How to Set Proper Performance Goals for Employees

Setting performance goals is a common HR tactic, but we don't often talk about why we do it. For many businesses, it's ingrained in the process and has become another line on the list to cross off as performance reviews come around. 

It doesn't have to - and shouldn't - be that way. 

Setting goals at work can force disruption on an otherwise straight-and-narrow path. In business, disruption is considered a powerful tool: innovation, technology and growing a market base are all disruptive changes that can bring new products, services and customers. 

As performance reviews and the ho-hum goal setting to-do's start to come together, encourage your team to take a step back and look critically at their goals. Are they:

  • Challenging 
  • Rewarding 
  • Enthusiastic 
  • Daring 

If not, your team needs to re-calibrate. Goal-setting is a powerful part of managing a team, and in this piece, we outline how to use it to your advantage. 

Performance Reviews and Goal Setting

Why Goals Matter 

The power of setting goals has been looked at in countless studies. Here are some powerful statistics that speak to why we continue to fall back on goal-setting: 

  • Setting goals is linked to self-confidence, motivation and autonomy 
  • People who write down their goals are 33% more successful in achieving them than those who note them in their heads (Dominican University)
  • Employees whose managers involve them in goal setting are 3.6 times more engaged at work (Gallup)
  • When the goals are measurable, it's a good way to see progress and success, as well as compare performance to similar roles 

How to Set Goals: Best Practices 

Goal-setting and performance reviews create a solid foundation for all parties, from the company as a whole, to smaller teams and departments, and especially for individuals. 

Employee success is made possible by reviewing progress often, integrating personal goals with company goals and providing employees insight into how their actions contribute to company success. 

Talk to the Employee 

A major difference between personal goals and work-based performance goals is the need for two parties. The best performance management and goal-setting approach is for all stakeholders to sit down and chat. Make goals that attend to the employee, the department and the company, and take all three into consideration to create goals that will be rewarding for everyone. 

Ask Why

Goals without purpose are more like checklists. To do their job, goals need to be a little scary, a little demanding and more than a little exciting. Get to the "why" of the goal: does it drive profits, boost egos or show professional mastery? Set a person on a more positive career path? Make sure goals have a mix of passion and purpose. 

Use SMART Goals

SMART goals (Specific, Measurable, Achievable, Results-based and Time-bound) are the gold standard of goal-setting: 

  • Specific: Include dates, resources and/or dollar amounts you'll need to accomplish them. 
  • Measurable: Identify appropriate metrics so employees can track progress and measure success. 
  • Achievable: Make them a stretch, but doable.
  • Results-based: Align with company strategy by relating to something that is necessary, of value and supports the company's vision. 
  • Time-bound: Determine a date, time-frame or scheduled completion of the goal. 

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How to Use Performance Goals in Your Business 

Here are some easy-to-see ways that great goal-setting props up your business. 

Create Succession Plans 

Employees who set challenging goals and consistently meet them may develop into top performers, not to mention, if they're finding professional success, you'll want to move them into positions where they can hone and share their craft. When you see these types of ambitious, successful team members, use your succession planning to solidify loyalty and increase the chances they’ll stick around to make waves in the future.

Identify Leaders

Setting and achieving goals isn't the only measure of long-term potential; even a missed goal can demonstrate promise in how the employee handles failure. Grit and grace don't seem like natural pairs, but great leaders have both. In this way, goals can demonstrate not just hard numbers, but also character traits that all organizations need. 

Retain More Employees 

A lack of professional development through practices like coaching, learning and goal-setting, is a major driver for voluntary departures. For Millennials, a must-keep-around demographic, the No. 2 reason they leave their current roles is because their career goals don't align with their employer (Millennial Branding). By agreeing on goals beforehand and having a plan in place, you’re giving the the employee the opportunity to drive their own career. Read: How Company Culture is Costing You Quality Candidates.

Set Employee Goals During Onboarding 

The onboarding process can be a very busy and exciting time for both the employer and new hire. Set expectations and goals early on and begin tracking progress to get them on the right track. An automated onboarding process can simplify these tedious tasks and allow companies to engage employees from the beginning.

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