Goal Setting gone wrong

In most of the companies, goal-setting is done to either achieve one or all three perspectives mentioned below.

  1. To achieve the annual sales targets.
  2. To achieve the annual operational plan and strategic priorities.
  3. To fulfil the annual checklist activity of performance management.

Ever wondered why all 3 works in silos and doesn’t connect with the big picture? Almost all the companies do the exercise of annual sales target setting but do the half cooked job for setting goals to achieve the annual operational plan and strategic priorities. If done right, goal-setting helps you to accelerate growth, bring alignment and accountability across the organization.

If your goal are not the guiding force of your day to day work, they are not the goals, but just a formality.

There are various goal-setting frameworks that a company can opt to drive their sales, operations and strategic plan. 3 of the major goal setting frameworks that are widely used are:

  1. Hoshin Kanri
  2. Balanced Score Card
  3. OKR

Hoshin Kanri

Hoshin Kanri (also called Policy Deployment) is a method for ensuring that the strategic goals of a company drive progress and action at every level within that company. This eliminates the waste that comes from inconsistent direction and poor communication. Hoshin Kanri strives to get every employee pulling in the same direction at the same time.

It achieves this by aligning the goals of the company (Strategy) with the plans of middle management (Tactics) and the work performed by all employees (Operations). The 4 steps for Hoshin Kanri are:

Hoshin Kanri Step 1: Clarify your current state and identify Mission, Vision, and Behaviours

Your company’s Vision and Mission statements are a good place to start if they have been well written and are still relevant. Answer these questions to help you identify your vision, mission, and behaviors

Mission: Why do we exist as a company? or How is the world a better place because of us?

Vision: Where do we want to be in the future (5-15-30 years)

Behaviors: What are the behaviors that you and your employees should be living by on daily basis to achieve your mission. These behaviors are different from the values which live on your website.

Hoshin Kanri Step 2: Define Breakthrough Objectives (Hoshins)

The breakthrough objectives are mission-critical objectives. These objectives may take 3-5 years to fully accomplish.A few good questions to ask your team to get to these Breakthrough Objectives are:

Q1. In 3 years from now, if we look back on what we have accomplished from now till then, what is the biggest, most significant accomplishment we could achieve?

Q2. What is the single most important objective we need to accomplish to remain competitive 3-5 years from now.

Hoshin Kanri Step 3:  Define Annual Objectives (Goals & Metrics)

Breakthrough Objectives should then be broken down into Annual Objectives. These annual objectives are the basis for your departmental and even individual annual strategic plans.

Hoshin Kanri Step 4: Deploy Annual Objectives through the organization (Catch-ball)

Cascading your goals is a powerful and important part of Hoshin Planning. Each Annual Goal or Objective must be broken down into specific goals and projects for each functional group or team. It is only when each team member has a challenging yet achievable goal that they can see how they contribute to the overall Hoshin Plan.

Balanced Score Card

KPIs traditionally have had a bias by measuring past costs, revenues, and profits but offering little insight into how an organization was likely to perform in the future. Robert Kaplan and David Norton’s balanced scorecard framework, introduced in 1992, revolutionized how businesses connected KPIs to the company’s broader mission. The balanced scorecard, incorporating financial and nonfinancial measures to guide operational and strategic goals achievement.

If you’ve ever seen the Balanced Scorecard in action, you’ll know it’s essentially a strategic framework, divided into four areas (called “perspectives”) that are critical to business success.

OKR(Objective & Key Result)

Objectives and Key Results (OKR) is a management tool that brings in the discipline to achieve excellence in execution aligned with organization and CEO’s priorities. OKR is a goal setting framework originally created by Intel and later adopted by Google in the way back in 1999 when it had had not even celebrated its first birthday. OKR has supported Google’s growth from 40 employees (when it first started using OKR) to more than 60,000 today, proving that it can be used by small organizations as well as large corporations. Today, both technology and non-technology companies are moving fast to leverage OKRs to enable a high-performance work culture.

Here are a few examples of what objectives could be:

1)  Reduce the variable cost in production by 2.5 %.
2)  Increase revenue from product X by 10%.
3)  Become a more effective sales machine.
4)  Move to the new office by December end to provide a happy environment to employees.
5)  Solidify brand and position as market leader.

And following are some example of ‘Key Results’ with respect to above-stated objectives. There can be more than one key result(s) that can define how one will achieve one’s objectives.

1)  Hire a consultant to review and improve the six-sigma process.
2)  Ensure at least 75% of the sales team members achieve their quota.
3)  Hire three sales managers by end of June.
4)  Identify an office that facilitates company and employee growth for 250+ employees.
5)  Hire a new branding agency by end of Q1.

Whatever goal-setting framework you are selecting, expecting it to work out magically and contribute towards your company growth without the involvement of your leadership is naïve. At qilo, we have seen many implementations succeeding when leadership from the CEO to every business gets involved, and many fail when you implement these frameworks just for the sake of implementing it because someone else is also doing it.