The Business of Setting Great Goals

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Every company I’ve observed implementing a performance management process that actually works has one thing in common - they teach their employees how to set good quality goals for themselves, and a defining factor in this is the goals reflect a fundamental understanding of the business.

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In larger companies, as roles become narrower in their function, the challenge can be that individual contributors and even managers may lack a fundamental understanding of the mechanics of the business model of the company.  What this does, is it makes it hard for those people to not only understand how their work connects to the success of the company, but it also makes it hard for them to come up with high-quality goals for themselves based on what they understand about their role. 

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How can leaders create great goals? 

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This is something I encourage the leaders I talk to and the talent management executives we work with to make a priority in their development process and their communication strategy around performance management.  When teaching a new employee how to use the performance management process, this is a great time to not only teach them about goal structures like SMART goals, OKRs, etc, but to also contextualize that structure with how their business actually operates - how it generates revenue, what costs it incurs, and where their role connects to the businesses operations itself.  

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If you work to combine a good structure, which honestly is the easy part, with a good quality education around the business acumen pieces required to understand where an employee's role connects to the business model, you’re set up for high-quality goals.  

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Why is building a goal-setting process important? 

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This is the absolute cornerstone of a good performance management process, regardless of the tools and structure you use.  Suppose you don’t have people working on goals that fit tightly with the business’s operations. In that case, it won’t matter if you’re good at the other things like creating transparency, communicating progress, helping to remove barriers, etc. A poor quality goal that gets achieved doesn’t move the needle for the business and it also makes it less likely that the person achieving it will get the recognition and reward they deserve, which feeds into a negative cycle of performance, all because the goal quality was low. 

So where to start?  

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This is something you can audit through structured conversations or even an effective surveying tool.  Some of our own customers at Rhabit do a great job of checking this continuously by measuring if they feel like their work makes an impact on the success of the company and their manager has explained how their work connects to the business.  

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Measurement is a great way to diagnose the state of business acumen within your organization.  

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I would also encourage you to look at your onboarding process.  What is the experience that new employees go through that teaches them about how the business and their role intersect?  Talk to your leaders about how they communicate the importance and impact of the roles their people have in the company when they bring in new team members.  Make this a fundamental part of your leadership development training.  

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Lastly, spot-check goals people create in your performance management system to see if you fundamentally understand how they connect to the business.  If you don't, consider reaching out to that person’s leader to try to learn more - this can often be a great way for talent managers and HR to learn more about the business itself, which only increases your chance of being successful in your own role.  

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If the goal still doesn’t make sense, this is a great time to work with that leader to improve their own understanding of your performance management system and what good quality goals look like by involving more senior leaders in the organization.  

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What’s next for creating a scalable goal-setting process?

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If you’re interested in learning more about great performance management methods and approaches, we’d love to speak with you and perhaps show you some of the ways we create high-performance environments by combining continuous feedback on interpersonal skills with easy-to-use goal tracking and automation for 1:1 agendas and data.  

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As organizational psychologists, we’ve worked tirelessly to create a system that’s simple and helps managers focus on their people instead of filling out forms, and we’d love a chance to show you how we’ve done it. 

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Till next time,

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The Rhabit Team

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