Goals and OKRs

How to Drive Business Success With a Goal-Setting Framework

September 30, 2022
August 25, 2023
  —  
By 
Lesley Chen
Lattice Team

In every organization, goal-setting is necessary for multiple reasons: It connects company plans to team and individual goals, creates more engaged teams, provides a way to measure success, and can even drive innovation. But before determining goals at your organization, you need a goal-setting framework to create a system and structure around how to set goals, how to communicate them, when and how to reevaluate them, and how to remove any obstacles in the way. 

There are many goal-setting frameworks, or goal methodologies, to choose from, and the best one for your organization will depend on your company’s operations and culture, as well as internal and external factors. Below, we’ll take a closer look at the most common goal methodologies, and how to choose the ones that fit your needs in order to build the best goal program for your organization.

Goal Methodologies

Most Common Methodologies

In a recent survey conducted by Harvard Business Review Analytic Services and sponsored by Lattice, 372 executives were questioned about their use of strategic goals. The respondents were asked to select which goal methodologies they used from the following options:

  • Key Performance Indicators (KPIs): KPIs are quantifiable measures of performance that are focused on specific inputs or outcome-based measures and are tracked over time. They are used to establish a target that organizations and teams can work toward or work to maintain. KPIs can also be used across multiple levels within an organization, from the top all the way down to the individual level, depending on the focus of the organization. While companies have lots of different measures, KPIs focus on tracking the most important ones that support the organization’s overall strategy. 
  • Specific, Measurable, Actionable/Attainable, Relevant, and Timely/Time-bound (SMART Goals): SMART goals have the five characteristics described in their name, and they create structure that increases clarity and certainty.
  • Objectives and Key Results (OKRs): OKRs not only set ambitious goals (the objectives) across an entire organization, but also the measures (key results) that let teams know when those objectives have been met. OKRs are flexible and adaptive, and they drive alignment. 
  • Objectives, Goals, Strategies, and Measures (OGSM): OGSM is a goal framework that can be set at the organizational or team level. Similar to OKRs, OGSM also set objectives, but in the case of OGSM, the objectives are a larger vision for the organization, and the goals clarify what success looks like for that objective. Strategies then help organizations understand the ways goals will be successful, and measures help them know how they’re tracking against their strategies. OGSM tend to be top-down, and should be able to be clearly communicated.
  • Management by Objectives (MBO): With MBO, there are established, clear organizational objectives that drive both team and individual objectives. Within this structure, which tends to be top-down, SMART goals are used as a structure for building goals. OKRs evolved from MBO.
  • Big, Hairy, Audacious Goals (BHAG): With this framework, organizations set a really big, long-term vision for the organization. An example may be what Microsoft set out to do with its mission: “A computer on every desk and in every home.” A BHAG is useful for clarifying and unifying an entire organization in a specific direction.

Within the HBR Analytic Services report, the most commonly used methodologies were KPIs (57%), SMART goals (50%), OKRs (30%), and OGSM (19%). Often companies use more than one methodology at a time.

Format vs. Framework

Some of the methodologies are frameworks, and some are formats, which is why they can be used in tandem. Formats are structures for how a goal is built. For example, SMART goals are a format — they lay out the characteristics of a goal, and can be part of any structure. Frameworks, on the other hand, provide a structure for all the goals within an organization. OKRs provide both a framework and a format. Objectives follow a format and are designed to be big and aspirational, and key results follow a framework in clarifying what success looks like and if and how key results are connected to each other. Another example of a framework is MBO, which leverages the format of SMART goals. Both formats and frameworks need to be taken into account when establishing goals.

Choosing the Right Methodologies for Your Organization

While case studies can provide useful information and inspiration, choosing a goal methodology goes beyond copying what another company is doing, and what works for another company won’t necessarily work for yours. Look at the operations and culture specific to your organization, and pick what will work best for your particular set of circumstances.

It’s also important to think about what the goals are for your goals program. Are you trying to be big and aspirational and build something new? Or are you trying to hit 100% of your smaller goals? Again, every company is different, so thinking about how the goals for your goal program align with your operations and culture can be helpful in choosing a goal methodology that will enable your organization to succeed. And methodologies can evolve and shift over time to meet a company’s needs, depending on both internal and external factors. For example, if your business is growing fast, you might want to implement some BHAGs, whereas during a downturn or possible recession, you may want to use KPIs that are more conservative to sustain the company through a time of uncertainty.

Regardless of what format or frameworks you choose, everyone in the company has to understand and agree on what you’re using to ensure full alignment throughout the organization. These common goal methodologies are not the only ones you can use either; if there is a different framework that fits your company’s culture better, implement that. Goal methodologies should fit your organization, not the other way around.

Obstacles to Goal Attainment

Even with the best goal methodologies in place, sometimes it’s just not possible to achieve every goal you set. Based on the HBR Analytic Services research, there are a number of obstacles that can get in the way. Here’s what the report found: 

  • 49% of respondents said there’s not enough time or resources to work toward goals because other work takes priority.
  • 40% said the roadmap was unclear, so there's a destination but no communicated path to get there.
  • 39% said there were conflicting goals across the organization, making it hard to choose what to do.
  • And a common theme emerged in about a third of responses: For one reason or another, goals just didn’t take. This showed up in the form of experiencing difficulty embedding goals into the culture (36%), difficulty communicating or promoting the goals effectively (36%), difficulty motivating employees to champion the goals (31%), or leadership putting little effort into checking in on the goals (27%).

Top 3 Areas to Focus On for Goal-Setting Success

While it is important to set big goals, don't let ambition obliterate reality. Communicating unrealistic standards or misaligned direction will cost you credibility, speed, and motivation. Focusing on these three areas of opportunity can help decrease obstacles:

  • Leadership Responsibility: When leaders don’t communicate well with one another or within the organization, it’s hard for teams and individuals to understand goals. As a leader, not only are you responsible for a team or individuals, but you are also responsible for helping remove blocks and obstacles so your team can be effective in reaching their goals to the best of their abilities.
  • Priority and Focus: Within any organization, there are more tasks and projects to be completed than there are people. A core capability of strong leadership is to create priority and focus, so teams can work productively and toward common goals. If every initiative and goal is important, then none are important. It’s crucial to prioritize quality over quantity, and the best way to create clarity for an organization is to focus on three to five of the most important goals at a given time.
  • Communication Habits: When organizations have a norm of strong communication habits, then there is clear and consistent messaging around setting goals, how to achieve them, and whether or not the company is on track to reaching them. Communication is key for reducing obstacles to achieve individual, departmental, and ultimately, the company’s strategic goals. Additionally, communication has to be two-way: Employees need to trust that their leaders are setting goals that benefit the organization, and leaders need to trust that employees will follow through and work toward the goals that have been set.

How Often Should You Reevaluate Goals?

Just as goal methodologies can evolve over time, so, too, can the goals themselves. That doesn’t mean you always need to be changing your goals, but it is worth checking in on them regularly to make sure they’re still relevant and aligned with company strategy.

In the HBRAS report, 43% of respondents said they reevaluated goals on an annual basis, and another 33% and 11% said they did so on a quarterly and ad hoc basis, respectively.  

The types of goals that should be reevaluated are strategic, or company-level goals, as these are the ones that have the largest impact. A reevaluation doesn’t necessarily result in a change. Instead, it helps keep your leadership team informed, and sets aside time to take a step back and consider whether or not any adjustments are needed, based on new internal and external factors that have arisen. The frequency for which you do so should be based on building a balanced cadence that takes into account business — but also human — nature. Top factors to consider include:

  • Organizational Complexity and Size: The size and structure of an organization will help determine how and when to reevaluate goals. If your company only has 40 people in a single location, versus 4,000 employees distributed across the world, it will be relatively easier to reevaluate and change goals, while minimizing disruption throughout the organization.
  • Intentionality in Goal Reevaluations: Just saying you’re going to do a reevaluation is only half the equation. You also need to determine what actions will need to be taken after the reevaluation: What is the measure by which a change makes sense? If you change, how will you drive alignment and agreement on a new or updated goal? How will any changes impact the rest of the organization? Having a process in place that takes these factors into consideration, from revaluation to execution, will increase clarity and drive confidence in the leadership team.
  • Stability vs. Strategic Imperative: It’s natural to crave stability, and so when making decisions about goals, leaders have to balance what is important strategically with what is going to create stability. In some situations, goal changes will be necessary and worth the short-term instability that will result. In others, keeping a less-than-perfect goal outweighs the loss in consistency, engagement, and cohesion that may be caused by a goal shift. 

When goal-setting is embedded into company culture, it will organically come up in day-to-day conversations. But it’s also important to have structures and systems in place around when to formally talk about goal reevaluation as well, so there is a process dedicated to having the right discussions at the right time.  

Different goal frameworks may impact the frequency of evaluation. For example, BHAGs tend to be more long-term, and will need to be examined less frequently than KPIs or OKRs. OKRs, on the other hand, can follow annual or even quarterly reviews. And reevaluations don't necessarily have to tie in to goal-setting cycles; you may set goals on an annual or biannual basis, but given unpredictability in the industry or economy, want to revisit goals in the middle of a goal-setting cycle.  

Essential Considerations for Your Goal Program

1. Your framework must work for your organization, its stage, and its priorities. 

Your goal framework should only consider circumstances related to your organization, not what  is or isn’t working for others. So designing and building a goal program will look different from company to company, but they should all follow some general recommendations. Here are three best practices:

  • Align operations and culture. Your goal methodology should align with your operations and company. If you want your organization’s goals to be ambitious, BHAGs or OKRs may be ideal. If accuracy is a top priority and integrated into your culture, KPIs or another format may work better. There’s no-one-size-fits-all approach; successful goals are custom-built.
  • Program design matters. Before jumping into anything, take some time to think through the program design. Planning out the details ahead of time improves the quality of communication around rolling out a program, as well as changing or evolving to a different program. Taking this step also helps evaluate the impact of the goals and identify opportunities for improvement.Ask yourself questions like: 
  1. What are you building?
  2. What are the goals of your goal program?
  3. How many levels of goals do you want?
  4. How many goals do you need at each level?
  5. What’s the frequency at which you want to create and share goals? 
  • Less can be more. Even though program design matters, there comes a point where you can overthink designing the perfect goal program. If you spend 95% of the time administering the goal program and only 5% of the time actually working on goals, that is not going to be an effective way to achieve your goals. You can start with a more lightweight strategy, and build complexity over time.  

2. Planning is essential.

Making time to build clarity and alignment is critical for a healthy, effective goals program. Here are three things to keep in mind when planning your program:

  • Planning is an action. There’s that famous quote, “When we fail to plan, we plan to fail.” Planning may seem time-consuming, but doing the right work upfront will save you time and effort in the long run. 
  • Intentional planning impacts everyone. Having well-defined goals from the top can cascade down to the team and individual levels, ensuring that everyone is working toward a common mission. Without intentional planning and communication, you may have teams working on different initiatives that either compete with each other or distract from the larger company goals.
  • Like people, programs will grow and evolve. As mentioned earlier, goals are not always static, and this should be accounted for in the planning stage. A goals program should have a defined strategy, but also have room for reevaluation and evolution to better support the operations and culture over time. Planning is as much a part of the continuation and growth of your program as anything else.

3. Communication is critical to performance.

Communication is one of the most critical, if not the most critical, components that drive performance through goals programs and in organizations. And goals create a common language for everyone within a company to talk about the work they’re doing. They allow different individuals and teams to have more effective and productive conversations around what’s happening in the organization and what’s working — and what’s not.

Sustained change over time doesn’t come from huge shifts, but rather from small habits that are consistent and repeated over the years. By creating the right communication habits, you will enable your organization to operate and grow more effectively. Identifying the right habits to use at key moments — setting, executing, and reflecting on goals — can help set your organization and its people up for success. 

Key Takeaway

Goal frameworks and methodologies are important in structuring organizational goals that align with company operations and culture. They need to be designed for your specific company at the stage it’s currently at, and you are not just allowed, but encouraged, to continue to reevaluate and update goals as needed.

To build the right goal program for your organization, you need to spend some time planning before you execute. It may feel like you’re not moving forward because you’re in the planning stage, but in actuality, you’re going slow now to go fast later. Finally, the goal program hinges on good communication; without it, goal programs lack focus, effectiveness, and ultimately, success.

This article is based on our webinar from Lattice Advisory Services, “Making Goal-Setting a True Framework for Success.” For more information and actionable tips, watch the full webinar here.