Focus on goals and performance is the single most important factor that affects the bottom line. When all people in a company pull in the same direction and know exactly what they should do to realize the vision, the effect is much greater than if you have a straggly target structure pointing in different directions.

The vision

It starts with an overall vision for each business – what is it you want to achieve in the long run? What are the long-term strategic objectives of the company? Depending on size, all companies have different perspective on the vision – the big international group might set their long term goals as far ahead as five years, while the small entrepreneur might aim for one year or shorter. A vision can be changed, but the important thing is that the vision exist and that it’s accompanied by long-term, more concrete goals. The vision and the overarching objectives need to be clear and communicated (often!) to all employees.

Cascading goals

The vision is broken down to the company’s functions and then to every team and employee, who, together with their colleagues and/or manager discuss and formulate appropriate goals for the period. In some cases objective setting is delegated directly to each team in order to provide a “bottom up approach”, which increases the engagement when setting goals in the business. It can be both quantative, measurable goals and more qualitative, fuzzy, soft targets. A good way to work with targets and continuous improvement is OKR’s – Objectives and Key results.

Agile Goal Setting

The trend in working with targets and follow-up is to have a more agile approach to goal setting. It means that the follow-up happens faster and more regularly. Historically, large companies used to have fixed yearly goal setting processes where the goals were set in January and followed up in the middle of the year (mid-year review) and then followed up again in the end of each year where the goal fulfillment formed the basis for compensation (performance appraisal).

Nowadays, this way of working is not seen as creating any value. Instead, it is not uncommon to set monthly goals (or even shorter) and complete with a coaching approach for the follow up on a weekly or bi-weekly bases. Also, if reality changes, you need to adjust your targets as well, adapting to the faster pace in the external environment. Adjustment of targets can happen every month or even more frequently and it’s necessary to get faster feedback in order to change course if needed. Otherwise you risk having to much goals left in the end of the year and some of the goals may not be relevant anymore.

Agile objectives are shorter, transparent, set by employees in the team and are not linked to any kind of external reward / motivation. They are visualized using for example images, metaphors or stories, and communicated and updated frequently.

IT support

Whether you are still running an annual follow-up or if you are working with agile targets, you need an IT-system for support to store, update and track targets. A good IT system should sustain support the method or process that the organization has decided to follow and preferably also support not only to WHAT should be acheived (results), but also HOW it is done (behavior).