As a leader of progressively larger and more complex organizations throughout my career, there are several quotes I heard that stick in my head. One such example ... I was talking to one of my leaders about performance within his organization. He was very proud of the performance, and his team was clearly exceeding goals by a wide margin.
I asked him, “Do we have the right goals?”
His response, with great pride: “Yes! I prefer to under promise and over deliver.” To which I said, “Sandbagger!”
His answer was the wrong answer! This kind of attitude robs organizations and individuals of the ability to be their best and drive better results. It can also lull a team, or even a company, into a false sense of security. Everyone thinks they’re doing amazing work ... only to wake up one day and find out that clients aren’t happy, the organization is not growing, and major changes need to be made (in some cases it may be too late). As part of our “Back to Basics” series, we will dive into Aligned Objectives and how critical it is to set the right goals.
One of the foundational elements of managing a scaled enterprise is the ability to set, measure and drive performance from goals that tie back to your corporate strategy. Traditionally, we have been taught to simply create S.M.A.R.T (simple, measurable, attainable, relevant, and time-bound) goals to ensure that our organization is delivering on the achievements we need to accomplish our mission.
While this is a valid approach, and is a great way to think about goals, one needs to guard against potential negative side effects that can come from just setting SMART goals. A specific goal determines a specific end in mind, but a lot of the time that’s not how business works. There are curves in the road, unexpected behaviors of employees or clients, and outcomes that could never be contemplated when the original goal was set. We argue there is a better approach. An approach where the goals are set within a broader strategic framework, and ensuring the right guardrails are in place to prevent misaligned incentives or conflicted outcomes.
For this reason, before diving into goal setting it is important to define and align on a consolidated organizational strategic framework that gives everyone in the organization the context of how their day-to-day actions directly impact the organization’s strategic goals. It is important to take a step back and ensure that you are aligned at an enterprise level on what foundational priorities the organization, what areas need focus, how to best impact the areas of focus, and how to measure them. Getting the distributed operation to participate, buy-in, and execute against a broader framework is rarely easy, but it’s critical to get everyone on the same page and marching towards the same priorities. The basic components of a strategic framework that we typically recommend are:
Strategic Pillars (THE WHY)
These are the broad categorizations of how the approach is organized. Examples of these could be Operational Quality, Employee Engagement, Service Excellence, Client Satisfaction, and Financial Discipline. The categories are the foundation of your strategic outcomes - if you are having a customer service problem, then having a strategic pillar of Service Excellence focuses your organization on a corporate priority to measure and ultimately drive better service. Ideally this clarity of focus would help establish the “WHY” of the functional area and ensure that initiatives are aligned and prioritized.
Strategic Focus Areas (THE WHAT)
This part of the framework should articulate the outcomes that need to happen that are tied to each specific strategic pillar. The outcomes should have a time horizon of no more than 12-18 months, and ideally are closely tied to an annual planning/budget cycle. Depending on where your company is in its growth curve will determine the number of long-term focus areas you should have, but ideally it would be no more than 5 or 6 priorities per strategic pillar.
KPIs (THE HOW)
Now that we have established the Strategic Pillars (“The Why”) and Strategic Focus Areas (‘The What”), the last component is to bring them together by determining the metrics that need to be impacted and by HOW much (‘The Ho w”).This is essentially where the rubber meets the road and can be the hardest to align on as this is where individuals can focus purely on the number, as opposed to accomplishing tasks aligned with the organizational strategy. WARNING: this is also the area where “sandbagging” is most rampant! Ideally the KPI’s are simple to understand, directly aligned to client satisfaction/profitability, able to be tied directly to individuals and teams, and are balanced (not too difficult to meet, but also not too easy).
Adapt goals in real-time, communicate progress consistently
Goals should never be viewed as stagnant, but rather dynamic and evolving. One common mistake is setting goals at the beginning of the year and not talking about them until it is time to hold performance reviews. As business needs change during the year, failing to revisit goals is the single biggest mistake I see by most leaders. This does not mean that goals should become moving targets, but rather that they should be adapted as the environment changes. Sharing progress on goals should be a foundational part of every all-employee meeting and be discussed at staff meetings at minimum each month.
ALTTRAX has extensive experience helping organizations assess and update their strategic plan, define a strategic framework that fits that plan, determine the right focus areas, and define the right KPI’s to ensure the entire organization is aligned to the business activities that must occur in order to drive growth. Contact us today and we will tell you more about how we can help.
ALTTRAX CEO, FOUNDER