We’ve seen a lot of things change in the last few years around performance management. Some companies are moving away from annual performance reviews, and towards more regular feedback processes throughout the year. Others are eliminating hierarchical management models and going with ad-hoc teams and role-based management. But the more things change, the more one thing has remained the same. Mutually agreed upon goals are still one of the most effective tools in the manager’s toolbox for managing performance.

Why are goals so effective? One reason has to do with measurement. You can’t change what you don’t measure, so the saying goes. Goals, especially those that are well-designed, provide a clear vehicle for an individual and a team leader to measure progress and change over time.

But it’s not enough to just have a goal. It turns out that our goal planning process – how we go about setting goals – is just as important as having them in the first place.  There was a lot of talk about a Yale study in 1953 that claimed that the 3% of graduates that had written goals accumulated more personal wealth than the 97% of their class that didn’t.  The study turned out to be total fiction, but the underlying premise was so interesting that when scientists did an actual study of the effect of writing down goals, they found the impact to be substantial.

Another reason why goals are effective is that they create a sense of shared values across a team, and throughout an organization. Ideally each person’s individual goals can be directly tied back to the values and larger goals of the organization. This keeps everyone on the same page, and fosters a sense of shared effort.

There are a few key elements to keep in mind when creating your goal plans:

Specific goals are far more effective than vague goals.

For anyone who has ever been on a diet, this one is pretty obvious.  If I say I want to lose weight, I’m much more likely to actually do it if I have a specific target of pounds to hit. This is why we so often hear about the SMART goal framework – specific goals allow us to measure success in a more meaningful way.

Stretch or difficult goals result in higher performance than setting the bar low.

When people are faced with a challenge, they tend to rise up to it.  Pushing yourself to do something hard means you blow right past those easy goals, and when you hit a stretch goal you feel like you’ve really accomplished something.

Group related goals are better for team performance than individually beneficial goals.

This one is a bit of a no-brainer – having a goal that benefits the whole group will help the whole group perform better than a goal that only benefits one of the individuals.  But the key message for managers in this fact is to be careful that goals within your team are aligned.  Having two people working at cross purposes can make the whole team perform worse.

While new trends in management have come and gone over the years, goal planning has remained a constant part of the team leadership process. Well-defined goals are the foundation of performance management, and help keep the team, team leaders, and the organization on track.

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