Every client company I have worked with as a research and management consultant the last 15 years has employed some type of management by objective, with varied results. Given that goal setting has been around in organizations for centuries, one might think it is a straight forward and simple process with predictable benefits. However, setting and working with goals in a structured way, that motivates people and supports the overall long-term objectives of the business can be a tricky task. Here are some of the reasons why, and a few things to think about when working with goals.
Goals are important but dangerous
To start off, what is it about goals that make them potent as a driver of performance? One aspect is that goals affect our motivation and motivation in turn affect performance. Setting and committing to a goal help us focus our efforts and makes it easier for us to prioritize. In a work environment with many different demands on our time, this can serve to reduce stress and make it easier to handle expectations. Setting and reaching challenging (but realistic) goals can furthermore create a sense of pride, accomplishment and competence. Well thought through goals (more about this later on) can also serve to align individuals and teams around a common mission.
However, the same mechanisms that make goals effective can also turn them into potential organizational hazards. The fact that goals create focus may lead to an overly narrow focus, meaning we are unable to take in relevant information that ought to make us reprioritize. A strong focus on goals can also lead to unethical or unwanted behavior in order to reach the goal, like overcharging clients to meet billable hours or focusing on your own sales budget instead of helping a colleague on a very important bid for the company. Once a goal is reached it is often a natural reaction to relax and slow down instead of keep going. However, setting very challenging goals and then not reach them can create a sense of failure, particularly if there is no clear strategy for how to handle and work with “stretch goals”.
4 things to consider to get it right
So how do you get it right? Some key elements of working successfully with goals include
- working with a hierarchy of goals
- involving employees in the goal setting
- ensuring alignment and adapting goals to the chain of command
- training managers and staff in the process of working with goals
1. RACE – The hierarchy of goals
A useful approach is to think about goals in terms of a hierarchy. At 3S we work with a model called RACE, based on concept developed by Mercuri International. The acronym stands for Result goals, Activity goals, Capability goals and Energy goals.
Many goals in an organization are stated as the desired final result, such as “Revenue of 10 million Euro”, or “Market share of 40%”. A result goal is characterized by being an outcome that you want to reach but do not fully control. Regardless of what you do, there might be factors beyond your control that hinder goal completion (your biggest competitor launches a new and innovative product), or helps you along the way (you biggest competitor is hit by a scandal and customers turn to you). Result goals can be necessary to set the direction and outline where we want to end up – but they provide no help in understanding and ensuring the right actions for how to get there.
On an individual level, result goals can have different effects. If you have a senior role with lots of experience, you might find result goals motivating as you feel confident about planning how to reach the goal. The same can be said if you perform something fairly simple where how the task is solved does not need to be converted into a goal. On the contrary, for someone who is new on a job or fresh out of school, setting goals on activity and learning level might be more effective and motivating, and result goals should only be set as soft goals (if at all).
Setting goals at this level means formulating goals for the activities needed to reach the result goals.
Activity goals mean you have to think through what you need to do, and thus the goal setting process can create a valuable discussion on how to actually reach the results. A tool for creating specific activity goals can be to define the selected activities in terms of quantity (how many of activity X), direction (what focus area) and quality (what defines an activity X well done).
Capability goals outlines what knowledge and what skills should be acquired in order to reach the activity goals that lead to the result goal. What does an individual need to learn, develop or practice? Learning is not limited to formal training but could also include coaching, working alongside a more senior colleague, practicing a new task etc. Another important aspect of setting capability goals is to look further than the time frame of the current result and activity goals. Given that it takes time to acquire knowledge and master a skill, perhaps the capability objectives should be set against possible activity or result targets in several years’ time.
Last but not least – remember to think about goals for creating energy. This might be goals that are not coupled directly to results the same way activity or learning goals are but impact commitment which is essential. Including them in the goal hierarchy is a way to discuss engagement in a wider perspective.
Working through the RACE model to create a RACE plan (the chosen set of goals) is a way to structure, prioritize and clarify goals and mitigate some of the risks by ensuring that the questions “what?”, “how?”, “what is required?”, “what do I need to learn?” and “what gives me energy?” are not ignored. But remember that depending on situation and individuals all aspects do not need to be discussed in detail or turned into expressed goals.
2. Involve to motivate and create ownership
If goals are seen as a management control mechanism and not as a tool to support achievement and personal development, you run a big risk of reducing motivation and ownership. Make sure to involve the team and the individuals in their own goal setting.
3. A different and aligned set of goals is required for each step in the “chain of command”
A situation that we often encounter, particularly in sales organizations, is that the goals of the manager are the aggregated goals of the team that he or she is leading. When it comes to sales budget goals (a result goal) this is natural, but when it comes to activity goals, the situation is different. The goals for a sales manager for example, should not be “ensure that the sales team do X, Y and Z”. That provides no help in planning what to actually do as a manager. The activities need to be related to the activities for functioning as a manager and enabling the team to perform. This way of thinking should filter all the way through management levels and form the basis for structured feedback.
4. Train managers and employees in the process and in giving structured feedback
No matter how well the goal setting is handled, talking about how we are doing and providing feedback is crucial to harnessing the power of goals. Realizing that this requires its own set of competencies and skills is just as important. Make sure to train managers and staff (competence) and plan for how feedback sessions and reviews should actually be implemented (activities).
Suggested summer reading
For interesting reads on the topic of goal setting, motivation and potential hazards I recommend:
“En liten bok om mål” (unfortunately only in Swedish) by Stefan Söderfjäll & Christopher Svensson, Natur & Kultur, 2017
“Drive: the Surprising Truth About What Motivates Us”, by Daniel Pink, Penguin Putnam Inc, 2011
“Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting” by Lisa D. Ordóñez, Maurice E. Schweitzer, Adam D. Galinsky & Max H. Bazerman. Harvard Business Shool Working Paper Number: 09-083, 2009
Want to know more?
If you want to know more about how 3S works with helping organizations increase business impact through the RACE framework and methodology, please drop me a line or give me a call at email@example.com or +46 (0)70 550 28 08