Best Practices: Goal Setting

How and Why Goal Setting Works

It's official: we can accomplish more and go farther if we dedicate ourselves to written goals, keep the goals on our corporate and personal radar screens and follow through on the steps required to make them happen.

TEC speaker Angelo Kinicki, who co-authored the textbook "Organizational Behavior," found that 68 out of 70 organizations examined in various studies enjoyed productivity gains as a result of management by objectives. Goal setting is the first step in management by objectives.

"Research on goal setting shows that it's a very powerful technique to improve individual productivity and organizational effectiveness," says Kinicki.

Yet, TEC speaker Bruce Breier -- who has addressed more than 200 TEC groups on this topic -- finds that many CEOS are not personally goal-oriented.

Goals give us focus, get us going, add to our resolve and lead to actions.

A common element among high achievers is sharing goal-setting behavior, says TEC speaker and member Rick Houcek. In writing goals, high achievers are prepared to risk failure -- and the demands of success.

Setting Achievable Corporate Goals

Before you can begin goal setting, it's essential to create a blueprint for how the process will unfold, advises Breier.

He recommends five points in the company plan:

1. Mission statement
2. Vision statement
3. Fiscal year priorities
4. Strategies
5. Monthly monitoring and managing meetings.

Beginning with a mission statement, each step flows into the next -- and goal setting begins after the mission and vision statements are finished. The process needs to be simple. "The more complex it is, the less people are enjoying it,'' Breier says.

To be effective, goals should follow the "SMART" format. That means they should meet these criteria:

Specific
Measurable
Achievable
Results oriented
Time sensitive

As goals are set within the organization, finding the right amount of "stretch" -- for growth -- is crucial.

"Too easy" goals do not boost performance, so they are of little value, but studies show it is best to challenge employees, expect them to challenge themselves, with goals that are attainable, but with considerable effort.

Overdoing Financial Goals? -- Often, CEOs fall prey to the allure of setting only financial goals. Kinicki says that compromises the other reasons they are in business -- such as employing people and contributing to their communities.

Corporate Goal Categories -- Kinicki talks about goals in four areas -- financial, customer service, employee-based (centering on learning and innovation) and internal business process. Breier discusses other categories, including image and reputation, community relations/philanthropy, sales and marketing.

Whichever categories you choose -- or if you customize them for your own organization -- the final product should reflect your corporate purpose and path.

Setting Employee Goals -- In his work for the textbook "Organizational Behavior," Kinicki explored whether it's better for employees to set goals in a particular environment, or for them to set goals by themselves, or whether they do best with assigned goals. He found: No one method seems to be better than the other, in terms of outcome and performance.

The more closely a manager can match the employees' wishes with the goal-setting style, the better the chances for an outcome everyone seeks.

Linking Monetary Incentives to Goals -- Bonuses and other pay-for-performance incentives are gaining in popularity, but Kinicki warns that they work only under certain conditions.

Studies show that pay should not be linked to achieving goals unless:

• The performance goals are actually under the employees' sphere of influence
  
  
• The goals can be quantified, then measured and
  
  
• Frequent, relatively large payments are made for achieving goals

If these three conditions aren't met, undesirable outcomes are possible, Kinicki says. Other studies have shown that quality suffers when quantitative goals are given highest priority.

Leadership in Goal Setting -- Goals are only worth the paper they're written on if leaders don't bring them to life for the organization.

"In the 25 years I've been working in this field, I am constantly reminded that it is the CEO's responsibility to bring passion to the mission. When I see CEOs who are passionate about the mission statement, it lights everybody up. If the CEO's not, neither are they."

Cascading Goals in the Organization

Houcek often finds that there is a "disconnect" between what an executive staff understands about an organization's goals, and what the CEO believes they understand. In many cases, the staff will tell Houcek they don't even know what the goals are.

Kinicki coined the term "cascading goals" to describe the process of adopting goals at different levels in a company. Like water over a cliff, goals must spill over and "cascade'' throughout an organization to be implemented.

"Cascading creates horizontal alignment in a company," says Kinicki. All the executives at the same level need to gain agreement about what they will do to support the CEO's vision and minimize conflict.

A dramatic example: Over two years, a technology division of American Express was able to cascade goals from a senior vice president to the 800 people in that area. The end result: the costs of developing a software system were cut in half over a two-year period.

How Cascading Works -- Once the vision and main categorical goals are set at the CEO and managerial level, select a person who will champion the process of cascading goals. He or she works to ensure that each department will create goals and action plans that support the goals of the company's leadership.

Communicating Goals -- Updating people on their progress is critical. Goals must be visible and repeated to keep the commitment alive. Besides scheduled meetings, goals may be touted in: monthly e-mail messages, company newsletters, bulletin boards, and "surprise" coffee breaks, among others.

Ensuring Goal Implementation

Action Plans -- When everyone returns to their jobs after goal setting exercises, enthusiasm for the goals can be buried by the demands of day-to-day business. The first step is to develop action plans based on the goals-complete with incentives and consequences for non-performance.

Accountability -- Discussing consequences is critical in any goals-to-action plan. Often, the consequences are determined as the team works on the goals in the earliest planning stages. Houcek encourages the team to arrive at the "three strikes and you're off the team" approach.

In Houcek's experience, peer pressure creates such an intense expectation of performance that it causes action. "The perceived humiliation of removal from the team is so great that most people act,'' he says.

Monthly Management Meetings -- Once your goals and action plans are set, Breier recommends scheduling monthly management meetings to monitor progress. The original planning group should meet for a 90-minute session to recap the previous month; acknowledge progress and examine shortfalls; amend the plan if it needs to be changed; and, clarify the action plan for the next 30 days.

Coaching for Goals -- Implementing goals that were set months ago requires discipline. The planning group has to follow through with their direct reports. The managers need the discipline to make the goals a priority over day-to-day firefighting in a business.

When Goal Setting Goes Wrong

How often have you set goals that are then set aside? Examine roadblocks if you have a pattern of abandoning organizational or corporate goals.

Commit Goals to Paper -- This may seem obvious. But Houcek is surprised at how often goals are stated but not written down. Let your TEC or KEY group or chair hold you accountable to writing down your goals.

Stumbling Blocks for the CEO -- Goal setting is not for the faint of heart. It's not for the passionless, either, says Breier. He suggests that the CEO spend some time weighing vision, goals and priorities alone -- or with an advisor -- before inviting trusted managers and employees into the goal setting process. And if a working group goes off-site to do visioning, goal setting and planning, don't forget to allow for resting and relaxing as well.

Ten Organizational Roadblocks

1. Lack of clear-cut responsibilities around the goals
2. Lack of a tracking system
3. Lack of an accountability system
4. Lack of commitment
5. Lack of buy-in from people who are expected to fulfill the goals
6. Ineffective communication
7. Lack of time or resources
8. Too many goals are financially driven
9. Focusing on too many or too few goals
10. Goals aren't tied to a longer-term vision

Personal Obstacles in Goal Setting -- When we fail to meet personal goals, many factors may be at play. Houcek, in his studies of high achievers and his experiences with thousands of executives, finds the following common denominators: CEOs with no passion for the goals they have set; the goals are not precise; the personal goal is at cross-purposes with the CEO's self-image.

Fearing Failure, Commitment -- Fears can play a role in our failure to make-or realize - goals. "Goal setting is basically making a commitment," says Breier. "Fear of commitment is prevalent in the world. If I don't set a goal, then I'm not accountable for it. That's a subconscious tactic for avoiding goal setting."

Houcek believes the fear of failure is more of a reckoning with the "cost of success." After all, he points out, we fail every day. In fact, we're experts at failure.

"Once I'm a winner, I have to continue to win or I'll be a bigger loser in everyone's eyes. That's an unconscious thought, but it's a very real one," he says.

Improving Your Life with Personal Goals

Houcek leads a life filled with passion. He believes it's because he has mastered the art of goal setting and realizing those goals.

"It makes for a very fulfilling life. I spend virtually 100 percent of my time in four areas.'' They are: his family, personal health and fitness; his business and playing baseball in a traveling men's league.

Houcek finds that many executives don't spend time with their spouse, and don't do the things that create intimacy in a family. But he believes we can "soar with the eagles" by acting on our passions -- if we are honest with ourselves about what those passions are.

Start with "Master Want List" -- If living that kind of life sounds appealing, Houcek says it all begins with a little list called the "Master Want List.''

Questions to prompt you: What do you want to do with your life? Who do you want to meet? What new activities do you want to try? What experiences do you want to have again? Where do you want to go? What do you want to learn? What do you want to improve? Who do you want to spend more time with?

How Will You Benefit? -- Choose from the "Master Want List" the goals you would like to pursue and give yourself a timeframe. Next to each goal, indicate how you will benefit from completing it. That's a prime motivator.

Framework for Personal Goal Setting -- Breier approaches personal goal setting in a way that mirrors business goal setting. He recommends starting with a personal mission statement, a personal vision statement, the goals for the next 12 months, annual goals, and an action plan with strategies for success. Use your birthday as the date that you review your goals and set new ones.

The Quantum Factor: Beginning With Yourself

Many of us have achieved success based on an external focus -- an ability to accomplish what we want outside of ourselves. TEC Speaker Tom Hill has proven that we can make quantum leaps simply by focusing on ourselves first.

To Hill, if you want to have a better business, become a better person. If you want to create new markets, become a better person. If you aspire to greater spheres of influence, become a better person.

Hill contends we can make quantum leaps by creating quantum goals.

The G-Curve -- As Hill began studying people who have made dramatic improvements in their lives, he noticed that they seemed to do so at 18-month intervals. He calls this year and a half period the Growth Curve, or G-Curve. As a result: If you can stay disciplined and focused on your goals for 18 months, Hill says, you can experience major breakthroughs in your life.

Creating Quantum Goals -- A quantum goal is reachable, achievable, but beyond your current expectations. "Quantum goals aren't unrealistic -- like I want to be President of the United States in 18 months -- but they do involve taking risks," Hill says.

Reviewing Goals for Focus -- "I believe in reading your goals out loud at least twice a day. Carry them with you, put them on your computer screen. By repeating them, they're in your subconscious all the time," he says.

Goals are a moving target. As things change, as new opportunities arise and new people come into your life, you will want to adjust your goals. After Hill and his wife realized they weren't as financially secure as they wanted to be, Hill made an 18-month journey and started over, in his 50s, selling real estate franchises. Eighteen months later, his net worth was $1 million.

Developing the Discipline -- Doing what you need to do, until it becomes habit, is a matter of discipline. "Eating less and exercising more isn't a matter of willpower. It's discipline," says Hill.

"Discipline will help you keep the 18-month commitments to get to the next level," says Hill. "I estimate that it takes about six years to reach the perfect state, the ideal world, from working on your goals."

Finding Supporters For Your Quantum Goals -- Focusing on your personal development can pay remarkable dividends. For example, becoming a better "you" can influence who wants to be on your board, who wants to be your COO, who wants to be around you in social settings.

Hill recommends identifying those individuals who, if they chose to, could help you reach your quantum goals. Never ask them for anything. Stay in touch with these people at least once every 90 days. Chances are, they will offer you opportunities beyond your expectations. That's how it's happened for Hill.

Contributing Experts:

Bruce Breier

Bruce Breier, president of BHB Consulting Services, an organizational consulting practice, believes that executives and managers would experience higher levels of success and lower levels of stress by managing their positions in a more systematic manner. He began his consulting career in 1978 and has been a TEC speaker since 1985. His presentations to TEC groups are "The Goal Setting Executive" and "The Organized Executive."

Dr. Tom Hill

Dr. Tom Hill is CEO of The Goal Coach Companies, LLC with headquarters in Lake St. Louis, Missouri. He is author of "Living At The Summit -- A Novel Approach To An Exceptional Life" and co-author of "Chicken Soup For The Entrepreneurial Soul. " In 1986, after more than two decades in education, Dr. Hill changed careers and embarked on a new path. Following it eventually took him to levels of success that validated his wildest dreams. Dr. Hill launched a new business, building it into a $3 billion enterprise in less than 10 years. He is a nationally known speaker who has received many accolades for his presentations. His TEC topics are "Designing the Exceptional Life" and "Designing the Exceptional Life II."

Rick Houcek

Rick Houcek is president of Soar With Eagles, an Atlanta, Georgia company with a single-core purpose: to help individuals and companies profit by teaching ordinary people how to achieve extraordinary results. He is a success coach and professional speaker who does strategic planning retreats, motivational keynotes and seminars. Houcek is a current TEC speaker who was a four-year TEC member, then 10-year TEC chair, and now a member again. His TEC presentations are "How to Set Self-Motivating Goals You Can Achieve" and "Strategic Planning for TEC-Sized Companies."

Angelo Kinicki

Angelo Kinicki, D.B.A., is a professor of management at Arizona State University and a partner in Kinicki and Associates, Inc., a consulting firm specializing in the customized design and implementation of performance management systems and surveys to assess employee attitudes and customer satisfaction. He has authored over 50 academic and practitioner articles and his textbook Organizational Behavior is a market leader. His TEC topics are "Performance Management: The Key to Organizational Success" and "Cascading Corporate Goals Throughout an Organization."

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