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Link Individual Performance to Organizational Goals

Goal management can help organizations manage employee performance in a strategic, effective way.

March 8, 2009
Related Topics: Technology
KEYWORDS metrics / technology
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Organizations that focus on harnessing individual potential are likely to be more competitive than their peers. Goal management can help organizations manage employee performance in a strategic, effective way.

The economy and the changing nature of work itself have given the importance of goal setting new life. Goals can help an organization and its employees focus on the most important and pressing priorities. The challenge is to ensure each employee is aware of and fully appreciates what must be done each day, and at specific intervals, for the organization to meet its goals. Developing a goal management process can focus employees and resources on producing better outcomes.

Creating Linkages

The best way to ensure individual employees’ efforts have maximum impact on the bottom line is to link them to organizational goals. Such connections should be made deliberately, and the process can be designed in a way that virtually guarantees business success.

Using its mission as a starting point, a business defines a statement of intent or a vision. A strategy to achieve this vision follows. Business plans are then developed to execute the strategy, and different departments drive their operations according to their areas’ functions. Once a department establishes its goals, the activities necessary to complete associated responsibilities are assigned to individual team members. These individuals are then free to establish their goals within the context of the organization’s strategic objectives. The collective efforts of individuals and departments creates organizational success.

The linking process starts at the top and moves down the organizational structure to the individual. Individual goals and activities are then reported back up the organizational structure. The reporting structure gives executives a method to track and monitor the execution of business plans. In this model, everyone’s efforts are harnessed and directed toward the most important organizational outcomes. Individuals know the importance of their efforts and how their work fits in with the work of others and the larger organization. If individual goals are made in isolation, tremendous effort might be spent doing work that is not most important or most pressing. This is why organization-centric goals are indispensible.

The San Diego Zoo has been using goal management as part of its talent management strategy for several years. Employees’ and managers’ goals are linked to five overall organizational goals so the Zoological Society’s employees can see a clear connection between objectives that have been set for them and the organization’s overall objectives. The zoo has taken goal alignment even further, as employees also understand how their achievements will translate into potentially greater compensation in its pay-for-performance compensation model.

Contemporary Goal Management

Traditional goal setting involves individuals seeking managerial approval for their self-defined goals as a part of their performance review. The goals were often activity-oriented, describing what the individual would attempt to do in the coming year. Traditional goal setting also emphasizes self-improvement and professional development activities, such as gaining new skills or attending conferences and workshops.

The problem inherent to this approach is the individual could easily set well-intentioned goals from a benign, but selfish point of view, in isolation of how these goals impact others or the department’s goals.

The contemporary approach recognizes that goals are established and executed to help the organization achieve certain defined results. Essentially, goals are organization-centric instead of individual-centric. Well-defined organization-centered goals create a framework for people to build something collectively.

When working together effectively, individuals might share the same goals, but each team member also becomes part of a solution. Members are interdependent, yet connected and will therefore share their successes with their manager, co-workers, team members and the organization. This interconnection may take the form of common goals that apply to everyone in a department or area; yet, each person has a different, defined part to play in the goal being achieved.

The goal-setting process should be integrated with other organizational systems to ensure it is institutionalized. When integrated with the employee performance management system, goals ensure individuals are held accountable for areas of focus and that managers have reasons to track and monitor efforts and intervene when necessary.

Automating the Process

While there recently have been considerable advances in the conventional wisdom about defining, tracking and managing goals, one of the most important advances has been the development of Web-based systems to automate this process. Instead of old-fashioned paper-intensive processes that made goals hard to track or share across an organization, these systems make it easy to share goals and report the progress of the efforts to achieve them.

By using technology as a strategic enabler, organizations are able to reap numerous advantages. Talent managers and other senior leaders are able to track employees’ progress on goals. Executives have the power to see the status of individual, departmental and division goals at any time, making it easier to manage goals and their interconnections across an organization. Ultimately, technology enables organizations to clearly communicate goal management information and track it on a daily, weekly or monthly basis.

As part of its overall employee performance management strategy, Illinois-based Rockford Health System has been using Web-based technology to streamline and manage appraisals, goal management and other talent management functions. With its online performance management system, Rockford is able to continually measure and evaluate performance to ensure organizational strategy is being properly supported by individual employee goals.

A Quality Checklist for Organizational Goals

The seven C’s framework offers a series of criteria by which organizations can evaluate whether their goals are likely to be implemented successfully. Goal criteria include:

1. Clear

2. Connected

3. Communicated

4. (Organization) centric

5. Countable

6. Coordinated

7. Closed loop

First, clear goals are easily understood, and they are actionable. Goals must be defined, documented and unmistakable so they are operational for all employees. Good organizational goals also are connected to mission and strategy; this ensures they are meaningful. Regardless of how well-defined goals are, if they are not properly communicated, they lose their intended impact. Every employee must know what the organization’s mission, vision, strategy and goals are to optimize their collective efforts.

Organization-centric goals describe how to link to goals from the top of the organization down to the lowest level, like a staircase. This process ensures each link in the chain is tightly bound to the next and that the whole organization is working together to support itself. This has been proven much more effective than people-centric goal alignment, or linking an employee’s individual goals to his or her managers’ and peers’ goals.

The fifth item in the checklist is about quality assurance. It demands goals be tracked and measured either quantitatively or qualitatively. While “countable” implies numbers, talent managers should consider it a measure of accountability. By having a defined standard to evaluate a goal, a metric can be used to test whether the goal is successful.

“Coordinated,” the sixth criteria, describes the need to have goals that are shared across boundaries, individuals or departments. With such goals in place, when individuals or departments are required to work together to be successful, they are more likely to work in a way that is mutually beneficial instead of competitive. Shared goals and common goals promote teamwork.

The final item on the checklist is to close the loop. Not only must goals be organization-centric and tied to the established business plans, individual efforts must be reported back to the top so leaders know their business plans are being carried out as intended. Reporting the progress of dozens or hundreds of individual activities to senior management may sound complicated and time consuming, but modern computer software can make this multifaceted process easy and routine. Each successive level of the organization can track its respective activities, and predetermined linkages are automatically aggregated and put into a reportable form for each successive level.

When properly managed, goals become strategic tools used by organizations to gain the maximum output from the collective contributions of all employees. Goals direct time, attention, effort and resources in the best direction. Organization-centered goals epitomize what organizations are all about: individuals coming together to produce outcomes they could not produce alone. Goals help organizations work together better, smarter and easier, and good goals establish priorities and help individuals focus on what is most important.

The best technique to make this happen is to establish clear connections at each successive level of the organization and to link individual efforts to the organization’s goals, like the aforementioned staircase that connects each step to the one before and after it. The current wisdom on goal management is that goals should be organization-centric with a clear line of sight between the work produced by individuals and the company’s aims.

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