UK: Goal Setting: How And Why It Works

Last Updated: 21 February 2012

We can accomplish more and go further if we dedicate ourselves to written goals, keep the goals on our corporate and personal radar screens, and follow through on the steps required to make them happen.

Research found that 68 out of 70 organisations examined in various studies enjoyed productivity gains as a result of management by objectives. Goal setting is the first step in management by objectives.

Research on goal setting shows that it is a very powerful technique to improve individual productivity and organisational effectiveness.

Yet many CEOs are not personally goal oriented.

Goals give us focus, get us going, add to our resolve and lead to actions.

A common element among high achievers is sharing goal-setting behaviour. In writing goals, high achievers are prepared to risk failure – and the demands of success.

Setting achievable corporate goals

Before you can begin goal setting, it's essential to create a blueprint for how the process will unfold. We recommend five points in the company plan:

  • Mission statement
  • Vision statement
  • Fiscal year priorities
  • Strategies
  • Monthly monitoring and managing meetings.

Beginning with a mission statement, each step flows into the next – and goal setting begins after the mission and vision statements are finished. The goal-setting process needs to be simple. The more complex it is, the less people are enjoying it.

Effective goals are SMART goals

To be effective, goals should follow the "SMART" format. That means they should meet these criteria:

Specific

Measurable

Achievable

Realistic

Time bound

As goals are set within the organisation, finding the right amount of "stretch" – for growth – is crucial.

Goals that are too easy do not boost performance, so they are of little value. Studies show that it is best to challenge employees, and expect them to challenge themselves, by setting goals that are attainable – but with considerable effort.

Don't overdo financial goals

Often, CEOs fall prey to the allure of setting only financial goals. That compromises the other reasons they are in business – such as employing people and contributing to their communities.

Corporate goal categories

Goals can be set in four areas:

  • financial
  • customer service
  • employee-based (centring on learning and innovation)
  • internal business process

and extended into other categories, including:

  • image and reputation
  • community relations/philanthropy
  • sales and marketing.

Whichever categories you choose – or if you customise them for your own organisation – the final product should reflect your corporate purpose and path.

Setting employee goals

Is it better for employees to set goals in a particular environment, or for them to set goals by themselves? Or do they do best with assigned goals? No one method seems to be better than the other in terms of outcome and performance.

The more closely a manager can match the employees' wishes with the goal-setting style, the better the chances for an outcome everyone seeks.

Linking monetary incentives to goals

Bonuses and other pay-for-performance incentives are gaining in popularity, but they work only under certain conditions.

Studies show that pay should not be linked to achieving goals unless:

  • the performance goals are actually under the employees' sphere of influence
  • the goals can be quantified, then measured
  • frequent, relatively large payments are made for achieving goals.

If these three conditions aren't met, undesirable outcomes are possible. Other studies have shown that quality suffers when quantitative goals are given highest priority.

Leadership in goal setting

Goals are not worth the paper they're written on if leaders don't bring them to life for the organisation.

In the years we have been working in this field, we are constantly reminded that it is the CEO's responsibility to bring passion to the mission. When we see CEOs who are passionate about the mission statement, it lights everybody up. If the CEO is not passionate about it, neither are the employees!

Cascading goals in the organisation

Often there is a "disconnect" between what executive staff understand about an organisation's goals and what the CEO believes they understand. In many cases, the staff don't even know what the goals are.

The term "cascading goals" has been used to describe the process of adopting goals at different levels in a company. Like water over a cliff, goals must spill over and cascade throughout an organisation to be implemented.

Creating horizontal alignment

Cascading creates horizontal alignment in a company. All the executives at the same level need to gain agreement about what they will do to support the CEO's vision and minimise conflict.

A dramatic example: Over two years, a technology division of American Express was able to cascade goals from a senior vice president to the 800 people in that area. The end result: the costs of developing a software system were cut in half over a two-year period.

How cascading works 

Once the vision and main categorical goals are set at the CEO and managerial level, select a person who will champion the process of cascading goals. He or she works to ensure that each department will create goals and action plans that support the goals of the company's leadership.

Communicating goals

Updating people on their progress is critical. Goals must be visible and repeated to keep the commitment alive. Besides scheduled meetings, goals may be touted in a number of ways, including:

  • monthly email messages
  • company newsletters
  • bulletin boards
  • "surprise" coffee breaks.

Ensuring goal implementation

  • Action plans

    When everyone returns to their jobs after goal-setting exercises, enthusiasm for the goals can be buried by the demands of day-to-day business. The first step is to develop action plans based on the goals – complete with incentives for performance and consequences for non-performance.
  • Accountability 

    Discussing consequences is critical in any goals-to-action plan. Often, the consequences are determined as the team works on the goals in the earliest planning stages.

    In our experience, peer pressure creates such an intense expectation of performance that it causes action. The perceived humiliation of removal from the team is so great that most people act.
  • Monthly management meetings 

    Once your goals and action plans are set, we recommend scheduling monthly management meetings to monitor progress. The original planning group should meet for a 90-minute session to:
    • recap the previous month
    • acknowledge progress and examine shortfalls
    • amend the plan if it needs to be changed
    • clarify the action plan for the next 30 days.

Coaching for goals 

Implementing goals that were set months ago requires discipline. The planning group have to follow through with their direct reports. The managers need the discipline to make the goals a priority over day-to-day firefighting in a business.

When goal setting goes wrong

How often have you set goals that are then set aside? Examine roadblocks if you have a pattern of abandoning organisational or corporate goals.

Commit goals to paper 

This may seem obvious. But it is surprising how often goals are stated but not written down.

Stumbling blocks for the CEO 

Goal setting is not for the faint of heart. It's not for the passionless, either. We suggest that the CEO spend some time weighing vision, goals and priorities alone – or with an advisor – before inviting trusted managers and employees into the goal-setting process. And if a working group goes off-site to do visioning, goal setting and planning, don't forget to allow for resting and relaxing as well.

Organisational roadblocks

There are ten organisational roadblocks to effective goal setting and implementation:

  1. Lack of clear-cut responsibilities around the goals
  2. Lack of a tracking system
  3. Lack of an accountability system
  4. Lack of commitment
  5. Lack of buy-in from people who are expected to fulfil the goals
  6. Ineffective communication
  7. Lack of time or resources
  8. Too many goals being financially driven
  9. Focusing on too many or too few goals
  10. Goals not being tied to a longer-term vision.

Personal obstacles in goal setting 

When we fail to meet personal goals, many factors may be at play. For example:

  • The CEO has no passion for the goals they have set.
  • The goals are not precise.
  • The personal goal is at cross-purposes with the CEO's self-image.

Fearing failure, commitment 

Fears can play a role in our failure to make – or realise – goals. Goal setting is basically making a commitment. Fear of commitment is prevalent in the world. "If I don't set a goal, then I'm not accountable for it." That's a subconscious tactic for avoiding goal setting.

Improving your life with personal goals

Mastering the art of goal setting and realising those goals makes for a very fulfilling life, for example in terms of:

  • family
  • personal health and fitness
  • business and leisure activities.

Start with a Master Want List

If living that kind of life sounds appealing, it all begins with a little list called the Master Want List. Here are some questions to prompt you:

  • What do you want to do with your life?
  • Whom do you want to meet?
  • What new activities do you want to try?
  • What experiences do you want to have again?
  • Where do you want to go?
  • What do you want to learn?
  • What do you want to improve?
  • Whom do you want to spend more time with?

How will you benefit? 

Choose from the Master Want List the goals you would like to pursue, and give yourself a time frame. Next to each goal, indicate how you will benefit from completing it. That's a prime motivator.

Framework for personal goal setting 

Approach personal goal setting in a way that mirrors business goal setting. We recommend starting with a personal mission statement, a personal vision statement, the goals for the next 12 months, annual goals, and an action plan with strategies for success. Use your birthday as the date that you review your goals and set new ones.

The quantum factor: beginning with yourself

Many of us have achieved success based on an external focus – an ability to accomplish what we want outside of ourselves. However, we can make quantum leaps simply by focusing on ourselves first.

  • If you want to have a better business, become a better person.
  • If you want to create new markets, become a better person.
  • If you aspire to greater spheres of influence, become a better person.

The G-Curve 

In studies of people who have made dramatic improvements in their lives, we notice that they seemed to do so at 18-month intervals. We call this period of one and a half years the Growth Curve, or G-Curve.

As a result, if you can stay disciplined and focused on your goals for 18 months, you can experience major breakthroughs in your life.

Creating quantum goals 

A quantum goal is reachable, achievable, but beyond your current expectations. Quantum goals aren't unrealistic – like "I want to be Prime Minister in 18 months" – but they do involve taking risks.

Reviewing goals for focus 

We believe in reading your goals out loud at least twice a day. Carry them with you; put them on your computer screen. By repeating them, they're in your subconscious all the time.

Goals are a moving target. As things change, as new opportunities arise and new people come into your life, you will want to adjust your goals.

Developing the discipline 

Doing what you need to do, until it becomes habit, is a matter of discipline. Eating less and exercising more isn't a matter of willpower. It's discipline.

Discipline will help you keep the 18-month commitments to get to the next level. We estimate that it takes about six years to reach the perfect state, the ideal world, from working on your goals.

Finding supporters for your quantum goals 

Focusing on your personal development can pay remarkable dividends. For example, becoming a better "you" can influence who wants to be on your board, who wants to be your COO, who wants to be around you in social settings.

We recommend identifying those individuals who, if they chose to, could help you reach your quantum goals. Never ask them for anything. Stay in touch with these people at least once every 90 days.

Chances are they will offer you opportunities beyond your expectations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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