4 minutes
It’s the time of year when many people, especially those responsible for the performance of an organization, are thinking about goals. I spend a significant amount of time consulting with CEOs and executive teams on organizational goal setting, and I’m often surprised that when we dig into the discussion, there is a big difference between their idea of goal setting and the type of goal setting that actually results in predictable organizational performance.
We all agree on one thing: Setting goals is an important first step to achieve desired outcomes. A wide range of research supports this. For example, Edwin Locke and Gary Latham, psychologists and pioneers in goal-setting theory, found over numerous studies that setting goals increases performance and productivity by 11 percent to 25 percent.
But Nonspecific Goals = Very Little Value
Almost everyone has basic goals in mind for their business and for their personal life. In the personal realm, we often carry around goals of losing weight, quitting a bad habit, or getting more sleep. Similarly, almost every leader wants to grow their organization rapidly, to improve their products and services, and to make their customers happier. These are natural goals, and we don’t have to think too hard about them.
But merely writing down such a goal is only a first small step, and it doesn’t provide much value if you stop there. To provide value, the goal-setting process must have the specificity necessary to enable alignment between all appropriate resources in the organization.
The impact of this alignment of resources is what so many executive teams underestimate. Too many times when I talk with leaders, their goals for the organization are vague enough that different people can and will interpret them differently. The transformation from goals to achievements only happens when people understand both what they need to do and what they need to not do. Each goal must establish priorities that are specific enough to allow everyone to choose between the many possible actions they can take each day.
The Question to Ask About Every Goal
The most valuable conversation in the goal-setting process is prompted by this question: What is the appropriate metric to measure completion of this goal?
Unless you pair your goals with good metrics, people may measure performance against that goal in many different ways, a confused approach that does not support cohesive performance.
A simple growth goal can lead to many different metrics, depending on the particular organization. While the CEO may have a clear vision of what he or she means by “grow the organization,” individual employees will often be confused. It’s vital to ask, “What is the appropriate metric?” Is it loan growth? Membership growth? Net income growth? Which is most important for us to tackle right now, at this stage in our journey? Why?
As a leader, you must have a thoughtful discussion with your leadership team about the best metric for each organizational goal. It’s a process that can often lead to breakthrough ideas. When I’m working with teams on goal setting, I often ask the question, “What are three ways we could measure this goal?” This prevents people from narrowing their focus and choosing whatever is the easiest but not necessarily the best metric.
Deciding how to measure progress toward goals isn’t particularly easy, but you can read here about the five characteristics of good metrics. To tie goals to measurable outcomes, it’s imperative to have a real discussion that goes beyond vague goals so that everyone at the table is clear on exactly how success will be evaluated.
Once you’ve landed on the right metric:
- Communicate broadly. Let the organization know what each credit union goal is, how it will be measured, and why that metric was chosen.
- Break it down. Ensure that each executive has conversations with his or her team about how everyone can positively impact organizational goals and metrics. What supporting goals are most important? How will they be measured?
- Share the scoreboard. Provide regular updates to all employees on performance against organizational metrics. Giving people access to a transparent, up-to-date record of how the most critical metrics are faring can do wonders for alignment, engagement, and good decision making.
If you can move beyond just having goals and force your executive team to get clear on how those goals will be measured, you will be well on your way to delivering predictable performance.
Joel Trammell is founder and CEO of Khorus, Austin, Texas, which provides an enterprise leadership platform that gives CEOs a central place for driving execution, managing talent, and building culture.
