The End of Performance Reviews Part 2: Proactively Managing Performance with Goal Setting

21 Mar The End of Performance Reviews Part 2: Proactively Managing Performance with Goal Setting

Did you read our last newsletter article entitled: “The End of Performance Reviews Part 1: Ahh, Music to My Ears…”? Did it make you feel good and nervous all at once? The article indicated you might be able to give up your current performance evaluation system (that’s the feel good part) and then put goal setting at the forefront of your performance management going forward (that’s the nervous part). While the shift to focusing on goals may seem daunting, it is worth it and easier than you may think.

The old performance evaluation system, with some kind of ranking scale, may seem easier because it is known and comfortable. Comfortable doesn’t always mean the most effective. While an employer can fairly quickly rank employees against various categories, add a few comments, and be done, this process produces stress, particularly if the employee isn’t a great performer and the issues haven’t been discussed during the year.

The questions to ask are: Is easier better? Does it bring about effective change, build morale and positively affect your bottom line? If yes, then stick to what you are doing. If no, read on.

Managing performance with goal setting can be, at first, challenging. Why? Because it is not a one-size-fits- all approach. Unlike standard performance evaluation forms, nobody can give you the goals for your employees. Only you (or the employee) can and you know what you need from your employees to support your success.

That being said, it will get easier and this article will shed some light on the goal setting process and get you going in the right direction. 

Why Goals?
The simple answer is: employee engagement. You can’t be a manager of a business and not be concerned about employee engagement. In your business, it’s likely you see a mix of employee engagement occurring regularly– some are engaged and some aren’t and some are in between.

Isn’t it likely true that an improvement in engagement would mean an improvement across the board? Employees motivated to make your business, their positions, better, will positively impact things like customer service, productivity and morale.

In groundbreaking research, the Gallup group created the Q12 Survey. Gallup “conducted decades of research – writing, testing, and refining thousands of question items to find the ones that would best measure employee engagement. In 1996, Gallup finalized the 12 question items that consistently and powerfully link to business outcomes, including profitability, employee retention, productivity, safety records, and customer engagement.”

The twelve core elements that they uncovered as the best predictors of employee engagement and performance are:

1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission or purpose of my company makes me feel my job is important.
9. My associates or fellow employees are committed to doing quality work.
10. I have a best friend at work.
11. In the last six months, someone at work has talked to me about my progress.
12. This last year, I have had opportunities at work to learn and grow.

Notice that the very first question is about knowing expectations at work. This would seem to be a fundamental component to high performance and employee engagement. Goals, among other methods of communication about expectations, like job descriptions, can be a significant source for creating that experience for employees. Not to mention helping address #3, #6, and #11 specifically, and others on the list like #9.

Creating goals
As the manager/owner/employer, creating goals begins with you. You must know where you want your business to go in order to determine the best way to get there. Therefore, you need to carefully analyze your business to determine what needs to be improved.

Once that’s accomplished, you have to tie your overall business goals to your individual employee goals, at each level of the organization. This is commonly referred to as “cascading goals” – a process that integrates goal-setting activities at all organizational levels, pointing to the goals outlined at the highest level. As goals cascade downward, they become more narrowly focused allowing for specific objectives to be defined.

You want everyone, in their own way, working towards the achievement of the goals you established at the executive level. For example, if your goal is to increase business by 10%, what does each employee need to do, or achieve, in order to help you accomplish your goal?

Things to keep in mind:

• The employee needs to be able to do the work; people can’t achieve a goal that is not within their scope of influence or current capability.
• The employee must have the tools, resources, and access required to get the work done.
• Expectations must be well-defined, and the employee must have sufficient time and bandwidth to meet milestones.
• Goals must be reasonable. The challenge of a stretch goal can be invigorating; an impossible target will certainly be frustrating and can be demoralizing.
• Managers must be prepared to offer guidance and coaching.

Writing Goals
Writing goals can be critical to whether or not they will be achieved. A misunderstood goal will be ineffectual; an overly ambitious goal will hinder motivation. It’s important that the goals be S.M.A.R.T. – an acronym you’ve probably heard before, but it’s worth discussing again. S.M.A.R.T. stands for Specific, Measurable, Attainable, Relevant, and Time Bound.

• Specific: Exact, accurate, clear, unambiguous, and without the use of generalities. You must specifically define what you expect the employee to do. Use action verbs when possible. You should take into consideration the employee’s personality and experience level. For example, a highly autonomous and more experienced employee will likely need fewer details than a less confident or seasoned employee.
• Measurable: You will need to identify how success will be measured. What is the concrete criterion? This is usually stated in terms of quantity, quality, timeliness or cost. This is how you will be able to objectively assess whether or not the employee is achieving the goals established. For example, a goal could be for the employee to increase production by 25%.
• Attainable: Is the goal within the employee’s capabilities? Is the goal part of the employee’s overall authority? Goals need to be realistic – not out of reach and not extreme. If you can’t answer this question: “How can the goal be accomplished?” the employee won’t be able to either. Ensure that the employee has the resources and time, as well as access to necessary information (i.e. data, people) in order to be successful at reaching the goal.
• Relevant: The goals should matter to the employee and align with goals for the team, department/division, and organization. In doing so, be sure the employee understands how his/her individual goals contribute to the success and/or failure of the goals at higher levels. In this sense, you are giving the employee context for the work they do.
• Time Bound: Specify a delivery date and/or schedule. When does the goal need to be completed? For example, “by the end of the 4^th quarter of this year” or “every month.” Goals should be grounded in specific time frame or target date. This helps create a sense of urgency and can prevent day-to-day activities from getting in the way unnecessarily.

Getting comfortable with establishing goals in this way will take some practice. For simplification, think of the aim of S.M.A.R.T. goals as specifying who, what, where, when, and why of the goal and creating shared understanding and expectations. Ultimately, the purpose is to help the employee, the team, the department, and the organization succeed.

Pitfalls to avoid:

• Consider the employee’s total set of goals. While each individual goal may be achievable, you may be assigning the employee more goals than they could reasonably be expected to successfully complete. Generally 3-5 should suffice.
• Don’t create a situation in which safety, ethics, or morals will need to be compromised in order to achieve the goal. Be sure employees know you don’t want short cuts (cheating), which can be dangerous, to become the manner in which a goal is accomplished.
• Don’t create goals that are so narrowly defined that employees miss the bigger picture. You don’t want employees to focus myopically on short-term gains and lose sight of the long-term effects on the organization.
• While goals should be time bound, don’t make the time line inappropriately short. Too short of a timeframe can result in long-term problems – short-term goals encourage short-term thinking.
• Think about whether or not the goal will influence risk-taking. Define acceptable levels of risk. You don’t want your employees to take too much risk and put the organization in any kind of harm.

Conclusion
The process of creating and writing goals as a means of increasing performance management is a shift worth making. Yet, poorly written goals will not help your organization or employees get better, they will hinder total performance on all levels, not to mention be potentially damaging along the way. Start slow in this process, maybe write one to start, and see how that goes. Get feedback from your employees, learn from mistakes, and further enhance your process before going too far.

Once you’re on your way with that part of goal setting, you can work on monitoring and feedback. Goals will not be successful without it. That’s Part 3 of our series – stay tuned!