Companies that want to create impactful change need to properly define their goals. Using a constructive goal-setting approach, you can establish and encourage steady goal progress while keeping employees motivated and accountable. In this article, we’ll cover everything you need to know about goal setting.
What is goal setting?
Business goals are achievements you want to attain at the organization, team, or employee level over a specific period of time. Goal setting is a surefire way to improve your organization’s performance and reach new levels of success. As a powerful driver of motivation and learning, goal setting involves using a structured working model to approach your goals. That is, using the goal-setting theory as a model for understanding the components of a practical goal.
Back to basics: the goal-setting theory
The goal-setting theory honed by Edwin Locke and Gary Latham in 1990 highlights the correlation between goal setting and performance, stating that specified and well-defined goals can enhance productivity. They put forward the idea that such goals can motivate individuals to do their best by cultivating focus, effort, and perseverance.
The goal-setting theory is said to work when you meet five critical conditions:
- Clarity: Goals must be specific and measurable, letting employees know what they’re striving to achieve
- Challenge: Goals should be challenging yet attainable, as easy goals won’t encourage employees to put their best foot forward
- Commitment: Employees need to support the goals they’re working towards and commit themselves to achieve these
- Feedback: Feedback helps employees determine how well they’re performing and what they need to change to improve results
- Task complexity: Employees need an adequate timeline for their goals — one that accounts for the learning curve and task complexity
Why is goal setting important?
Goals provide direction
Goals can pave a clear direction for your employees to embark on. After defining business goals, employees can follow a distinct pathway that aligns their daily activities with the company’s main objectives. This allows them to zero in on areas prioritized by your business while discouraging them from going on a tangent and investing energy into activities that don’t contribute to key goals.
Goals keep motivation levels high
When employees directly contribute to your organization’s goals, they’re more likely to stay motivated when faced with challenges. Measurable goals are incredibly motivating, as employees can visibly see themselves progressing towards the end goal as they hit each milestone and short-term goal. This keeps them increasingly engaged as they close in on their final objective.
Goals improve accountability
Beyond cultivating motivated employees, goals also hold them accountable. Using goal setting to depict clear goal posts and deadlines gives employees a timeline to abide by. As such, they’ll consistently work towards these milestones, simultaneously monitoring their progress to ensure they’re on track.
Goals boost employee performance
After you’ve set goals for your employees, they know what needs to be done and by when. This provides them with a clear sense of purpose, resulting in heightened productivity. A study published in the Journal of Leadership & Organizational Studies corroborates this, revealing a positive relationship between an employee’s goal commitment and their department’s performance.
Goals help you address obstacles
Once you’ve announced your goals, employees can consistently compare their performance with the desired outcome. This can help them uncover where they’re falling short and where they’re thriving, revealing what needs to be improved or adjusted. As such, goal setting can help you stay on track by pinpointing what you need to adapt or reconfigure to move forward.
Types of goals
You can choose to establish different types of goals. These can vary depending on the scope, context, duration, or complexity of what you want to achieve.
Process vs. performance vs. outcome goals
- Process goals cover methods or strategies you want to use to facilitate progression and attain the performance goals
- Performance goals are short-term initiatives that work together to achieve the outcome goal
- Outcome goals refer to the overarching end goals that you’re striving to achieve
Short-term vs. long-term goals
- Short-term goals are those you want to accomplish soon — often within the next week, month, or quarter, depending on your cadence. These serve to complete the bigger picture and contribute toward larger business goals.
- Long-term goals refer to end goals you want to accomplish at a later time. These are rooted in your company’s values and require more time, commitment, and planning.
Individual vs. shared goals
- Individual goals are personalized to each employee based on their professional goals and broader organizational objectives. These help employees cultivate unique pathways that align with their aspirations while contributing to overarching business goals.
- Shared goals help employees work together by fostering a sense of unity. Additionally, they enhance collaborative capabilities within departments, teams, and projects. Therefore, shared goals are vital to creating an environment that balances strengths and weaknesses, resulting in an inclusive and productive workplace.
Qualitative vs. quantitative goals
- Qualitative goals are assessed objectively as there’s no concrete definition or measurement for achievement. Instead, goal achievement for qualitative goals is ‘felt.’
- Quantitative goals are measurable and can be tracked, with goal accomplishments attained when a particular metric or outcome is reached.
5 different goal setting frameworks
Choosing the right goal-setting framework can bring you closer to realizing your goals. These can help you align employees with your company’s trajectory while allowing you to keep an eye on your progress. Below, we discuss five of the most widely used goal-setting frameworks.
SMART goals guide your goal-setting process by defining goals using five principles:
- Specific: goals clearly highlight what you want to achieve
- Measurable: goals have metrics attached to them
- Achievable: goals are ambitious but not unachievable
- Relevant: goals contribute to your organization’s mission and values
- Time-bound: goals have a reasonable deadline
The OKR framework stands for objectives and key results. This goal-setting methodology can help you execute your priorities by facilitating transparency and focus while ensuring effective resource allocation. The OKR framework consists of three main components:
- Objective: a short statement that highlights what you want to achieve during a given period
- Key result: a progress indicator showing how well you’re progressing towards your desired outcome
- Task: activities that you undertake to help you make headway
Want to know all about implementing OKRs? Read our guide on writing OKRs.
KPI stands for Key Performance Indicators and depicts quantifiable measures that track performance over time. You can select KPIs for multiple domains within your organization, including project, individual, departmental, or business objectives.
Backward goal setting
Backward goal setting involves working backward. You start by determining your end goal and work retrogressively to develop an action plan. That is, you keep your end goal at the forefront of your mind while breaking it down into smaller goals and milestones, identifying the daily, weekly, and monthly goal posts you need to reach along the way to achieve your final goal.
BHAG goals stand for Big, Hairy, and Audacious goals. These refer to challenging, long-term business goals (often 10-25 years away) that your organization uses as a guiding light. While these goals are far away, they can continuously direct employees towards effective action.
The 7 steps to setting goals
After choosing a goal-setting framework suitable to your needs, you can begin the goal-setting process. Use the seven goal-setting steps highlighted below to ensure you established goals correctly and are on the right track.
Step 1: Figure out your goals
The first step of the goal-setting process is figuring out what you want to achieve, why you want to achieve it, and when you want to achieve it. If you’re unsure where to start, use your company’s comprehensive mission statement as a base. This way, you can establish goals for employees and teams based on your company’s priorities.
Step 2: Write your goals down
Once you’ve settled on your goals, the second step is to write these down. Putting pen to paper and writing out your goals cements them as tangible, improves clarity, and gives you time to reflect on why you’ve chosen these goals. When putting your goals in writing, it’s essential to take note of your language: avoid using perhaps, may, or might, as these can affect how attainable you perceive these goals to be.
Step 3: Consider how you’ll measure your goals
After solidifying your goals in writing, you need to figure out how you’re going to measure progress. Achieving your goal requires you to know precisely what success looks like, and most of the time, this requires a quantifiable approach.
Step 4: Prepare for potential obstacles
You must be prepared to encounter challenges when working to achieve your goals. As challenges can come in many forms (e.g., knowledge, people, skills, or context), you need to take a bird’s-eye view and consider all grounds when anticipating complications. Once you’ve pinpointed possible hurdles, dig deeper into their root causes. Thinking of these beforehand can help you address and tackle issues before they emerge, resulting in a more confident approach to goal setting.
Step 5: Map out a timeline
The fifth step of the goal-setting process is to create a timeline for your goals. This timeline should clearly outline the tasks, milestones, and deadlines you need to tick off to excel towards your goals. A visual timeline of everything you need to accomplish can help you create realistic expectations for achieving your goals while making the more significant goal seem more digestible.
Step 6: Create a plan
After establishing your timeline, you need a plan for approaching your goals. With a plan in place, you become aware of what you need to do to accomplish what you’ve set out for your business. You can start creating a plan by first emphasizing the daily habits you must get into to gain momentum. After this, pan out to the weekly, monthly, and quarterly steps you need to take to overcome obstacles and successfully realize your goals.
Step 7: Monitor progress consistently
A study by Censuswide and Geckoboard revealed that tracking your progress increases the likelihood of obtaining your goals, with companies that track progress hitting their goals almost twice as much as companies that don’t. As such, you must get into the habit of reviewing your goal progress weekly or monthly. Doing so can also help you remain organized and focused while allowing you to reflect on your performance.
Tips for effective goal setting
Align goals to wider company objectives
Beyond creating a ripple effect for your organization’s success, there are several reasons for aligning your employees’ goals to company objectives. These include:
- Employees feeling more connected to your company
- Employees understanding the impact of their work
- Employees gaining clarity on your organization’s priorities
To make goal alignment easier, ensure your company’s story and objectives are vocalized consistently across the whole company. For example, you can do so by emphasizing objectives in your company’s history, company-wide meetings, or company newsletters.
Keep goals visible
Ensuring your goals are visible keeps you working towards them, reminding you and your employees of what you want to accomplish. This further increases your likelihood of attaining these goals as it avoids them becoming a one-off conversation, where employees forget about their goals after initially discussing them.
Commit to your goals
According to the goal-setting theory, goal commitment is composed of self-efficacy and perceived importance. That is, an individual’s belief that they can achieve their goals and the importance of their expected outcomes. Therefore, you need to instill confidence in your employees and emphasize the importance of these goals.
To boost goal commitment (and, consequently, your chances of goal attainment), acknowledge the value of these goals to your company. When doing so, ensure that executives are on board with your goals, as vouching for the importance of these goals is futile unless C-suite people prioritize them.
Rewarding your employees for attaining their goals can keep them inspired — particularly when it comes to long-term goals. Giving them something to look forward to can drive performance, productivity, and retention, as:
Long story short
Ambitious and specific goals can keep your employees accountable and productive while allowing you to monitor progress. You can choose to set different goals (e.g., long-term, individual, quantitative) depending on the breadth, reach, circumstances, time scale, and complexity of your goals.
Regardless of the goals you select, using a goal-setting framework is essential. These frameworks can help you align employees and craft an actionable plan for tackling your goals. Moreover, using the goal-setting steps and tips outlined in this article, you can facilitate a seamless goal-setting process that makes goal attainment a breeze.
At Gtmhub, we make the process of setting goals simple and intuitive. Inspired by the Objectives and Key Results (OKR) methodology, our platform is designed to help you align teams, improve focus, and foster transparency across the organization.
Quick-start your OKR journey with ready-to-go OKR templates from our Marketplace or connect with 160+ Integrations to update your OKRs and KPIs automatically to easily make data-driven decisions with our customizable Insights and Dashboards.