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Setting Goals for Maximum Results

Sid Scott

May 2005

Ideally, everyone in your company sees that all efforts should be focused on making the business successful, however that success is measured. Amazingly, in too many organizations, employees are not told about the company's plans, budgets, or needs. Even in open-book companies, strategic plans and objectives may be shared only with a select group of managers. Without this information, individuals do what is within reach and comfortable, but they may not actually be helping the "big picture." In contrast, the most successful organizations have found ways to tie everyone to the big picture through goal-setting.

The High-Performing Business

At the NCEO/Beyster Institute 2005 annual conference, Dr. Ed Lawler III, a very well-respected management guru from the University of Southern California, spoke about how to create a high-performance organization. He remarked that organizations where people were linked to strategy, structure, processes, and rewards gave those companies a strong competitive advantage. Lawler stated, "In the high-performing organization, employees know what to do, why they do it, and they are motivated to do it."

Through his research, Dr Lawler has found goal-setting in the high-performance organization is directly connected to the overall business strategy of the organization. In fact, the research shows that performance goals, jointly set, driven by business strategy are the most effective. Unfortunately in many organizations, managers present goals to employees rather than seeking their input and involvement. According to Dr. Lawler, this method of goal-setting is the least effective.

I'm pretty certain if I asked you whether you'd like to have a high-performing business or not, you would not hesitate to choose the high-performing model. To do that, Dr. Lawler believes, "requires significant amount of power, business information, knowledge, performance-based rewards at all levels of the organization."

Effective Goal-Setting Basics

Assuming you agree in concept with Dr. Lawler, here are my thoughts on how to bring it to your organization:

Know where you are going. Most business leaders have a pretty good idea of the business, the market, the competition, and the customers, and they may know where they want to go. What seems to be missing is a formal, written plan that is regularly reviewed and updated. If you have a business plan, great; if you don't, get busy. It doesn't have to be extensive, a couple of pages will do. But don't leave it on the shelf; use it, review and update it as needed.
Share the plan with managers first, then employee owners. This can be done through individual or group meetings. Allow them to ask questions and to give you ideas. The more minds bringing ideas for company success, the better.
Train managers to understand how to write goals with employee owners. Managers and supervisors are the key to successful goal-setting, but they probably need help developing skills on how to get the best results.
Tie individual goals to what the business wants/needs to accomplish. Enough said.
There are three types of goals. Goals can be "innovative" ones that take the company, division or department in a new direction, or they can be "problem solving" goals that help fix something that needs fixing. You can also have a "maintenance" goal that focuses efforts on keeping a good level of performance at the current acceptable level.
There are two kinds of goals. Goals can be either directly tied to what the company wants to accomplish (operational goals), or tied to helping an employee owner learn new knowledge, skills, or change behaviors (developmental goals).
Goals need criteria. First, goals need to be measurable so we know how well we did. Measurements can be time frames, dollars, percentages, numbers, etc. You know what's best for your company. Goals also need to be a stretch, but attainable within the given period with the resources (time, people, money, equipment, etc.) available.
Goals need to be written down. When we write goals out, we make a commitment and we have something to share with others. Here is a sample goal statement that includes measurements and well as the "why" (reasons for doing the goal): "My goal is to write this column by May 19, 2005, to help employee-owned companies better understand how to take advantage of the marvelous brain power in their organizations and to be more financially successful."
And, when you do this process, mutually set the goals together with the employee owner.

Why Mutually Set Goals?

Dr. Lawler's research shows that mutually set goals tied to business strategy are the most effective. To understand why mutually set goals work well, we need to look at the psychological basis that makes this approach best.

First, most of us resent being told what to do, whether that is by a parent, spouse, friend, or boss. The reason is that when someone directs us to do something, the assumption is that we are incapable of coming to a similar conclusion from lack of knowledge, intelligence, or both. Thus, when someone gives us strong direction, the perception is they think we are less able than they. Directive behavior is often interpreted as both insulting and disrespectful.

Second, being directive puts the manager in the parent role (do we really want to have kids at work?) and the employee in the child role (think about how kids act out?). When this happens, we lose the ability to relate to each other as responsible adults.

Third, when a small group of individuals in an organization makes most, if not all, of the decisions, a lot of available brainpower isn't tapped. Many, many times, those individuals (employee owners) closest to the situation have the best insights and ideas; why not ask for their input?

Finally, most employee owners will go along with the boss's wishes to try to solve a problem, or put in a new service or product because they don't want to lose their jobs. However, they may not be as motivated and willing to help make the implementation and ongoing processes successful as they would if they were made part of initial goal-setting process. When people aren't part of a process, they don't "own" it. My observation from 40-plus years in the workplace is that buy-in comes from ownership—it's that simple.

Sid Scott is Vice President of Human Resources for Woodward Communications, Inc., a multi-media corporation located in Dubuque, Iowa. WCI became a 30% ESOP company in January 1992, and increased employee ownership to 61.58% in February 2001. He was elected to a second term on the NCEO Board of Directors in 2000, and is a frequent presenter/facilitator at conferences. Sid serves on the board of Monroe Publishing Company, a 100% employee-owned newspaper located in Monroe, Michigan. He has a MBA from Bradley University, a BS in liberal arts from Illinois State University and is an adjunct faculty member in business administration for Clarke College in Dubuque and the University of Wisconsin-Platteville.

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