Effective Goal Setting
Formal Performance Appraisal (or Review) is the last stage
in the annual Performance Management cycle.
In a recent article, I mentioned various “must-have” criteria for what I
considered a robust (not perfect) system.
One of these criteria was relevance and I stated that it wasn’t unusual to find individual
objectives that were totally different to those of the organisation. Goal
Setting is one of the most critical parts of the performance management
cycle and should be based on 3 factors:
1.
What the organisation stands for (its “mission”
or “vision”);
2.
Review of previous performance;
3.
What the organisation wants to achieve in the
long and short-term based on 1 and 2 above.
If you were to ask what banks stood for after the various
scandals reported in 2012, what would you answer? You would be right to be in doubt after the
breaches of trust and (some might say) ethical conduct that were reported. For the most part, the breaches were
committed by a relatively few highly-paid employees who put profit (or lining
their pockets?) above all other considerations, but banks now have a bad name
and aren’t trusted.
Thanks to current pressures from various (misguided?)
stakeholders, management thinking horizons tend to be limited to one year or
even one quarter, meaning that people’s energy is focussed mainly short-term,
with no thought for the next 5-10 years.
At times, management may not set goals until several months
have passed. There’s no excuse for this;
if they’ve done the budget properly, they should know what’s needed. I have waited up to six months for my goals,
with the result that they tend to be “fudged” and the appraisal is necessarily
“fudged” as well.
Current fashionable thinking requires that staff goals be:
Stretching
Measurable
Achievable
Realistic
Time-bound
These apply to people, countries, departments/teams. However, what may be “SMART” for one won’t be
for another for various reasons (experience, knowledge, local law, market
forces, etc). Was it so “smart” for
banks to set the targets they did for increasing lending in the run-up to the
global financial crisis? What about PPI
in the UK? These goals were stretching,
measurable and were achieved, but at what cost?
Were they really “realistic”?
The problem that many staff see in so-called “Smart goals”
is that they are just the opposite. The
table below provides “employee perceptions” of what “Smart goals” risk becoming.
Description
|
Real Meaning
|
Stretching
|
“Over-ambitious/unachievable unless
we break rules/act unethically”.
|
Measurable
|
“How”?
|
Achievable
|
“We have neither the staff,
systems nor budget”.
|
Realistic
|
“In your dreams”
|
Time-bound
|
“We’ve been given 6 months to
achieve this?”
|
Goals must unite the whole business, not divide it. Example: a bank’s Risk Department’s primary
objective (minimise risk) may be at odds with the primary objective of Corporate
Lending (increase profitable, income-producing assets). If Risk overrides Lending, the result is
either lower risk but lower income and loss of reputation as a lender. If Lending overrides Risk, this means higher
income but potential increased write-offs of bad debts meaning reduced
profitability.
The trend in many organisations nowadays is to use a
“Balanced Scorecard” – a yardstick that looks at results in four areas:
·
Customer Experience
·
Operations/processes/systems
·
Finance/profitability
·
Learning & growth
Different functions, departments and teams will weight
different aspects more heavily than others.
In the end, if goals set are seen as unrealistic, expect
either mixed performance or cynical manipulation if not downright fraud in
meeting them.
I have spent more than half my life working in different world markets from the most developed to “emerging”economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services.
Labels: Financial, Productivity, Strategy, Teamwork
posted by William Martin @ 18:13
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