Goals are an important tool for organisations to meet their objectives. Although goals help assessing the work of employees and are a useful instrument to instigate meritocracy, their main role is to ensure that the team is committed to follow the path determined by management.
The first step to create meaningful goals is to establish the company’s ambition and future vision. Only once we know where we want to get, it is possible to translate this aspiration into goals.
Which indicators will measure the business’ success in search for the objectives established? There are financial indicators such as net profit and profit margin, market indicators like market share, and satisfaction metrics that can be applied to clients and employees.
Putting indicators in practice
Goals must be established for different time horizons. The most overarching is the long-term global goal which allows the company to gauge whether it is approaching the future vision that was instituted. It should be broken up in annual targets that reflect the improvement opportunities identified for each of the indicators.
Immediate goals which are solely focus on the very short-term objectives can distract the teams and should, therefore, be avoided.
The annual goals are transformed into targets and indicators for each area of the company. Those must all be connected: the objectives of the lower levels must have a cause and effect relationship with the higher levels in a chain of achievements that leads to the global goal. At the same time, the goals of peers must be aligned. This process is not trivial and there are many tools available to assist managers, e.g. tree diagrams, which clearly show the relationship between these indicators.
At Aquila, one of the solutions offered is Competitive Intelligence through Goals Alignment which ensure the translation of the global goal to each area.
Another important concept for the creation of goal is the S.M.A.R.T. approach. A S.M.A.R.T. goal is “Specific, Measurable, Attainable, Relevant and Timely”. If a company has identified improvement opportunities, it needs to decide how much of that opportunity it can capture. For so, it must create an achievable, yet challenging, that captures a significant amount of the overall opportunity. The percentual of the opportunity to be captured will be higher or lower depending on the impact it has in the global goal, the organisation’s strategic directions, the management maturity level (capacity to achieve results), historical analyses and comparative analyses conducted through internal, external and functional benchmarks.
Engaged teams is the key
In the end, the company directors will be the people responsible for defining the goals. This does not mean that the professionals under the directors should only receive their mission and follow it without understanding their context.
According to the Harvard Business Review, 90% of strategies fails due to low implementation, that is, they lack the ability of being transformed in reality in the daily work routine. The same piece of research also identified that 63% of people do not know where their company wants to get to and only 5% of the employees understand their role in the strategy of the company.
Members of staff must know what the organisation wants to achieve in the future. Only then, they will be motivated to create the action plans that make the achievement of goals possible. Transparency around the company’s strategy tells the real story behind the numbers and gives more meaning to the work.
Maurício Chaves – Partner Consultant – Aquila Group