Employee Goal Setting - Tips for an Effective Process
Employees will be more motivated if they feel that they are being treated "fairly". The best way to assess your employees' performance "fairly" is to utilize a standardized and documented Employee Goal Setting system.
Motivating and retaining talented employees is important in any company, no matter the size. Employees will feel more satisfied and motivated in their jobs if they feel their work is being recognized and appreciated. This can be achieved through salary merit increases, cash/equity bonuses, promotions, accolades or even an old fashioned pat on the back. But even more important to employees than feeling recognized and appreciated is that they feel they are being treated fairly. Employees who believe they are being treated fairly tend to be more motivated to perform their jobs well.
The best way to install “fairness” in employee evaluation is to utilize processes and tools to facilitate a standardized Employee Goal Setting process which is designed to set clear standards and objectives for employees to be evaluated, while in theory removing personal or professional bias. Now, anyone who has worked in a system like this will tell you that it is still not always “fair”; there are always going to be things like personal favoritism and IOUs that affect an employee review. But, that does not mean that companies should not adopt and strive to improve these systems in their own businesses. It is advantageous to both parties, both the employee and the employer, to have a standardized system, so that it is fair. There will always be disagreements, but having the documentation of job description, goals and calibration will help support the decisions that are made on compensation, promotion, etc.
So what do these Employee Goal Setting systems look like?
At a high level, the best system is one where expectations are laid out and agreed to (by both parties) in the beginning of the year, progress against expectations is discussed throughout the year, and a final assessment of completion of those expectations is delivered at the end of the year.
Let's take a look at some of the tools and processes that you can use to develop your own system.
Job description. This is a critical tool that is often overlooked. The first step to helping an employee excel in their job is making sure they understand exactly what job they are supposed to be doing.
Goals. Each year, make sure you sit down with your employees and set goals. Goals are the measuring stick by which you can assess an employee’s success for the year. Make sure that the employee’s goals align with his/her job description. Here are some pointers to keep in mind when setting goals:
- Start from the top. Set goals for your entire organization and then set employees goals that follow that direction. Your employees will appreciate seeing how their performance directly contributes to company performance.
- Goals can be quantitative or qualitative. Not every employee goal can be measured for statistical improvement, so sometimes a goal can be assessed with a simple “yes/no” on completion.
- Set time frames. If your Product Development department’s goal is to launch a new product, be sure to set a date by when the product should be launched.
- Identify dependencies. In the above example, if Product Development’s goal is to launch the new product in October, make sure to document that your Sales Department’s goal to sell the new product is dependent on the launch date of the new product.
- Stretch goals. These are goals that are set slightly beyond the existing goal and are used to push peak performance. Stretch goals work most effectively when they are utilized in a system that is tied directly to bonus or compensation increase amounts.
- Tasks to achieve goals. Ensure when setting numerical goals that you and the employee identify a list of tasks or projects that will need to be performed to meet those goals.
- Shared goals. Sometimes in a matrixed organization it will be necessary for teams or individuals to share the same goals, due to different functions or departments working towards the same goals. In other words, if your sales team beats their goals, don’t overlook the contribution of the finance, operations and administrative teams that supported them.
- Goals should complement, not compete. If you manage customer service representatives and give them goals to (1) answer 100 calls per hour and (2) get a 100% customer satisfaction score, that might be impossible. Make sure the goals set strike a balance and complement each other, but don’t compete against each other so that an employee would have to choose between achieving one or the other.
- Recognize the effort behind the goal. Let’s look at a simplified example, of two salespeople for a company who each have the same $1MM annual sales goal for the same product… Employee A is selling your product in an existing geographical market, where product and brand recognition is high. They are credited for all catalogue sales that occur, and spend most of the day at home taking orders over the phone from repeat customers. Employee A easily surpasses his/her $1MM sales goal for the year. Employee B is selling your product in a new geographical market, where the product and brand recognition does not exist. He/She is spending six days a week out in the field, trying to get prospects to become customers. Employee B struggles to make 40% of his/her $1MM sales goal for the year. While Employee B did not make the goal, one would have to recognize two things: (1) the two employees’ goals should not have been the same, and (2) Employee B deserves some reward for the amount of effort that went into getting to only 40% of the goal.
Quarterly goal progress meetings. Track your employees progress against their goals and have them support their progress with evidence. Listen, evaluate, and make recommendations to help them progress. If your company’s priorities have changed, then you can revise the goals, but it is critically important that you and the employee have an open dialogue about why and agree on the decision. You want your employee leaving these meetings more motivated, not less.
Calibration. After assessing an individual success against goals, you should also benchmark your employees against each other. It can be done at year-end, and is a good way to make sure that effort is being recognized (like in the two salesperson example above).
Learn more about the author, Benjamin Suggs.
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- goal setting
- employee evaluation
- motivating employees
- employee issues