The practice of active goal-setting is necessary not just to enhance business performance but it is fundamental to running a successful business. Just by setting goals, you, your team and your company will achieve a higher level of performance. Below we show a couple of goal-setting approaches that companies use. The key is that they are measurable, very clear and also challenging.
The SMART acronym refers to goals that are Specific, Measurable, Assignable, Relevant, and Time-bound. Assigning certain individuals (or teams) to tasks that are quantifiable and on a deadline provides a high level of specificity, which drives focus and performance.
MBO Method (Management by Objectives)
MBO is a process of defining objectives on which managers and employees agree to objectives and have clarity on what they need to do in order to achieve them. This method was popularized by Peter Drucker in his seminal work, The Practice of Management.
OKRs (Objectives and Key Results)
OKRs identify an objective (the thing to be accomplished), and an accompanying set of 4-5 key results (the steps taken to achieve the objective). The objective is concrete and time-bound, and should also ideally be measurable and quantifiable. The key results must be measurable and quantifiable, and should likewise adhere to a specific time frame.
Market Potential Method
As shown in the Business Insider article, this method tells you to assess your market potential, determine your potential and set that as a goal.
The historic method is simple: just analyze last year’s sales, and apply the rate at which the current market is growing and use that to come up with a new goal.
The One-minute Manager – “The One Minute Goals” Method
This is based on a famous book by Ken Blanchard – the One Minute Manager, now available in a new 2015 edition. With this approach, managers and their direct reports set goals together. The manager reviews the goals and analyzes whether or not the employee’s behavior is facilitating the achievement of the goals. Here it is in a simple form:
- Agree on your goals.
- See what good behavior looks like.
- Write out each of your goals on a single sheet of paper using less than 250 words.
- Read and re-read each goal, which requires only a minute or so each time you do it.
- Take a minute every once in a while out of your day to look at your performance, and
- See whether or not your behavior matches your goal.
Among other approaches, there is also the Full Time Equivalent (FTE) Method, also mentioned in the Business Insider article. Say you are coming up with a simplified annual sales goal, you would figure out a breakeven quota goal for each full-time equivalent sales rep and then you can determine a target and establish a measurable goal (i.e. for simplicity, we will ignore the complexities of territory management, types of accounts and sales processes, etc.).
Each of these approaches requires goal-tracking and frequent review. Every time you revisit your goals, you should ask: what’s the next step I need to take to get there? For example, Atiim’s OKR goals management software makes the processes of setting, tracking, and aligning goals seamless and systematized across an entire organization.
What else? Does your company have a set method of goal-setting? Which method do you find most effective?
Do you manage a company or teams (either as a CEO, a senior executive, a middle manager or even a front-line manager)? Do you set and track objectives? Does aligning employee performance to business goals matter, and are you responsible for driving results? If so, please check out a live demo of Atiim OKR & Goals Management Software and we’d love to hear what you think about it. Thank you!