Building confidence. A manager who assigns an important goal to an employee is sending an implicit signal that the manager believes the employee is capa- ble of achieving the goal. This creates higher levels of self-confidence for that employee, which leads that person to stronger levels of performance.3

Companies with well-designed goal management processes execute busi- ness strategies quickly and efficiently by aligning employees around the things that matter. Goal management also helps companies adapt to changing market conditions by providing a means to refocus employees on new sets of priorities. Goal management can also increase employee engagement and retention by cre- ating a link between employees’ jobs and the broader mission and strategy of the organization.

The question is not whether goal management methods should be imple- mented at a company but how to best implement them. This chapter provides guidance on using goal management to drive business execution. It also high- lights common problems that can undermine goal management effectiveness. Goal management is more complex than simply telling people what to do. Effective use of goals increases employee productivity, engagement, and motiva- tion. Ineffective use of goals can have the opposite effect.

Section 5.1 starts the chapter by discussing what it means to be a goal-driven organization. Section 5.2 discusses how goal management fits into an integrated talent management process and explains the relationships between goals and other factors that drive employee performance such as skills and competen- cies. Section 5.3 reviews eight critical design questions that should be addressed when designing and implementing goal management processes in an organiza- tion. Section 5.4 describes five levels of goal management maturity and discusses methods for achieving each level.

5.1 WHAT IT MEANS TO BE A “GOAL-DRIVEN” ORGANIZATION Being a goal-driven organization means ensuring that all employees are focused on achieving clearly defined goals supporting the business needs of the company.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 105

This is not simply a matter of communicating the company strategy to every employee. The personal interests of individual employees should be clearly linked to the success of the entire organization. Being goal driven requires engaging employees at all levels of the company in meaningful discussion to identify what they can achieve that will help execute the company’s business strategy, tying these to their personal job interests, and then holding them accountable for the commitments they make to support the business’s overall strategic mission.

The following characteristics are found in organizations that effectively lever- age goal setting to drive business execution:

• All employees have clearly defined goals tailored to their specific job and linked to the overall strategy of the company. When asked, employees can say exactly what their goals are, when they need to be achieved, how they will be mea- sured, and why they are important to the company’s strategy and mission.

• Managers are held accountable for setting effective goals with their direct reports and ensuring these goals are met. The performance of managers is evaluated based on the quality of the goals assigned to the people they manage and whether they achieve these goals. Managers whose employees have poorly defined goals or consistently fail to achieve the goals assigned to them are con- sidered to be poor managers and are treated accordingly.

• Clearly defined processes are used to align strategic goals with operational goals. Consistent methods are used to translate strategic goals related to company profit, growth, and other business outcomes into tactical goals that specific departments and employees must achieve to deliver on longer-term strategic commitments.

• Performance against goals is reviewed regularly to guide operational decisions. Goals are reviewed on an ongoing basis throughout the year to guide deci- sions about business strategies, resource allocation, and project coordination. Data on goal accomplishment are used to gain insight into the operational performance of the company. This does not mean micromanaging employees against their goals. It does mean checking in with employees to ensure they are on track to succeed and understand what is needed to get them back on track if they are starting to fall behind.

• Goal plans are adjusted throughout the year to reflect changes in business strate- gies or operational tactics. Goals are updated, redefined, and recommunicated

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management106

in response to changes in business strategy that may occur throughout the year. If the company decides to modify its direction or approach, these modi- fications are captured in individual goal plans. Companies should also monitor how frequently goals are changed to avoid confusion and inefficiency caused by constantly changing direction or shifting priorities.

• Goal performance data are used to guide personnel decisions. Decisions regard- ing pay, promotion, and staffing are based in part on employees’ performance against past goals and discussing the relationships between people’s past goal accomplishments and the sorts of goals they will be assigned in the future.

A quick way to evaluate whether a company has a goal-driven culture is to ask employees to describe the link between the business strategies of the organi- zation and their day-to-day jobs (see the discussion: “Goal-Driven Cultures and Employee Engagement”). Employees in goal-driven organizations know what they are supposed to be working on and why it matters to the business. They know why their job is important. You can walk up to any employee and ask, “What are the major things you have to get done this year to be successful in your job, and how does this tie to the company’s overall strategy?” and that person can give you a quick, precise answer. Employees in goal-driven cultures see a direct relationship between how they are evaluated and the impact they have on the success of the company as a whole. They feel connected to the strategies set by top business lead- ers and know that their success and the company’s success are closely intertwined.

G O A L - D R I V E N C U L T U R E S A N D E M P L O Y E E E N G A G E M E N T

The following five statements can be used to measure whether a com-

pany has a goal-driven culture. Asking employees whether they agree

with these statements provides a quick sense of the degree to which an

organization has a strong goal orientation:

1. I know exactly what goals I am expected to accomplish in my job.

2. The work that I do is well aligned with my company’s strategy.

3. Decisions about my pay and career opportunities depend in part

on how well I perform against a formal goal plan that my man-

ager and I agree on.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 107

4. The company takes steps to ensure my goals are accurate and

appropriate.

5. My manager and I review and update my goals throughout the

year to ensure they are aligned with changes in company needs

and strategy.

These five statements are similar to survey questions frequently used

to assess employee engagement. This is because one of the primary

ways to increase employee engagement is to ensure employees have a

clear sense of purpose in their jobs and know why their work matters.a

Goals play a critical role in clarifying why employees’ jobs are meaning-

ful and important.

Effective use of goals increases the performance levels of employ-

ees and also plays a key role in increasing employee satisfaction and

retention. After implementing more effective goal management, one

company saw its employee engagement survey scores increase by 16

percent in a single year. The impact that goals had on this increase was

reflected in survey comments such as “I finally understand how I fit in

with the larger organization.”

aBuckingham, M., & Coffman, C. (1999). First break all the rules: What the world’s greatest managers do differently. New York: Simon & Schuster.

5.2 THE ROLE OF GOALS IN AN INTEGRATED STRATEGIC HR SYSTEM Goal management plays a pivotal role in converting business strategies from lofty, long-term aspirations communicated by senior leaders into tangible com- mitments and deliverables owned by employees at all levels of the organization. But companies often fail to maximize the value of goal management by allowing it to become subsumed within other strategic HR processes such as performance management or career development. This tends to occur when companies con- fuse the management of goals with the management of learning objectives and competencies.

To understand how goals fit into the broader field of strategic HR, let’s revisit the three basic components of job performance introduced in chapter 2. Increasing job performance ultimately depends on managing three things:

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management108

• Goals describe the business outcomes employees are expected to support or accomplish (e.g., achieving sales quotas, minimizing accidents, maintaining productivity levels, processing documents). In essence, goals define the rea- son that a job exists. People are employed to deliver, create, complete, pro- duce, or otherwise accomplish specific things. Goals clarify these things.

• Competencies describe the behaviors employees are expected to display on the job—for example, building relationships, planning and organizing, solv- ing problems, and other activities that influence success or reflect the com- pany’s cultural values. People often distinguish goals from competencies using the concept of “what versus how.” Goals define what a person is sup- posed to do in the job, and competencies describe how he or she is expected to do it.

• Attributes are characteristics of employees that are associated with job suc- cess. They include qualifications (e.g., job experience, education, certifica- tions), aptitudes (e.g., personality and ability traits), and interests (e.g., career aspirations, salary preferences, work schedule expectations). Attributes define who employees are in terms of their knowledge, skills, and abilities. The attributes employees possess influence the competencies they display, which determine the goals they can achieve.

The relationship of attributes, competencies, and goals can be summed up as, “What you achieve [goals] depends on how you act [competencies], which is largely determined by who you are [attributes].” Attributes, competencies, and goals are managed using four fundamental types of HR processes broadly focused on right people (staffing), right things (goal management), right way (performance management), and right development (career management). Of these four processes, goal management is among the most critical for driving business alignment, productivity, and efficiency.

Goals define what employees need to accomplish for the company to be suc- cessful. Managing employees without defining job goals is like asking someone to enter a foot race without telling the person where the finish line is. He or she may get there eventually but is likely to waste a lot of time and energy along the way. Staffing, performance management, and career development make sure you have the right people in the race and are giving them effective guidance and motivation along the way. But goal management defines what they actually need to accomplish to win the race.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 109

Goal management, performance management, and career development meth- ods should complement one another but should not be treated as the same thing. Goal management processes are used to define business goals. They should be kept distinct from career development and performance management processes that emphasize employee learning objectives and job competencies. An employ- ee’s goal plan should define what the employee needs to accomplish to support the company’s business strategies. Things related to competencies or career learn- ing objectives should be managed as part of performance management and career development, not goal management.

Employees frequently make the mistake of putting their learning objectives on their goal plans. Goals define what employees must achieve in their job to be successful. Learning objectives describe what they are doing to build their personal attributes and capabilities to improve their performance or advance their careers (e.g., knowledge, skills, and experience). Learning objectives are the focus of career development processes and should not be placed on job goal plans. At the same time, learning objectives can support the accomplishment of job goals. Consider an example. Imagine an employee’s job requires her to achieve the goal of “report accurate customer satisfaction scores on a monthly basis.” In order to do this more effectively, the employee decides she needs to “learn how to use Excel.” The job goal in this example is “report accurate cus- tomer satisfaction scores.” “Learning to use Excel” is a learning objective because it focuses on building the employee’s knowledge. From a business perspective, it is reporting the customer satisfaction scores that ultimately matters, not whether the employee did or did not learn how to use Excel. In sum, learning objectives often define things employees must develop to be effective in their roles, but they are different from job goals, which describe what employees must accomplish to support the company’s strategies.

It is also important to distinguish job goals from competencies. Com- petencies define behaviors that employees are expected to display in a job. Goals define what people are expected to achieve as a result of displaying these behaviors. Competencies play a critical role in driving workforce productivity, employee development, and company culture. But it is ultimately the accom- plishment of goals that determines whether a company achieves its strategic business objectives. Creating performance management processes that clearly define and evaluate job competencies ensures that people accomplish goals in a manner that is efficient and supports the company’s norms and values. But

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management110

competencies are not the same as goals and should not be included in goal man- agement processes.

Goal management processes should be treated as distinct from processes used to manage competencies and learning objectives, but there is a logi- cal connection among goals, competencies, and learning objectives. When a company assigns goals to employees, invariably some employees will struggle to achieve them. Companies can then use performance management meth- ods to give employees feedback on the competencies they need to display to accomplish their goals. This helps employees identify what behaviors they need to change in order to succeed. Sometimes an employee’s inability to display certain competencies will be due to a lack of skills or knowledge. In these cases, companies can use career development programs to help employ- ees build the attributes needed to display the competencies that drive goal accomplishment. For example, imagine a salesperson was given the goal of “selling 100 units in Q1.” A month into this assignment, the manager real- izes the salesperson is not on track to achieve this goal. Upon observing the employee, the manager realizes the employee is struggling because he is not effectively displaying the competency “addressing customer needs.” After a conversation with the employee, the manager learns that the employee does not know enough about the product to answer customer questions effec- tively. As a result of this conversation, the employee sets a learning objective of “complete product training,” which will help him display the competency “addressing customer needs,” which will enable him to accomplish their job goal of “selling 100 units in Q1.”

Goals, competencies, and learning objectives have related but very distinct roles for increasing employee performance. The most effective strategic HR processes are designed with a clear understanding of these different roles. The methods used to define, measure, and manage goals, competencies, and learning objectives are significantly different from one another. Goal management, per- formance management, and career development processes should be built and managed as integrated but distinct activities. The rigor of keeping these three somewhat related concepts distinct may seem somewhat trivial, but it pays off by reducing confusion and process inefficiency. Over time, managers and employ- ees will understand and appreciate the value of differentiating among goals, competencies, and learning objectives.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 111

5.3 GOAL MANAGEMENT CRITICAL DESIGN QUESTIONS All companies use some form of goal setting to direct people’s efforts on the job. The question is not whether to set goals but how to do it effectively. To truly leverage the power of goals, companies must put thought into designing goal management processes that make the most sense for their particular jobs and business needs. The following design questions are central to building fully effec- tive goal management processes:

1. How will you ensure employees have well-defined goal plans?

2. What are you doing to ensure employees feel a sense of commitment and ownership toward the goals they are assigned?

3. What methods are used to align employees’ goals with company business strategies?

4. How is employee goal accomplishment measured?

5. What is the relationship between goal accomplishment and employee pay, promotions, and recognition?

6. How are goals used to support employee development and career growth?

7. How does the organization coordinate goals across different employees to foster communication and collaboration?

8. How are goals used to guide business execution on an ongoing basis?

The answers to these questions depend on your company’s business strategies, the nature of its workforce, and its talent management processes. The correct answer to each question can vary considerably from organization to organiza- tion. Failure to address any of the questions can result in a suboptimal goal man- agement process.

5.3.1 How Will You Ensure Employees Have Well-Defined Goal Plans? Research has shown that employees often struggle to understand exactly what it is they are expected to do when they show up on the job.4 This lack of goal defi- nition decreases employee productivity and retention, increases anxiety around role clarity and value, and raises the potential for internal conflict and organi- zational politics around responsibilities and accountability. In fact, the survey

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management112

question, “I know what is expected of me at work,” strongly correlates with employee engagement and employee turnover. The most direct way to address problems caused by lack of clear goals is to ensure employees and their man- agers sit down on a regular basis to define the goals employee are expected to accomplish.

The simple action of requiring managers to meet with employees to estab- lish goal plans drives tremendous value for business execution. It forces manag- ers to engage with employees around what actions and accomplishments should take priority in their jobs. By establishing clear expectations, goals increase pro- ductivity in the near term and set the foundation for fairer and more effective conversations and decisions related to talent management later (e.g., on com- pensation and promotions). Tracking whether employees have goal plans also provides a metric for evaluating if managers are performing the most basic part of their job: talking with employees about what they should be doing. In fact, there is a positive correlation between the frequency with which managers work with their employees to maintain goal plans and financial metrics reflecting overall company performance.5

Two things need to be considered when designing processes to ensure employees have well-defined goal plans. First, managers and employees should be given clear guidelines on what a well-defined goal plan looks like. Second, managers and employees need to set goals in a manner that gives employees a sense of ownership and accountability toward achieving them.

Creating a Well-Defined Goal Plan Many employees do not think of work in terms of discrete, well-defined goals. Even highly experienced employees can find it difficult to summarize their roles in terms of a short list of succinct, well-defined, and measurable objectives. Fortunately, there are at least three ways to help employees create well-defined goal plans: (1) provide goal librar- ies, (2) communicate criteria for creating and evaluating goal plans, and (3) train employees on goal setting methodologies.

Goal libraries are databases containing common goals and goal plans asso- ciated with different types of jobs. An example from a goal library is provided in figure 5.1. Goal libraries can be an effective starting point for crafting goals, although library goals often need to be modified to fit an employee’s specific job or role. The challenge to using goal libraries is they can take considerable effort to create and can be difficult to maintain over time.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 113

Another method for creating well-defined goals is to provide employees and managers with clear criteria and frameworks for creating and evaluating goal plans. Table 5.1 provides a set of criteria for developing goal plans and addresses common problems found in employee goal plans. Providing simple sets of rules and recommendations like those in table 5.1 leads to the creation of more con- sistent goal plans across the company and helps employees to develop and cri- tique their goals without having to rely on extensive input from others.

Most of the criteria in table 5.1 are relatively uncontroversial, but there is one possible exception that warrants a bit more discussion. This is the guideline to “have at least five goals and no more than ten.” Empirical research suggests the optimal number of goals on an employee goal plan is around eight.6 My own experience suggests that most jobs cannot be adequately described in fewer than five goals. When people try to describe a job in fewer than five, they either leave out important aspects of their work or combine different goals into less clearly defined, broad categories of “general things they have to do.” Employees who have more than ten goals may be focusing on too many things. The purpose of goal plans is to describe what employees need to keep in mind as they go about

Figure 5.1 Example of Contents from a Goal Library

Source: SuccessFactors, an SAP Company, used with permission.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management114

Table 5.1 Some Simple Goal-Setting Guidelines

Have at least five goals and no more than ten,

• Do not oversimplify what you actually do; get credit for your contributions!

• Focus on what matters the most; don’t try to catalogue everything you do. • You should be able to quickly list all the goals on your goal plan from

memory.

Goals define the things you are here to do; they explain why your job exists and why it is important.

• Even if someone never actually saw you work, he or she should be able to use your goals as evidence of the contributions you make to the company.

Define goals to be independent of each other.

• It should be possible to achieve one goal without achieving another.

Do not list personal learning objectives in your goal plan.

• Goals can (and should) drive personal development, but they must reflect business needs.

• Example: instead of listing a goal like, “Learn to use Microsoft Excel,” write the business needs driving this learning objective, such as, “Support project X, which will require learning Microsoft Excel.”

Personalize cascaded goals to your job.

• Change the names of cascaded goals; make them relevant to your role. • Tasks or deliverables associated with the goals cascaded to you by your

supervisor may become your actual goals. • You may create several different goals on your goal plan to support a

single goal cascaded to you by your supervisor.

performing and planning their day-to-day work. They should be able to easily recite all their goals from memory. And a well-known finding from psychol- ogy is the number of items on a list that people can easily commit to memory is between five and nine (often referred to as the “7 plus or minus 2” rule in intro- ductory psychology classes).7

Some employees resist reducing their goal plans to fewer than ten goals. I have seen goal plans with over thirty different goals listed for a single employee! When this happens, it is usually because the employee has confused goals with tasks. Goals are outcomes, accomplishments, or responsibilities people need

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 115

to fulfill to be effective in their jobs. Tasks are activities they perform to achieve these goals. For example, a goal might be, “Install a new heating system.” Tasks for this goal might include things like “create a list of system specifications” and “review proposals from vendors.” Some employees list all the tasks they intend to perform as separate goals, which can lead to the creation of very lengthy goal plans. Although it may be useful to describe the tasks a person plans to accom- plish to achieve a goal, tasks are not what the company truly cares about. Tasks are a means to an end but not the end unto itself. To use a sports analogy, the dif- ference between tasks and goals is like the difference between executing plays in football and scoring points. At the end of the day, achieving points is what mat- ters, not the number of plays run.

A third method for establishing effective goal plans is to provide employ- ees with a framework for writing and structuring goals. The most common framework is to teach employees how to set goals that are SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound (see the discussion: “Making a Goal Plan SMART”).

M A K I N G A G O A L P L A N S M A R T

The acronym SMART describes a method for ensuring that goals agreed

on by managers and employees are well defined and clearly under-

stood. To be SMART, a goal must be:

Specific: The details of the goal are defined so that its achievement can

be objectively determined. Whether a goal is accomplished should not

depend on someone’s subjective evaluation; it should be based on

tangible, observable facts and outcomes. Goals should be defined at a

specific enough level so that there will be little debate about whether

the goal was or was not achieved.

Measurable: The definition of the goal includes a list of one or more met-

rics or criteria that can be used to evaluate if the person is on track to

accomplish the goal. Ideally, metrics are quantifiable measures such as

percentages or numbers, for example, “achieve 95 percent uptime on

service delivery” or “closed five new contracts in my region.” But they

can also be qualitative indicators of goal achievement, for example,

“installed a new software system” or “completed a training course.”

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management116

The following story illustrates how the SMART criteria can guide the creation of goals. Imagine that a retail store manager asked a frontline clerk to set a goal for the coming year. The employee responded with a goal “to improve my per- formance.” This goal does not meet any of the SMART criteria. So the manager and employee reviewed the following questions to make the goal SMART:

• Is it specific? “Improve my performance” is not a specific enough goal to be veri- fiable. Whether the employee’s performance has improved will depend on what is meant by performance. Is improving performance a matter of better atten- dance, sales, customer service, attention to detail, or something else? To make the goal more specific, let’s assume that the manager and employee rewrote the goal as, “Improve my performance delivering service to store customers.”

• Is it measurable? The goal “improve my performance delivering service to store customers” is reasonably specific, but does not define how to measure achieve- ment of the goal. To address this, the manager and employee expanded the goal to, “Improve my performance delivering service to store customers as demonstrated by a significant increase in customer survey scores collected dur- ing my shift.”

• Is it achievable? Determining whether a goal is achievable requires the man- ager and employee to reach agreement between what is desired by the business and what the employee thinks is possible. Employees should be encouraged to strive for goals that they view as difficult but achievable. These types of goals have been shown to create the highest levels of performance. For example, the

Attainable: The goal can realistically be accomplished. The skills, resources,

and tools needed to achieve the goal are available to the employee,

and it is reasonable to expect the employee to achieve the goal suc-

cessfully. This does not mean the goal will be easy to accomplish, but

that it is realistic to expect that the employee can accomplish it.

Relevant: The goal should support the overall strategy and mission of

the company. It reflects things the person is expected to do as part

of their job.

Time-bound: The goal definition should include specific milestones and

deadlines for its accomplishment. Specific dates are agreed on for

determining whether the goal has or has not been achieved.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 117

manager may want customer satisfaction survey scores to increase by 10 percent, but the employee may feel that such an increase depends on too many factors they cannot control. The employee may argue for a 1 percent increase, but the manager may view this as too easy to achieve. For the purpose of this illustra- tion, let’s assume the manager and employee agree on setting the goal as a 5 percent increase in customer survey scores because this number is felt to be difficult but realistic to attain by both the manager and employee.

• Is it relevant? This means making sure the goal is associated with the employ- ee’s job duties and the company’s overall business strategy. Improving cus- tomer service is relevant to the job in this example. But it might not be considered relevant if the employee worked in a noncustomer-facing role in a distribution center.

• Is it time-bound? This means making sure there is a specific date when the goal is expected to be completed. The manager and employee need to agree on a date when they will formally review the goal to see if it has been achieved. This can be done by expanding the goal to this: “Improve my per- formance delivering service to store customers, demonstrated by achieving a 5 percent increase in customer survey scores collected during my shift by the end of Q4 of this year.”

When a goal lacks any of the five SMART criteria, employees are at risk of not fully understanding what it is they are expected to do or how their success will be evaluated. By going through a process of discussion, the manager and employee in this example were able to translate the non-SMART goal of “improve my per- formance” to a difficult but achievable SMART goal of “improve my performance delivering service to store customers demonstrated by achieving a 5 percent increase in customer survey scores collected during my shift by the end of Q4 of this year.”

Although the SMART framework is probably the most widely used, I have found it to be less effective than another framework called the COD model: Commitments, Outcomes, and Deliverables (see the discussion: “Commitment, Outcome, Deliverable (COD) Goal Methodology”). All of the major con- cepts associated with the SMART framework are incorporated into the COD model. But they are presented in a way that is simpler and reflects how employ- ees and managers actually discuss goals. Managers are encouraged to talk with employees about what commitments they can make to support business

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management118

initiatives, the deliverables they will meet to fulfill each commitment, and the business outcomes this will create.

The discussion provides guidance for using the COD method to set goals. An additional advantage of the COD framework is how well it supports the con- cept of goal cascading, which will be discussed later in the chapter. People are instructed that a deliverable at one level in the organization may be reframed as a commitment at the next level down. This has proven to be useful in helping people better understand how to leverage goal processes to communicate and align employees around new business initiatives.

The most important point is not whether you use goal libraries, SMART goals, COD goals, or some other goal-setting framework. What is important is to provide employees and managers with some method to ensure they are set- ting well-defined and appropriate goals.

Goal setting is somewhat like riding a bike. It is not hard to learn, but if you don’t do it correctly, you can hurt yourself. Furthermore, if you ask managers and employees if they know how to set goals they will probably say yes. But this does not mean they know how to do it well. The following are examples of actual goals I have seen on goal plans created by managers and employees who purported to know how to set goals: “to lose ten pounds by December,” “to get along with others,” “to hit our revenue targets,” or “to increase my performance.” With the exception of losing ten pounds, none of these goals meets the criteria of being well defined. And the only one that was well defined was not job rel- evant (at least not for the job this employee held). The lesson is that it is very important to provide managers and employees with clear criteria and methods for setting goals or people will waste a lot of time writing goals that are not well defined, job relevant, or motivational.

C O M M I T M E N T , O U T C O M E , D E L I V E R A B L E ( C O D ) G O A L M E T H O D O L O G Y

Your goal plan, which defines what you are responsible for doing within

the organization to support the company’s business needs, should consist

of five to ten specific commitments you have made to support the strate-

gic needs of the organization. Each commitment will be associated with

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 119

a variety of specific outcomes and deliverables. The following guidelines

will help in building out your goal plans.

Commitment: What I’m Doing

• Develop a short phrase that describes what you are doing and why it

is relevant to the business.

• Customize commitments to your particular role; they should define

what you specifically do in the company.

• Identify five to ten different commitments, each associated with one

or more outcomes and deliverables.

• Link all commitments to commitments on your manager’s or other

people’s goal plans so they directly or indirectly roll up to the CEO’s

goal plan.

Outcomes: Why I’m Doing It

• Identify the results you will create by achieving this commitment,

that is, the evidence that will demonstrate you were successful.

• Try to have no more than four outcomes per commitment. A single

outcome may be adequate for some commitments.

• You can tie several commitments to the same general outcomes.

This is very common when one outcome is dependent on a variety of

commitments being met (e.g., “increase corporate profitability by 5

percent”).

Deliverables: How I Will Do It

• Identify the actions you will complete to meet the commitment, that

is, the tactical strategy you are taking to drive the outcomes.

• Try to have no more than five deliverables per commitment.

• Deliverables at one level of the company often become commit-

ments for people at the next level; you may cascade certain deliver-

ables as commitments for your direct reports

The following is an example of a goal written using the COD format:

Commitment: Improve customer service levels in the stores I manage to

increase return customer traffic and sales

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management120

Outcomes: Scores of 90 percent or better on in-store customer surveys;

Increase year on year store sales by 5 percent

Deliverables: Provide customer service training to all store employees by

the end of the first quarter; review customer survey results with team

on the first week of each month; implement customer suggestion pro-

gram by June of this year

5.3.2 What Are You Doing to Ensure Employees Feel a Sense of Commitment and Ownership toward the Goals They Are Assigned? Goals will not have an impact on performance if employees feel little sense of commitment toward achieving them. Managers must remember that goal setting is not about telling people what to do. It is about working with people to clarify what needs to be done in a manner that builds commitment toward goal accom- plishment. There are many ways to increase the motivational power of goals. The best and least expensive way is to ensure managers pay attention to three con- cepts when they work with employees to create goal plans: participative goal set- ting, managing goal difficulty, and addressing goal-setting anxiety.

Participative Goal Setting One effective way to build goal commitment is to use participative goal setting. This technique requires managers to meet with employees to discuss what goals make the most sense given their capabilities and the organization’s business needs. Participative goal setting gives employees a sense of influence and buy-in over the goals that are assigned to them. The opposite of participative goal setting is to simply assign goals to employees without their partic- ipation. When it comes to motivation, there is a big difference between telling peo- ple what to do compared with talking with them about what they should be doing.

The simplest participative goal-setting techniques involve some variation of the following steps:

Step 1. Managers ask employees to list the goals they plan to accomplish over the coming work period to support the organization.

Step 2. Managers create their own set of proposed goals they want employees to achieve.

Step 3. Managers and employees discuss the two sets of goals to find a mutu- ally acceptable set of final goals.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 121

Step 1 is often the most difficult step in this process. Employees may struggle to identify possible goals. When this happens, managers need to be careful not to simply tell employees what the manager thinks their goals should be. Instead, they should use one or more of the following techniques to help employees identify goals:

• Have employees list things they created, accomplished, or influenced over the past month, quarter, or year that contributed to the company’s success. These can be used as a source of inspiration for creating future goals for the next time period.

• Have the manager share his or her goals with the employee and ask what things the employee can accomplish to support these goals. This reflects a method called goal cascading, which I discuss later in this chapter.

• Challenge employees to list the things they do that justify why their job exists. In other words, what does the company pay them to produce? This method focuses employees on the importance of being able to define and articu- late the goals of their job. But it can be quite threatening if done poorly and should be used with caution.

There are certain jobs where a lot of participative goal setting is neither nec- essary nor expected. These tend to be jobs where roles are well defined or responsibilities are determined based on collective bargaining or other contract agreements. For example, someone hired to clean tables in a restaurant does not need to spend a lot of time talking with the manager to determine whether his or her goals involve keeping the tables clean. However, it might make sense to use participative goal setting to determine how many tables an employee can realis- tically clean on a busy night. Employees who work in highly well-defined roles appreciate being consulted on whether their job goals are realistic and obtainable. These employees may not expect to have a lot of influence in the goal-setting pro- cess, but simply knowing that they are allowed to voice their opinions increases their engagement and job satisfaction.8

Another advantage of participative goal setting is that it lessens the risk that employees will accept goals that are illogical, overly risky, or even downright counterproductive. There are many examples of situations where employees accepted goals that did not make sense because they did not feel empowered to question their manager. Some tragic examples can be found in the transportation

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management122

and manufacturing industries where employees were given goals focused on “minimizing costs” or “maximizing revenue” that ultimately led to accidents caused by mechanical problems. After these accidents, employees stated that they knew the goals were putting the machinery at risk, but they didn’t feel they had permission or authority to question the goals they had been assigned.

Managing Goal Difficulty Goals have the strongest impact on productivity when they are difficult but achievable. Managers should challenge employees to set ambitious goals where a successful outcome is possible but not certain. But managers also need to be sensitive to stress caused by having too many chal- lenging goals. Goal plans ideally include a mixture of difficult goals along with goals that are important but not as challenging. The less difficult goals provide employees with a sense of balance and confidence that they will be able to meet their job expectations. Managers must also be careful about pushing employees too hard month after month. Most people are capable of putting in high levels of effort when required to accomplish critical goals. But over time, they will stop putting effort into goals if they feel the goals have become unrealistic, unreason- able, or unsustainable.

Addressing Goal-Setting Anxiety If employees are not used to setting goals, they may have concerns about how the goals will be used. The best way to address this is to clearly communicate why the organization is implement- ing more rigorous goal management methods and how these methods will help employees to be more successful. The following are several benefits to help employees understand the value they personally gain from adopting goal man- agement processes in their organization.

Improving Strategic Communication Well-defined goal plans clarify what people are working on and how it relates to the company’s business strategy. Goals establish priorities for employees. They also help employees communicate to their peers and leaders what they are doing to support the company’s strate- gies. To reinforce this message, let employees know who will be looking at their goal plans and how this information will be used to guide company decisions.

Fairly Evaluating Performance Goals provide a clear and transparent method for evaluating employee contributions to the organization. They reduce reliance on subjective opinions or ill-defined criteria when making decisions about pay,

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 123

promotions, or job assignments. To emphasize this point, let employees know how goal accomplishment will be used to guide pay and promotion decisions.

Managing Workloads Rigorous use of goals protects employees when there are changes in the business. Having clearly defined goal plans reduces the risk that managers will ask employees to take on additional responsibilities without dis- cussing how this has an impact on their existing commitments. To emphasize this, establish guidelines for updating employee goal plans during the year to reflect shifting organizational priorities. For example, restrict goal plans to a maximum of ten goals and inform managers that they must work with their employees to remove or readjust their existing goals before they can ask them to take on a significant new assignment. Some caution is needed when setting these sorts of guidelines lest employees become too caught up on whether something is or is not on their for- mal goal plan. But there is usually value in encouraging employees and managers to carefully think about priorities before committing to taking on new work.

Providing Credit for Contributions Most employees have experienced sit- uations where they have been asked to work on one objective, only to be told later to stop working on that activity and pursue another objective. By tracking goals, companies give employees credit for work they have done on an initiative even if the larger project may not have been completed due to changes in the overall business strategy. Let employees know how goal data will be reviewed and what methods will be put in place to ensure people are recognized for past contributions.

Balance the Use of Goals as a Tool for Communication versus Evaluation Another potential way to reduce goal anxiety is to use goals solely as a communication tool until people become comfortable with them. After people become comfort- able with the goal-setting process, goals can move beyond strategy communica- tion to include supporting pay and promotion decisions. However, employees in some jobs may view goals as relevant only if they have a direct impact on their pay. In these cases, it may be important to tie goal achievement to pay and per- sonnel decisions so people take the process seriously. How much you emphasize goals as tools for communication versus tools to guide personnel evaluation will affect how employees react to them. Put thought into what makes sense for your organization. The approach that makes the most sense will vary depending on the situation.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management124

5.3.3 What Methods Are Used to Align Employees’ Goals with Company Business Strategies? Goal management is not just about making sure employees have well-defined goal plans. It is also about making sure these plans align with the overall objec- tives of the company. This requires ensuring that goal conversations between managers and employees incorporate information about company strategy. There are three primary methods for doing this: establishing goal categories, using prepopulated goal plans, or implementing goal cascading. Each has its own strengths and weaknesses. Establishing goal categories is the easiest but least effective. Creating prepopulated goal plans provides the most clarity to employees but is the most difficult to maintain. Goal cascading is the most effec- tive, but it requires managers to invest the most time by talking with employees about how to develop appropriate goal plans.

Goal Categories This method starts with identifying broad categories of goals that the company needs to address to support its business strategies (e.g., finan- cial performance, customer service, safety). Employees are then instructed to set goals that fit into some or all of these categories.

The most common example of goal categories comes from the balanced scorecard management theory.9 This approach argues that every company should focus on four categories of goals: (1) providing customer service; (2) increasing operational efficiency and quality; (3) attracting, retaining, and developing employees; and (4) achieving financial targets. Balanced scorecard categories are fairly effective for ensuring that employees are setting goals that support key elements of company performance. There may also be value in creating additional goal categories that reflect a company’s particular business strategy, market, or industry—for example, a manufacturing company might create a goal category called “workplace safety” to ensure employees are actively thinking about ways to reduce injuries and accidents, and a technol- ogy company that emphasizes innovation might create a goal category called “new product development” to reinforce the importance of setting goals that drive creativity and exploration. But companies should avoid creating too many categories lest employees become confused or overwhelmed. It is also important to remind employees that certain categories may be more or less relevant to their particular jobs. Some employees might put most or all of their goals under a single category.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 125

The value of goal categories is their ability to get employees to think about the company’s overall strategic needs when setting goals. Rather than start- ing the goal-setting process by having employees ask themselves, “What do I need to get done in my job?” goal categories encourage employees to think about setting goals from a different perspective: “What does the company need me to support through my work?” Goal categories also make it possible to track goals based on common strategic themes. This allows companies to analyze goals to make sure they adequately support different strategic initiatives. For example, goal data might be used to diagnose if the company is on track to achieve its cus- tomer service objectives but at risk of not meeting financial objectives.

Predefined Goal Plans Predefined goal plans are preset combinations of goals developed for specific jobs or groups of jobs based on company strategy. Employees are assigned predefined goal plans based on their role in the organi- zation. For example, all customer service representatives in a company might be given a predefined goal plan with five core goals:

1. Achieve an average customer satisfaction score of x percent.

2. Become certified to support at least x additional product lines.

3. Reduce the time to resolve customer problems by x percent.

4. Sell at least $x of additional products and services.

5. Maintain a customer renewal rate of at least x percent.

Every customer service representative would be assigned these same five goals, although the numerical targets associated with the goals might change from one employee to the next based on experience level, job location, or some other variables.

Predefined goal plans provide detailed guidance to employees and managers on what things are important to the company. They also significantly reduce the time needed to establish goals since employees are working from a preset tem- plate. Predefined goal plans can be highly effective when setting goals for jobs with large numbers of employees or for jobs where the basic responsibilities and tasks do not change that much from one year to the next (e.g., hourly retail jobs, certain jobs in health care, many frontline sales jobs). The disadvantage is it takes time to develop predefined goal plans, particularly if you are trying to set goals for a wide range of job types. Predefined goal plans also do not work well

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management126

for jobs where the goals employees have can change significantly based on shift- ing company needs and strategies.

Cascading Goals Goal cascading is a method for communicating business strategies so all employees in the company understand the role they play in strat- egy execution. The goal-cascading process starts when senior leaders set their goal plans based on company strategy. Leaders share their goal plans with their direct reports, who in turn set goals that align with and support those of their supervisor. By doing this, companies can ensure that employees at all levels are working on goals that link back to the organization’s overall strategic initiatives.

Figure 5.2 provides an illustration of goal cascading drawn from the health care industry. In this example, the CEO of a hospital sets a goal to “decrease annual operating costs by $5 million by the end of Q4.” This goal is cascaded to the chief operating officer (COO) of the hospital, who proposes that one way to reduce operating costs is to “decrease the rate of illnesses acquired by patients while in the hospital by 10 percent by the end of Q4.” The COO then cascades this goal to her director of facilities, who determines that the best way his area can reduce patient-acquired illness is to “implement health and safety programs by the end of Q2 in all the departments managed by facilities.” This is cascaded to

Dishwashers: Ensure all dishes are cleaned using water heated to a level that will kill bacteria

Cafeteria Manager: Develop and enforce proper food-handling procedures

Facilities Director: Implement occupational health and safety programs in all departments

COO: Decrease hospital-acquired illness by 10 percent over the coming year

CEO: Decrease operting costs by $5 million per year

Figure 5.2 Goal-Cascading Example

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 127

the cafeteria manager, who suggests that the most appropriate health and safety programs in her area are to “develop and enforce proper food-handling proce- dures for all cafeteria positions by the end of Q1.” The cafeteria manager’s goal is cascaded to the dishwashing supervisor, who interprets this as setting a goal for his team to “ensure all dishes are cleaned in water heated to an appropriate level to kill bacteria.”

The power of goal cascading is its ability to get everyone in the organization aligned around the same strategic objectives in a way that makes sense given their particular jobs in the organization. Consider how the example in figure 5.2 illustrates the link between a high-level strategic objective of “save $5 million” and a seemingly minor tactical task like “wash dishes using water heated at an appropriate level.”

Goal cascading also makes employees’ goals more meaningful by linking them to the overall mission and strategy of the organization. Consider how the dishwashing employee in this example might have reacted if his supervisor sim- ply said, “You need to wash the dishes in hotter water.” He might have resented being told to do something that made his work more difficult. Compare this to the supervisor who says, “You need to wash the dishes in hotter water to kill the bacteria that cause patient illnesses, which directly affects the mission and finan- cial stability of the hospital.” Now the dishwashing employee understands the rationale for the request and why changing how he does his job is important to the overall success of the hospital.

When done well, goal cascading is much more than a method for communi- cating what the company’s strategic objectives are. It is a method to help employ- ees identify what they can do to support those objectives. The key to effective goal cascading is to approach it as a process for translating high-level strategic objectives into actionable goals that employees can directly influence. This can be done by encouraging leaders and managers to clarify the relationships of three types of goals:

• Outcomes are goals that result indirectly from actions taken by employees. This includes things such as “increase sales by 10 percent,” “grow market share by 25 percent,” or “reduce operating costs by $5 million.” Companies cannot directly increase outcome goals such as sales volumes or market share. Instead, they take actions that lead to these outcomes. For example, the accomplishment of launch- ing a new marketing plan may result in customers’ buying more of the company’s products, which creates the outcomes of increased sales or market share.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management128

The advantage of outcome goals is they can be tied directly to critical indicators of company performance. Outcome goals are frequently associated with senior leadership roles as well as certain roles in sales and marketing where people are comfortable being held accountable for results they may only indirectly influence. The disadvantage of outcome goals is that employees often find them to be confus- ing or demotivating because they cannot directly control them. Many things influ- ence outcome goals besides the actions of employees (e.g., changes in the broader market and economy). Outcome goals are only indirectly influenced by what employees actually do. This may reduce employees’ sense that they can directly affect these goals, and many employees do not find these goals to be highly mean- ingful. This was illustrated in a meeting I attended where a CEO boldly proclaimed that the company’s goal was to become the first billion-dollar company in their industry niche. One of the company’s engineers replied, “That’s great, but it doesn’t mean anything to me. What do you actually want me to build?”

• Accomplishment goals describe things employees can directly achieve or create—for example, “develop three new products,” “implement a new technology system,” or “deploy a new purchasing process.” Accomplishments describe things employees do to create outcomes. They indicate the actions and deliverables a company is going to undertake to drive its strategic objectives. Accomplishment goals tend to be associated with professional positions where people are respon- sible for creating, building, or developing new products and services.

• Responsibilities are goals that describe ongoing performance levels employ- ees are expected to maintain. Employees must support certain responsibilities if the company is to achieve certain outcomes. Examples of responsibility goals include “process 100 calls per day,” “keep the error rate to less than 1 per 1,000,” and “score 95 percent on monthly safety audits.” These types of goals are com- monly associated with administrative, manufacturing, and customer service positions where the focus is mainly on supporting existing operations.

Goal cascading connects high-level strategic outcome goals with accom- plishment and responsibility goals that are meaningful to employees in different functions and levels across the organization. Figure 5.2 shows how an outcome goal of “reduce operating cost by $5 million” was connected to an accomplish- ment goal, “implement health and safety programs,” which in turn was con- nected to a specific responsibility goal of “wash the dishes in water heated to an appropriate temperature.” Imagine how the cafeteria workers in this example

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 129

might have reacted if they were simply given the original outcome goal: “reduce operating cost by $5 million.” At best they might have seen the goal as irrelevant to their jobs and something they could not have a direct impact on. They might also find the goal to be threatening and even intimidating because it is clearly something they cannot achieve by themselves. At worst, giving them this goal could lead the employees do doing the wrong things for the right reasons, such as deciding to wash the dishes in cold water to save money on heating costs.

Goal cascading starts with the creation of well-defined goals at the highest levels of the organization. It is not possible to implement goal cascading without considerable involvement of senior leadership, who must set well-defined goals that can be effectively cascaded to their direct reports. In most cases, the qual- ity of employees’ goal plans directly reflects the quality of their supervisors’ goal plans. Leaders who create and cascade goals provide visible role models of how to use goals to drive business execution. But the opposite is true as well: if leaders do not invest energy into setting and communicating well-defined goals, it is folly to expect that their direct reports will invest the time necessary to create effective goal plans. Leaders must also discuss how their goals can be linked to the goals of their direct reports. The best and perhaps only way to implement goal cascad- ing effectively is to have senior leaders set and cascade their goals and then follow up with people in the company, asking them, “What are you doing to support the goals I cascaded?”

Implementing goal cascading also requires that managers know how to engage their direct reports in goal-cascading conversations. The COD method of goal setting discussed earlier is particularly well suited to goal cascading. This is because it is based on how business leaders naturally go about communicat- ing and managing business strategies. When using the COD method, leaders are instructed that a “deliverable” at one level in the organization may be reframed as a “commitment” at the next level down. Leaders are encouraged to meet with their direct reports to discuss how their commitments and deliverables align with commitments, outcomes, and deliverables of individual people in the group. This approach helps align employees around higher-level business initia- tives. Figure 5.3 provides an example of how this works. A manager cascades a broader commitment to one of her direct reports. The direct report then cre- ates two new commitments that support certain deliverables associated with the managers’ higher-level commitment, but also reflect the nature of the employee’s particular role on the manager’s team.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management130

It often makes sense to use different goal alignment strategies for differ- ent parts of the company, for example, using goal cascading with senior lead- ers, directors. and managers and switching to goal categories or predefined goal plans for lower-level frontline jobs. What is important is to have some method in place to make sure employee goal plans are supporting company strategic initiatives and critical business outcomes. This includes making sure the goals of senior leaders align with the goals of their direct reports’ direct reports. In

Figure 5.3 Goal Cascading Using the Commitments, Outcomes,

Deliverables Methodology

1. Manager cascades a commitment to an employee on their team that has multiple deliverables

2. The employee translates this into two commitments based on those deliver- ables that are relevent to his role

M a n

a g

e r’

s G

o a l

p la

n Commitment • Improve product quality and

reduce costs created by re-work

Outcomes

• Decrease product defect rate to less than 1 per 10,000 units

• Lower cost per unit manufacturing costs by 5%

Deliverables

• Re-engineer product inspection process

• Hire a process maintenance engineer

• Implement alpha quality training across the manufacturing team

• Re-negotiate vendor contracts to obtain higher quality raw materials

E m

p lo

y e e ’s

G o

a l

p la

n Commitment 1 • Re-engineer product inspection process

Outcomes

• Decrease product defect rate to less than 1 per 10,000 units

• Shorten product inspection time by 5%

Deliverables

• Conduct kaizen workshop with manu- facturing team during Q1

• Document and train supervisors on new process by end of Q2

Commitment 2

• Implement alpha quality training across the manufacturing team

Outcomes

• Decrease product defect rate to less than 1 per 10,000 units

• 100% certification of manufacturing team on Alpha quality process

Deliverables

• Develop quality training curriculum • Arrange for training department to

deliver training for all employees by Q2

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 131

most companies, it is the people two levels or more down from the senior-most leader who comprise the bulk of the employee population. From an execution standpoint, it is not the CEO’s strategic goals that matter as much as the goals of people further down in the organization who are ultimately responsible for executing the strategy.

5.3.4 How Is Employee Goal Accomplishment Measured? If goals were perfectly defined, there would be no reason to discuss measure- ment of goal accomplishment. Goal accomplishment would be self-evident because you could simply examine a goal and determine whether it was or was not achieved. But the reality is that most goals are not so well defined. For exam- ple, if someone had a goal to sell $10,000 worth of product and sold only $9,000, did he totally fail to achieve his goal? Should he be evaluated as performing at the same level as someone who sold only $5,000? Many goals are also associated with less tangible concepts related to quality or performance. For example, if an author has a goal to “complete a three-hundred-page book by September,” can we evaluate whether she achieved that goal solely based on the number of pages she wrote? Or should the evaluation include some attempt to assess the quality of what she wrote in addition to examining the absolute number of pages?

Goal-setting methods like SMART and COD help make goals easier to measure and evaluate. This reduces subjectivity when evaluating employ- ees’ goal accomplishments. These methods also help employees understand why they received certain evaluations and what they need to do differently to change the evaluation in the future. But there is almost always some subjec- tivity inherent in judging employee performance as it pertains to goal accom- plishment. How goals are evaluated can become a particularly significant point of contention if goals are used to guide pay or promotion decisions. For this reason, a decision should be made early on whether goals can and should be evaluated solely on tangible, objective metrics or whether goal accom- plishment will be determined based on some overall rating agreed on by an employee and his or her manager.

Some goals lend themselves to more objective evaluation because they can be easily measured using available metrics—for example, sales goals associated with hitting specific financial targets or manufacturing goals associated with produc- ing specific numbers of products. But goals for many jobs are difficult to measure objectively due to the nature of goals themselves or because an inordinate level of

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management132

effort would be required to collect truly objective goal data. In these cases, it is good to agree on a standard goal accomplishment rating scale such as the following:

1 = Very poor performance: Failed to meet most or all goal expectations

2 = Poor performance: Met some goal expectations but not all

3 = Effective performance: Met all goal expectations

4 = Exceptional performance: Exceeded goal expectations

Employees should meet with their managers to review their goals and, if pos- sible, reach consensus on the goal accomplishment rating. If agreement cannot be reached, then it is usually the manager who gets to make the final rating. If possible, it is also beneficial to have the manager’s evaluation reviewed by his or her supervisor or peers, or both, through some form of performance assessment calibration process.

It is important to set expectations around the goal accomplishment levels most employees will achieve. For example, if the example of the scale above was used to evaluate goal accomplishment, the expectation should be set that most employees will receive 3s assuming they are generally solid performers. The rating of 4 is reserved for employees whose performance truly went above and beyond goal expectations. This will encourage employees to strive for difficult goals without overly punishing them if they fail to accomplish everything they set out to achieve. If someone always succeeds at achieving every goal, then it is questionable whether this person is truly challenging himself or herself.

People are not setting truly difficult goals if they consistently exceed their goal expectations year after year. Yet many companies develop cultures where anything less than 100 percent goal completion is viewed as failure. Companies with cul- tures like this are unable to differentiate between high-performing employees who set and achieve difficult goals and mediocre employees who set and achieve rela- tively simple goals. For example, a large consulting company had an unwritten pol- icy where the only way to be promoted was to be rated as having had perfect goal accomplishment. The best way to succeed in this company was to set easy goals and avoid any assignment where success was not almost certain. Employees who set ambitious goals and failed to achieve them might as well leave the organization. Methods for addressing this type of rating inflation are discussed in chapter 6.

It is also useful to set expectations around how frequently employees should update progress against goals. Emphasize to managers that if their employees fail

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 133

to achieve their goals, then the manager is probably going to struggle to achieve his or her goals as well. If a goal is at risk of not being achieved, it is in the man- ager’s and employee’s best interest to discuss it early enough so something can be done to get it back on track before it is due. Employees and managers should update and review goal progress on a fairly regular basis throughout the year. How often this should happen varies depending on the type of job. It requires balancing the manager’s need to stay informed with the employee’s desire for a sense of autonomy. For hourly sales jobs, this might be something done daily or weekly. For pharmaceutical research positions, this might be done quarterly. Whatever time frame is chosen, you will know the process is working when nei- ther managers nor employees feel any sense of surprise when they meet to dis- cuss whether the employee’s goals were achieved.

5.3.5 What Is the Relationship between Goal Accomplishment and Employee Pay, Promotions, and Recognition? Goals define what people are expected to do in their jobs, so goal accomplish- ment should naturally play a central role in decisions related to compensation, promotion, and other forms of recognition used to reward and retain employees. Linking pay and promotions to goal accomplishment increases the meaningful- ness of goals, reinforces organizational priorities, and creates a more consistent, transparent, and fair process for making personnel decisions. But some risks are associated with tying financial incentives and other tangible rewards to goal accomplishment. The following design principles help reduce these risks when developing pay-for-performance strategies built around goals:

• Balance goals versus competencies. Performance can be defined in terms of two dimensions: what you accomplish and how you accomplish it. What you accomplish is measured by goal achievement. How you accomplish it is typically measured through competency evaluations or other ratings of employee job behavior. Pay-for-performance systems should balance goals and competencies when allocating pay decisions. Overemphasizing goals can lead to an unhealthy “ends always justify the means” approach to performance. Employees should not be rewarded for achieving goals if the methods used to achieve them vio- lated company values or involved ethically questionable practices. To manage this risk, many pay-for-performance processes use a roughly equal weighting of goals versus competencies when calculating overall performance levels.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management134

• Protect the intrinsic motivational value of goals. Research shows that the goals people pursue voluntarily can become less enjoyable when they are paid to accomplish them. This reflects the difference between doing something because you want to do it and doing something because someone expects you to do it (e.g., the difference between playing music for fun versus playing professionally). This issue tends to be less of a concern in a job setting, since employees naturally expect to be paid for what they do. But if employees are accomplishing certain goals without any specific financial incentives, then attaching financial rewards to these goals might actually decrease their motivation toward achieving them.

• Define the link between goal accomplishment and pay. When employees feel that pay decisions are based on clearly defined and consistently applied proce- dures, they are more likely to accept pay outcomes as fair, even if the decisions do not benefit them personally. This is referred to as procedural justice.10 The key to creating procedurally just pay strategies is to make sure that goals are clearly measurable and well understood. If employees understand the measures used to determine pay, they are much more likely to accept the results of pay decisions.

• Encourage challenging goals. One problem that can result when goals are linked to pay decisions is the potential for employees to avoid setting demanding goals where the outcome is uncertain since they know this could hurt their pay. Pay strategies should support employees who take on challenging goals, even if it means they may not always achieve the goals they set. Do not punish people who are willing to challenge themselves with difficult goals and reward those who play it safe by committing only to easier goals.

• Encourage teamwork and collaboration. Using goals to drive pay may encourage some employees to focus on activities that support their personal goals with little concern for the broader goals of their team or organization. It is a good idea to base pay on a mix of individual goals and broader team- or organization-based goals. This helps to create a balance between “what is good for me” versus “what is good for the group.”

• Balance the value placed on financial stability versus financial opportunity. People differ widely in their preference and tolerance for financial uncertainty. Employees in sales jobs tend to be more comfortable with linking some or all of their pay to goal accomplishment because they are willing to trade the financial stability of a regular salary for the opportunity to make considerably more money by hitting all of their goals. In contrast, many service employees want a more stable source of revenue. They will trade the opportunity to make more money through

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 135

a goal-based bonus plan for the greater financial stability associated with receiving a fixed salary. It is important to think about the stability preferences of employees before implementing a pay-for-performance strategy. Some association between pay and performance is almost always desirable. But whether the percentage of pay tied to goal attainment should be 5 percent, 50 percent, 100 percent, or some other variable will change from one job to the next. Also remember that what motivates people in leadership roles when it comes to pay may not be the same thing that motivates the people they lead (see the discussion: “Different Types of Goals for Different Types of Roles—We Don’t All Want the Same Thing”).

• Emphasize that goals are about a lot more than pay. If compensation and pro- motion decisions are communicated as the main reason for goal management, then employees and managers may view goal management solely as a method for evalu- ating employee performance as opposed to executing business strategies. Managers may look at employee goals only once a year, when it is time to make compensa- tion decisions. And employees may be overly conservative when they set goals if they view them solely as a tool to determine pay or promotion opportunities. If this is happening, you might consider downplaying the link between goal accomplish- ment and pay and promotion. This does not mean getting rid of the association between goals and personnel decisions completely. Just be clear that people view goal management first and foremost as a tool for driving business strategies and secondarily as a tool to guide and justify compensation and staffing decisions.

D I F F E R E N T T Y P E S O F G O A L S F O R D I F F E R E N T T Y P E S O F R O L E S — W E D O N ’ T A L L W A N T T H E S A M E T H I N G

Goals are one of the most powerful methods companies can use to

motivate and align employees around strategic initiatives. However,

what makes goals meaningful and motivating varies significantly across

different types of employees.a Each of the following types of goal ori-

entation reflects characteristics that make certain goals more or less

motivational for different kinds of people:

• Purpose driven. Purpose-driven people value goals that make them feel

part of a larger team or mission. They are motivated by goals that illus-

trate how their work contributes to a greater strategy or vision. They

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management136

tend to appreciate goals that give them a sense of “being part of some-

thing bigger than myself.” Health care, environmental, charity, and vol-

unteer organizations tend to be effective at using purpose-driven goals.

• Mastery driven. Mastery-driven individuals are motivated by goals

that challenge them to develop and test their capabilities. They get

satisfaction from proving to themselves and others that they can

accomplish difficult goals. Artists, scientists, doctors, and engineers

are often strongly motivated by mastery goals that require develop-

ing elegant creations and innovative solutions to difficult problems.

• Competitively driven. Competitively driven individuals enjoy goals that

allow them to compete against other individuals, teams, or organiza-

tions. They measure success in part by how well they perform relative

to others. Competitive goals are often particularly strong motivators

for many athletes, salespeople, and business leaders.

• Transactionally driven. Transactionally driven employees focus on goals

that are tied to clear benefits and rewards. Most often these are finan-

cial bonuses, prizes, promotions, or other rewards with clear monetary

value. These people evaluate goals based on the rewards tied to their

accomplishment rather than the goal itself. Many people in sales and

financial investment positions are strongly transactionally driven.

• Security driven. Security-driven individuals value goals that provide

them with a sense of role clarity and job stability. They value goals

that give them a sense of control and ownership over their future

employment prospects (“If I achieve these things, then I can count

on future employment and access to certain career opportunities”).

Public sector, manufacturing, and certain service industries often

attract people who place a lot of value on security-driven goals.

There are positives and negatives to each type of goal orientation.

Any one of them taken to an extreme is likely to have negative con-

sequences. For example, overemphasizing transactional goals over

mastery goals can lead to focusing solely on money without paying

attention to quality. Conversely, overly focusing on mastery goals with-

out value purpose-driven goals can lead to investing time in projects

that are intellectually impressive but of little relevance to the overall

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 137

mission of the organization. Furthermore, no person is solely motivated

by any single type of goal. The goals people value can vary depend-

ing on the context. For example, a person might be heavily focused on

transactional goals at work, but put more emphasis on mastery-driven

goals when pursuing personal hobbies.

People who strongly favor one type of goal often seem to mock or

scorn people who focus on other goal types. For example, purpose-driven

individuals may look down on people who are focused on transactional

goals, making comments like, “They care only about cash.” Conversely,

transactionally driven people may mock purpose-driven or mastery-

driven employees by making comments like, “Mission and visions don’t

pay the bills. Show me the money!” A common mistake of business lead-

ers is to assume that the things that make goals meaningful to managers

are the same things that make goals meaningful to their employees.

I believe that no single goal type is inherently better than another.

They can all be valuable forms of motivation. What is important is to

recognize that a goal’s motivation value may be different for differ-

ent people. Just because a goal is motivating to one employee does not

mean it will be equally motivating to another. Part of the art of goal

setting is balancing the use of different types of goals in way that maxi-

mizes overall workforce productivity.

aButton, S. B., Mathieu, J. E., & Zajac, D. M. (1996). Goal orientation in organizational research: A con- ceptual and empirical foundation. Organizational Behavior and Human Decision Processes, 67, 26–48.

Linking goal accomplishment to pay and promotion decisions is critical to maximizing workforce productivity, alignment, and efficiency. But it needs to be done with caution, or it can create unintended and potentially damaging conse- quences. It is probably not possible to create a perfect pay-for-performance pro- cess. But by paying attention to the factors listed above, you can create one that does far more good than harm.

5.3.6 How Are Goals Used to Support Employee Development and Career Growth? Effective goal setting requires striking a balance between what the company needs to accomplish, what employees can do, and what employees want to get out of

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management138

their jobs. Pay and promotions are part of this equation. But another powerful and often overlooked way to increase the motivational value of goals is to link them to an employee’s career objectives.

One effective method for linking goals to employee career growth is to have managers and employees evaluate goals in terms of organizational value and developmental value. Organizational value reflects how important a goal is to the company in terms of key strategic objectives or job requirements. Goals that are low in organizational value may be nice to accomplish but are not critical to the organization. Goals high in organizational value are critical to the organiza- tion and may be considered to be the most important part of the person’s job.

Developmental value reflects how much a goal requires the employee to learn new things or exposes this person to unfamiliar work environments, problems, or busi- ness situations. Goals that have little developmental value are usually things that an employee has done before. They may be mentally complex or time-consuming, but the employee “knows what he or she is doing.” Goals with low development value can also be unfamiliar but easy to master. Goals high in development value typically involve things that are unfamiliar to employees and that require them to develop additional skills, acquire new experiences, or work in new areas. This does not mean the employees lack confidence in achieving the goal; rather, in order to achieve it, they will have to acquire new knowledge, skills, and experiences. For example, an employee interested in developing cross-cultural leadership skills might be given a job assignment that requires her to work with customers in different parts of the world. This goal is high in development value because it means working in other countries, which will require this person to build cross-cultural skills.

Figure 5.4 provides an example of a person’s work goals plotted based on organizational value and developmental value. The goals are divided into four quadrants: business-driven development, functional, self-focused development, and underutilization.

Business-driven development goals are high in organizational value and high in development value. These are things that employees have to do for work that will require them to gain new experiences and develop new skills. These goals tend to be highly meaningful to employees because they are both important to the company and help them build capabilities to advance their careers. The downside of these goals is that they tend to be mentally demanding. They require learning how to do the work while getting the work done at the same time. People who have too many business-driven development goals risk becoming overwhelmed or burning out:

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 139

• Functional goals are high in organizational value but low in development value. These are things that employees know how to do and have typically done before. They are not necessarily easy, but they are familiar. The advan- tage of functional goals is they allow employees to contribute to the organi- zation by focusing on important but familiar tasks. The disadvantage is they do not push employees to grow and develop new capabilities. People who have too many functional goals may feel as if they are stuck in a rut, doing the same things over and over.

• Self-focused development goals are low in organizational value but high in development value. The advantage of these goals is they allow employees to take developmental risks since failure will not have a major negative impact on the business. The disadvantage is that employees may never get around to these goals since they are not important to the organization. This quadrant is sometimes referred to as the “books I want to read” or “classes I keep hoping to take” section of someone’s goal plan.

Self-Focused Development Goals

Underutilization (busywork)

Complete MBA

Write Monthly Department Newsletter

Core Functional Goals

Track and Manage Revenue Targets

Business-Driven Development Goals

Build New Project Group

Lead Acquisition Team

Importance

S tr

e tc

h G

o a ls

2 3 4 5

Conduct College Recruiting

Figure 5.4 Plotting Goals from a Development Perspective

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management140

• Underutilization goals are low in both organizational value and developmen- tal value. These may be goals that used to have more value but have become less important or less challenging over time. Underutilization goals provide little value to the company or the employee and should be removed from an employee’s goal plan if possible. It may make sense to reassign these goals to other employees who will gain more developmental value from performing them. What may be a relatively unimportant and low-development-value goal for a more tenured employee might be a challenging and important goal for a less-experienced employee.

Based on my experience working with clients, the optimal mix of goals is approximately 40 to 50 percent business-driven development, 40 to 50 percent functional, 10 to 20 percent personal development, and 0 percent underutiliza- tion. Assigning goals using this career development mind-set makes goal plans more meaningful to employees because they support their career aspirations. It also avoids motivational problems that can occur when employees feel over- whelmed by too many business-driven development goals, feel stuck in a dead- end job due to too many functional goals, or feel undervalued due to too many self-focused or underutilization goals. Perhaps most important, this goal-setting approach allows the organization to build the capabilities it will need tomorrow through changing how it accomplishes business goals today.

It is important to encourage managers to assign goals with development in mind. Operationally focused managers tend to assign goals to the people they know can achieve them. These managers assign goals based on people’s prior experience achieving similar goals. In other words, people are asked to do some- thing because they have done it before. While this makes sense for achieving short-term results, it undermines the power of using goals to drive long-term employee development. Employees grow weary of being asked to perform the same old tasks over and over without being given a chance to demonstrate their ability to do something new.

To maximize the motivational value of goals, managers need to approach goals as a tool for engaging and developing employees, not just for getting work done. Managers should be trained on the concept of mapping employee goals based on organizational value and development value. They should be encour- aged to use goal assignments to balance the company’s short-term operational needs with employees’ longer-term career objectives. The organization might

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 141

also give managers goals that encourage them to provide their direct reports with developmentally meaningful job assignments (e.g., rewarding managers for building the capabilities of their teams, increasing internal promotion rates, and improving employee engagement and retention).

5.3.7 How Does the Organization Coordinate Goals across Different Employees to Foster Communication and Collaboration? It is quite common to find that two people in the same organization are working on almost exactly the same goal totally unbeknown to one another. This situa- tion leads to wasted resources, missed opportunities to collaborate, and possible conflicts over “whose work is best.” The best way to avoid this problem is to pro- mote communication and collaboration between groups with similar goals by increasing goal visibility, sharing and linking goals, and creating common inter- est groups and communities.

Increasing Goal Visibility The most basic step for improving goal coor- dination is to give employees insight into the goals of other people they work with—for example, by listing employee goal plans on a publicly available intranet system in the company. Employees should be actively encouraged to share and discuss their goals with others so they can benefit from the support and advice of those around them. Employee goal plans should be public unless there is a very clear business or legal reason for keeping them private. Employees should not treat their goals as secrets to be kept from their coworkers.

Even business confidential goals can be shared in a way that does not dis- close sensitive information. For example, an employee could share goals related to increasing sales revenue without showing actual revenue targets. This could be done by stating something like, “Hit revenue targets outlined in the strategic operations plan,” where the operations plan is a confidential document. Similarly, a vice president of business development could share a goal of “growing market share through successfully completing acquisitions agreed to by the board” with- out including detailed information about what acquisitions are planned.

Sharing and Linking Goals Another method to encourage collaboration is to assign one goal to multiple employees or link one employee’s goals to the goals of other employees. This encourages employees to work together to achieve goals reflecting common interests. Linked and shared goals can be powerful tools for

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management142

encouraging collaboration, but they must also be carefully managed or they may create internal tension and resentment among employee groups. Shared and linked goals can pose risks if clear guidelines are not established around how goal perfor- mance will be evaluated. For example, how will the organization assign responsibil- ity for failure to achieve a shared goal? Will responsibility be shared equally across all employees, or will some employees be given more responsibility than others?

Creating Common Interest Groups and Communities The development of social technology makes it much easier for companies to bring together groups of employees who share the same or similar sets of goals. For exam- ple, I have seen companies create online groups and discussion forums where employees discuss how to achieve goals related to improving customer service, developing new products, or building the companies1 brand in the market. The employees joining these groups do not share the same exact goals, but are working on different goals tied together by common themes such as customer service, product innovation, or brand awareness. Creating online common inter- est groups encourages employees to communicate ideas, resources, and advice on how to achieve similar goals. It also creates a sense of camaraderie among employees who are wrestling with the same types of challenges. This approach avoids many of the issues that can arise from shared and linked goals since no assumptions are made around shared goal responsibility. Common inter- est groups can be particularly powerful in geographically distributed or vir- tual workforces where employees do not physically work together. By having a group of compatriots to turn to for advice, employees feel a greater sense of sup- port and connection to the company. Organizations may even provide formal rewards and recognition to employees based on the contributions they make to supporting their broader community of colleagues who share common goals.

5.3.8 How Are Goals Used to Guide Business Execution on an Ongoing Basis? Many organizations view goal setting as an annual or quarterly event. Goals in these companies are typically set at the beginning of the quarter or year and are reviewed only at the end of that time period to make personnel decisions associ- ated with pay and promotions. Goals are rarely reviewed or updated during the year. Such infrequent use of goals significantly limits their value for driving busi- ness execution.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 143

To maximize the value of goal management, companies must shift goal man- agement from an administrative process used solely for evaluating employee performance to an operational process used to guide decisions about business execution. This involves creating processes and norms that ensure goals are fre- quently discussed, reviewed, and updated. Four things are particularly impor- tant for making this shift: focus on goal accomplishment instead of employee performance, establish goal-based operational reviews, regularly update goals, and link goals to other business metrics. How these are implemented can vary significantly depending on the type of job and organization. For example, oper- ational reviews typically occur much less frequently in a biomedical research organization than in a call center sales organization. But both organizations need some form of goal-based operational review process if they are to maximize the strategic value of goal management.

Focus on Goal Accomplishment Instead of Employee Performance Using goals operationally requires shifting the focus of goals from being “something an employee is expected to do” to “something the organization needs to accomplish.” Goals should be treated primarily as metrics for measuring company performance and secondarily as measures of employee success. If an employee says, “I’m behind on one of my goals,” it should not be immediately interpreted as a sign that the employee is failing to do his or her job. It should be seen as a sign that the com- pany may need to shift resources to get the goal back on track.

Employees will not be comfortable calling attention to goals they are strug- gling to achieve if they see goals as something that is mainly used to evaluate their personal performance. When an employee says he is not achieving a goal, the ini- tial response from his manager should be, “What can the company do differently to help you succeed?” as opposed to, “What are you failing to do?” This does not mean that goal accomplishment will not affect compensation and promotion sta- tus, but compensation and promotion decisions are not the primary reason for using goals. One way to test whether your company is using goals for business exe- cution and not just personnel administration is to ask, “Would goal setting still be important and worthwhile if the company was forced to freeze pay for a year?”

Establish Goal-Based Operation Reviews The purpose of goals is to define what individual people across the company need to do to execute the organiza- tion’s overall strategies. Goals should be discussed on an ongoing basis. Operations

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management144

meetings should include reviewing the goals the group or company needs to achieve, discussing whether they are on track, and exploring how to achieve them more effectively. Goals should also be used to guide decisions about the allocation of scarce organizational resources. If managers want additional resources in terms of finances, technology, head count, or training, they should justify their request by linking it to specific organizational and employee goals.

The simplest way to incorporate goals into operations discussions is to lever- age people’s goal plans as a tool for guiding operation review meetings. For exam- ple, I knew a manager who used weekly operations meetings as an opportunity to publicly discuss the goal plans of direct reports. Each week a different per- son on the team shared his or her goal plan and reviewed the progress he or she made on different goals. When people know their goals are going to be discussed and reviewed in an open setting on a regular basis, they will put more effort into keeping goal plans updated and ensuring that their performance against goals is on track. The open discussion of goals also keeps the goal management process focused on relationships between people’s goals and business needs as opposed to using goals as a way to evaluate each person’s individual performance.

Regularly Update Goals One way to see if a company is using goals to drive business execution is to evaluate how frequently people review and update their goals. Company strategies usually shift somewhat over the course of a year. Most companies modify the tactics they use to accomplish strategies on a quarterly basis, if not more often. If goals are updated only once or twice a year, then it is unlikely they are being used to guide ongoing operational decisions. Similarly, it is important to encourage employees to update and modify goals over the year to reflect changes in their roles, business tactics, or market conditions. Few jobs stay exactly the same over a course of twelve months, and employees should be expected to regularly update and occasionally even change their goals through- out the year. It is important to put some guidelines and review processes in place to ensure people don’t game the system by lowering or changing their goals to ensure they have 100 percent goal achievement. But goals should not be seen as something set in stone that can be updated only annually or quarterly. If the company changes its strategy or tactics or an employee changes his or her job role, then these changes should be reflected in people’s formal goal plans.

Link Goals to Other Business Metrics There should be a clear relation- ship between employees’ goals and operational metrics such as profit and loss

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 145

(P&L) statements, customer service measures, financial forecasts, and productiv- ity charts. Creating links between goals and operational metrics calls attention to the role that goals play in driving the success of the company. This allows peo- ple to see the impact that goal accomplishment has on overall company perfor- mance. It also allows leaders to diagnose issues that are affecting performance against key operational metrics. For example, if a company is failing to achieve its revenue targets, is it because the company has not effectively executed its strategy or because the strategy itself is incorrect? In other words, have people failed to accomplish the goals associated with the strategy, or did the goals they set fail to drive the business outcomes the company was expecting?

Goals define what the company has to achieve to be successful. As such, they should be reviewed regularly, discussed openly, tied to key business metrics, and updated throughout the year to reflect shifts in company strategies and tactics. Leveraging goal management as a tool to drive business execution requires mak- ing the review and discussion of goals integral to day-to-day actions and deci- sions taking place within the company. This requires treating goals as important to business operations, and not just as things employees have to do to get a raise or be promoted.

5.4 GOAL MANAGEMENT PROCESS MATURITY It is remarkable how quickly companies can implement goal management pro- cesses when goals are made a priority by senior leadership. I have seen companies go from no standardized goal management process to the implementation of goal plans across over ten thousand employees in less than four months. But creation of goal plans is only the first step toward creating a world-class goal management process. Additional time is required to develop the internal skills and processes required to efficiently cascade and set well-defined goals, effectively manage and update goals throughout the year, and coordinate activities across the company to align efforts to accomplish shared goals. Improving goal management meth- ods can quickly produce rewards associated with increased employee engagement, productivity, and retention. But fully realizing the business execution value of goal management methods requires ongoing efforts lasting multiple years.



C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management146

Figure 5.5 lists five general maturity levels that companies go through as they develop their goal-setting processes. The levels begin with simply having goals and progresses up to using goals as a strategic tool to communicate, moni- tor, and manage the execution of business strategies.

The first level of maturity focuses on making sure employees have well- defined goals. Do not underestimate the business value of achieving this level. Simply getting managers to sit down with their employees and map out a clear set of goals and expectations is a major leap forward for many organizations. The value of achieving this level was memorably captured in a comment an employee made on an engagement survey conducted shortly after implementation of a new goal management process in a large multinational company: “For the first time in the fourteen years I have been with this company, I actually know what I am supposed to be doing in my job.”

Level 2 focuses on ensuring that employees’ goals are aligned with the company’s overall strategy. This is typically done through some form of goal- cascading process. It can also be achieved through the use of goal categories or standardized goal plans. It is important to focus on creating alignment early in

1. Tangible: everyone in the company has a clearly defined, measurable set of goals

2. Aligned: employees’ individual goals can be directly linked to overall strategic objectives of the company

3. Meaningful: people see a clear link between their career objectives and accomplishment of their goals

4. Coordinated: people across departments collaborate to accomplish shared and interdependent goals

5. Operational: goals are frequently reviewed and updated at all levels to actively manage business execution

Figure 5.5 Levels of Goal Management Maturity

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 147

the goal-setting process or the company risks focusing employees on activities that may not fully support the company’s overall strategic objectives. Level 3 shifts the focus from setting goals that are important to the company to setting goals that are also meaningful to employees. This involves using methods to ensure that employees see goals as being relevant to their personal career aspi- rations. The best way to do this is to establish goal plans that integrate business needs and employee development and to tie goal accomplishments to pay and promotion decisions.

Level 4 focuses on building collaboration within the company around com- mon types of goals. It is about breaking down silos and coordinating common efforts across peers and departments. This level is achieved through making goals visible across the organization and providing employees with tools that promote collaboration among employees with similar or common goals.

Level 5 emphasizes getting business leaders to use goal processes as tools for running and managing the business. As one COO put it, “You are using goal management correctly when it ceases to be just a tool for personnel administra- tion and becomes a tool for communicating and evaluating strategies.” This level is achieved by reviewing goal progress through the year, using goal metrics to diagnose how well the organization is executing on its strategic objectives, and leveraging goal management processes as a means to quickly update company direction and align the workforce around shifting strategic initiatives.

You do not necessarily need to master lower levels of goal management matu- rity to reach some of the higher levels. But maturity levels do tend to build on one another somewhat like the stories of a building. The stronger the foundation of the lower stories is, the more stable the higher levels will be. For example, it is difficult to make operational use of goals unless employee goals are tangible and well defined.

Companies also do not need to place equal emphasis on all five maturity lev- els across all parts of the organization. For example, goal coordination may be more important for some jobs than others. Companies may also differ from one department to the next in terms of the emphasis placed on using formal pro- cesses to ensure goal alignment. What is important is to consider what level of goal maturity is most critical to driving business success given a particular orga- nization’s business strategies, workforce characteristics, and operational chal- lenges, and then to stay focused on steadily developing and improving goal management methods until that level is achieved.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Commonsense Talent Management148

5.5 CONCLUSION Goal management is one of the most powerful and most underused tools for driving business execution. This chapter has explained why goals are critical for business execution and provided guidelines for answering critical ques- tions that underlie the design of effective goal management processes. All companies use some form of goal management, but few do it extremely well. Companies that make a concerted effort to fully leverage the value of goals to guide and motivate employee performance tend to outperform and outlast their competition.

NOTES 1. Kleingeld, A., Mierlo, H., & Arends, L. (2013). The Effect of goal setting

on group performance: A meta-analysis. Journal of Applied Psychology, 96, 1289–1304.

2. Lee, F. K., Sheldon, K. M., & Turban, D. B. (2003). Personality and the goal striving process: The influence of achievement goal patterns, goal level, and mental focus on performance and enjoyment. Journal of Applied Psychology, 88, 256–265.

3. Gist, M. E. (1986). Self-efficacy: Implications for organizational behavior and human resource management. Academy of Management Review, 12, 472–485.

4. Buckingham, M., & Coffman, C. (1999). First break all the rules: What the world’s greatest managers do differently. New York: Simon & Schuster.

5. Becker, B. E., & Huselid, M. A. (1998). High performance work systems and firm performance: A synthesis of research and managerial implica- tions. Personnel and Human Resources Management, 16, 53–101. Berggren, E., & Strezo, M. (2011). How companies leverage business execution soft- ware to drive excess shareholder return. SuccessFactors Research white paper, www.successfactors.com. Bloom, N., & Van Reenen, J. (2007). Measuring and explaining management practices across firms and coun- tries. Quarterly Journal of Economics, 122, 1341–1408.

6. Berggren, E., & Messick, K. (2008). Moving mountains. SuccessFactors Research white paper, www.successfactors.com.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

Doing the Right Things 149

7. Crowder, R. G. (1976). Principles of learning and memory. San Francisco: W. H. Freeman.

8. Spencer, D. G. (1986). Employee voice and employee retention. Academy of Management Journal, 29, 488–502. Wood, S. J., & Wall, T. D. (2007). Work enrichment and employee voice in human resource management- performance studies. International Journal of Human Resource Management, 18, 1335–1372.

9. Kaplan R. S., and Norton D. P. (1992, January–February). The balanced scorecard: Measures that drive performance. Harvard Business Review, 71–80.

10. Colquitt, J. A. (2001). On the dimensionality of organizational justice: A construct validation of a measure. Journal of Applied Psychology, 86(3), 386–400. Colquitt, J. A., Conlon, D. E., Wesson, M. J., Poster, C.O.L., & Ng, K. Y. (2001). Justice at the millennium: A meta-analytic review of 25 years of organi- zational justice research. Journal of Applied Psychology, 86, 425–445.

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .

C o p yr

ig h t ©

2 0 1 4 . C

e n te

r fo

r C

re a tiv

e L

e a d e rs

h ip

. A

ll ri g h ts

r e se

rv e d .