Our Chief Product Officer, Anup Yanamandra and I have been writing about performance management processes and applications in our blog series called “The Performance Management Playbook.”

For this month’s installment, I wanted to talk about how goal setting fits in as an part of the overall Continuous Performance Management process. Throughout my career I’ve been espousing the virtues of goal setting. I truly believe that when executed thoughtfully and properly, the process of setting, managing and achieving goals has the power to align and drive a business.

Here’s a breakdown of how this works.

Company Level Goals

Every company will have its own process when it comes to goals, but there is one universal truth: every successful goals program starts at the top and works its way down through the organization. This starts with the highest level leadership in a company determining the things they need to accomplish in a given time period to meet or exceed their plan. This should be a thoughtful process that takes into account what the business has to achieve, and what the measurable outcomes of those goals will be. The focus should be on the “Big Ticket” items, not tasks that need to be performed.

At the highest level these goals should be bold, aspirational, and measurable. At Betterworks, we believe and practice that you create the goal, with specific and measurable milestones under it. These milestones define both the work that needs to get done, and the measures that will tell you once you’ve succeeded.

Clear owners need to be assigned to each goal, as well as milestones, and many business goals are shared across leaders and organizations.

One protip on goal ownership; singular functional goals, albeit effective, can create silos, so be thoughtful about who should actually own each goal, and consider shared goals that span across leaders and organizations.

Communicate Those Goals to the Next Layer Down

Once these highest-level company goals are agreed upon and assigned owners, each leader takes these goals to their respective organizations. Discussing your highest level goals with your next layer of leadership accomplishes two things; the first being a shared understanding of what the company’s highest priorities are, and the second being alignment, as this next layer will create their goals and milestones based off of the company priorities.

As the next layer creates their goals, you’ll notice that not all the activity at this level will be in direct support for the highest-level company goals. This is okay, as long as there are some goals that are directly aligned and supportive of the highest company goals.

One last note here; it’s essential that as you communicate these goals down through the organization you ensure that each level of leadership takes the same steps of setting goals and creating milestones that are measurable.

Goal Alignment is Critically Important

Setting goals at all levels of your organization, and having one layer of goals support the next, is a fast track to harnessing the full power of an organization. When you have an organization where employees at all levels understand the highest level goals, it’s easier for them to understand what they are part of, how their role fits in, and how they should or could contribute to the success of the business.   When your organization has a strong and active sense of purpose and your employees are able to link their day-to-day work to that purpose, Gallup found that engagement increases by 3.5x.  

Conversely, when organizations don’t set clear priorities and goals are not created, employees cannot easily prioritize their work or make tradeoff decisions when necessary. If you don’t understand the organization’s priorities, then you aren’t equipped to say yes or no to new tasks or work. This ultimately diminishes employee engagement, as it can result in employees saying “yes” to everything which creates frustration and can cause the employee to feel overworked and overwhelmed.

To Cascade or Not to Cascade?

Many think that cascading of goals the right answer. But organizations with many layers can find this challenging, and get very little return for this effort.

Having the highest level goals in your company with leaders communicating and goal setting at the next layer (and the next as appropriate) and having some goals at the next layer support those highest goals is alignment enough. When organizations create a rigid model, where all goals need to support with success metrics directly linking to the next layer up, it creates a challenge to track, maintain and drive success.

So go for “alignment”, and don’t use a rigid cascade approach. This will be much more successful for your organization.

The Frequency of Goal Setting Depends on the Type of Goal

Most company plans are created for a fiscal year, and long-range planning could be 2-5 years. It is important to have goals for both the long and short term. I recommend creating your highest level company goals for the fiscal year and then breaking them down into quarterly goals.

Quarterly goals allow employees to work on manageable and meaningful work while still allowing for course corrections on activities that ultimately feed into annual goals so those can still be met.

On Setting Aspirational vs. Non-aspirational Goals

There is much debate over whether goals should be aspirational or not.  Aspirational goals drive employees to be their very best and allow the most growth. And there are some areas of the business that aspirational goals really make sense! Setting new sales achievement levels or breaking into new markets would be great examples of these types of goals. When moving your business into unchartered waters, go bold and aspirational, as this excites and engages your employees!

When employees feel they are part of something bigger than themselves, they put their all into it. The achievement with aspirational goals is often positive, so remember; if you shoot for the stars and only reach the moon, that is still a pretty good outcome for your company!

But there are also merits to non-aspirational goals. Realize that there are times in the business that it makes sense to set the goal at a non-aspirational level. For example, when you are rolling out a new reporting mechanism or new compliance requirements. These are areas that need to be achieved by the business but where aspirational goals don’t make as much sense.

So, the official answer around aspirational vs. non-aspirational goals? As with most things, there is not one right answer or one-size-fits-all approach. Both are appropriate at different times in your business. So find the process that works best for you, your employees and your business, and enjoy watching the benefits that process brings!

Additional Resources: Continuous Performance Management, OKRs (Objectives and Key Results), Create a Feedback Culture