How to Improve Your Company Performance with Goal Setting?
We all have ideas about what is most important for businesses, but goal setting is arguably one of the most basic, and vital, parts of a business. After all, it’s not just businesses that benefit from goal setting but it is great for employees personal growth as well.
We promote the benefits of personal goal setting to help us succeed every day. Even though goal setting in the workplace is obvious, sometimes it is seen as time-consuming and ineffective so skipped entirely, and sometimes it is not done right. The fact is that setting goals are extremely effective, but only when it is done properly.
Why is Goal Setting so Important for Businesses
Whether we realise it or not, goals are important for all of us. Just like saving up for that dream holiday, goals give us direction in everyday life. Without them, we tend to feel lost and even unsatisfied. If they’re that important outside of the workplace, imagine how vital they are when it comes to your employees and your business.
Take a look at some of the benefits derived from this important activity:
Engagement and Productivity
When goal setting is done right, it encourages employee engagement. Right from working directly with line managers to feeling more invested in the work they do, employees are voluntarily more actively involved. Engagement is a big part of what keeps employees happy at work, and employees that aren’t engaged often feel lost, unhappy and unsatisfied.
Effective goal setting motivates employees and increases productivity. While happier employees are usually more productive anyway, clearly defined goals have the added benefit of reducing confusion and providing a clear target to work for. Employees know what they’re supposed to be achieving and how they are supposed to achieve it, so putting it into action is much easier.
Ease and Efficiency
As well as making it easier to do the work that needs to be done properly, less confusion also means less time wasted. The company strategy and relevant work can be executed much more efficiently, and you even use the time saved to focus on more ways to improve efficiency or even set efficiency specific goals.
Clearly defined goals that are visible across the business at every level also make it easier to see what business objectives are being targeted and what is being achieved. Strategic decisions can then be made accordingly. For example, you may be able to spot where some employees or departments are duplicating the work of others or even where there are important goal-gaps with vital needs not being met.
Reward and Retention
Performance goal setting is the essential foundation for tracking and compensation strategies. Without goal setting, you can’t tell if employees are achieving targets that deserve recognition or which employees should be attaining the best salary and bonus packages. With effective goal setting, you can start to implement the tracking and compensation strategies you need to create a true pay-for-performance culture. This is key to improving employee retention and attracting the top talent in the future.
Alignment and Success
Your business is dependent on your employees and the productivity and efficiencies they achieve. However, these may not be successful unless the efforts are directed towards meeting your company needs. To do this you need to set goals across the whole business and ensure they are aligned at every level. Individual employee goals should meet the expectations and requirements of department goals, which should in turn all be in line with and help to achieve overall company goals.
Ultimately, goal setting is essential for business success. Research has shown a strong correlation between a company’s financial performance and effective goal setting with companies achieving higher levels of financial success when they more closely align goals across the organisation.
How to Set Goals – Effectively
If you’ve tried goal setting in the past or are currently struggling with a new goal setting strategy and are surprised by the benefits above, then there’s a good chance you might not be doing it effectively. Fortunately, with the right plan in place, goal setting can be relatively easy to execute. Here’s our three-step strategy for implementing effective goal setting in the workplace.
1. Make it SMART
All goals that you set whether at a company, department or individual employee level, need to follow the SMART format. This widely approved format for goals ensures that there is no confusion and targets can be tracked and changed easily. If you haven’t heard of SMART goals before or need a reminder, here’s the basic format. Major job functions and responsibilities can also serve as a general framework for writing employee goals.
Make your goal as specific as possible, highlighting who is responsible for getting the goal completed, what needs to be accomplished and which requirements or constraints are involved. You’ll also need to state why this goal is important. The more specific it is, the less room there is for misinterpretation and the more chance there is that the goal will be achieved accurately.
Set specific criteria for measuring progress so that both managers and employees know if they are still on track. If you haven’t already specified, now is the time to put some quantitative or measurable qualitative constraints on your goal. For example, reducing turnover by X% or increasing average customer satisfaction by X points. Without this part, you won’t be able to measure if the goal has been reached or not.
Ambition is great but an unattainable goal can be extremely demotivating. No one wants to feel like they’re running on a treadmill, so make sure that the goals you set for employees and departments can actually be achieved. This also means you can reward employees or teams when they do attain their goal which can be extremely motivating both to them and to the rest of the company.
It may sound obvious but if a goal isn’t relevant to the employee’s role, the department or the company’s needs, then it really serves no purpose. Relevant goals can be better understood by employees, and if they’re relevant to the business at every level then employees can get a clear idea of what their role is within the company and why the work they do is important.
Goals need to be set to a specific timeframe. This helps to create a sense of urgency but is also essential to being able to measure progress and identify whether the goal has been achieved or not. Without a timeframe, working towards the goal could just go on forever. It’s also a good idea to break down the timeframe into smaller targets and milestones, particularly if it’s a long-term goal. This not only makes it easier to achieve the goal as smaller targets are usually easier to understand and complete than big goals, but rewarding milestones can serve as additional motivation to achieve the final goal.
2. Make it Collaborative
Once you know how to format goals effectively, you need to make sure the goal-setting process is completely collaborative. This includes processes between managers and departments as well as between managers and employees. The latter is usually the easiest to achieve and many companies see the obvious benefits in having managers and employees work closely together to set goals and later to see if they are being met. This collaboration ensures that employees understand what is expected of them and have a say in their own work while managers can make sure that employees working towards goals that help the team or department as a whole.
What is less understood and practised is the importance of cross-department collaboration. Ensuring that goals are open to managers from other departments helps to reduce redundant or duplicate work. Additionally, managers can actually support other departments by looking at their goals and identifying if there are areas or goals being missed out as well as areas where they could be inadvertently working against each other.
3. Make it Align
Finally, you can use your SMART format and open collaboration to ensure that goals are aligned across the entire business. Alignment is the final step but by no means the least important. Keeping employees, teams, departments and company goals all in line ensures that key business objectives are being met. After all, everyone is working towards the common goal of business success.
Goal Setting with SuccessFactors
While the process of goal setting is straight forward, managing complete alignment across the entire business and tracking the process for hundreds or even thousands of employees, teams, and departments are no small feat.
Software that can help automate vital goal setting workflows, provide complete visibility of goals across the business and generate intuitive reports and insights to help improve the goal setting process is the best way to ensure you are setting goals effectively.
SuccessFactors Performance & Goals is the number one way to set goals and track performance to ensure your workforce is on track for success. Contact us today to find out more or to book your free demo.