When created and used effectively, goals motivate us to be our best and achieve what we hadn’t thought possible. They help us find purpose and meaning in our work by keeping us laser-focused and mindful of the future. Goals remind us that our day-to-day efforts and discipline add up over time to help us accomplish our larger, long-term aspirations and ultimately, achieve success.
On the other hand, lackluster goal-setting and monitoring can have the opposite effect. Allowing employees to get complacent can kill ambition and any desire for self-improvement. In order to reap the rewards of goal-setting, your business needs the right goal-setting framework in place. Below, we’ll examine two of the most popular ways to set organizational, team, and individual goals — SMART goals and OKRs — and give you the practical tips you need to ensure you’re getting the most out of whichever approach you choose.
Why Does Your Company Need Goals?
At a small company, it’s easy to understand how each individual’s day-to-day responsibilities directly impact the overall success of a business. But, as a company grows larger, this connection between company mission and employee responsibilities can become murkier and murkier. Effective goals act as a guiding force, reminding your employees what they need to achieve in order for the organization to operate, grow, and thrive.
Companies and individuals can use goals to:
- Communicate what to focus on (and what to deprioritize)
- Track progress and motivate employees
- Help individuals define and meet their own career development milestones
- Show how different initiatives are connected to one another
- Give employees direction while supporting their autonomy
In order to best benefit from goals, your organization needs to adopt and maintain the right goal-setting framework to keep your team productive and motivated.
Popular Goal-Setting Frameworks
The two most popular frameworks for corporate goal-setting are SMART goals and OKRs. Here’s a closer look at each so you can decide which one is best for your company.
SMART goals are commonly associated with Peter Drucker’s Management By Objectives (MBO) concept, which explains that management and employees need to define organizational objectives together in order for employees to understand expectations and set their own goals. In the case of SMART goals, MBO becomes a process by which the objectives of an organization are agreed to and decided upon between the management and the employees. This ensures that employees are clear about what is expected of them, which helps them set their own individual goals.
SMART goals, in particular, encourage employees to detail how a goal will be accomplished, balancing expectations with reality. A SMART goal must be written in a way that meets the following criteria:
- Specific: Does the goal have specific means and ends?
- Measurable: Can the goal be measured, and how?
- Actionable: Are there specific actions that can lead to accomplishing this goal?
- Relevant: Is this goal relevant to the work?
- Time-Bound: What is the time frame? Is it a set deadline, or is it on a regular schedule?
To show what this looks like in practice, here are two examples — a non-SMART goal and its SMART counterpart:
Example of a Non-SMART Goal: Close more business in Q1
Example of a SMART-Style Goal: Close (actionable) $1M (measurable) in sales by the end of Q1 (time-bound) by bringing in qualified leads through cold calls and demos (specific and relevant)
In the latter statement, the goal clearly states what the expectations are, defines what success looks like, and details how to go about achieving this goal — all key characteristics of an effective SMART goal. We’ve made it easy to create your own SMART goals with Lattice’s SMART Goals Template.
5 Tips for Creating Effective SMART Goals
Here are our top tips for implementing this goal-setting framework successfully at your organization. To get the most out of SMART goals, employees should:
- Pick goals they care about. While goals can be an effective way to motivate employees, uninspiring goals, or ones that are too easy, can have the opposite effect. Giving your employees the ability to create their own goals can help ensure that they are personally invested in their work.
- Put their goals in writing. Have your employees write down their goals and store them somewhere safe so they can refer back to them throughout the year and track their progress at regular intervals. Goals can be recorded in a spreadsheet, Google Doc, or goal-tracking software — whatever system works best for your organization and its employees. Documenting goals and storing them in an easily accessible place keeps SMART goals transparent and measurable, and can also help hold your team accountable.
- Set goals that are attainable, but ambitious. If employees meet their goals within the first few weeks or months of the quarter or year, they weren’t ambitious enough. Goals that don’t push employees outside of their comfort zones can actually leave individuals feeling underutilized or unchallenged at work, so encourage your staff to set some more ambitious goals that might be a stretch to complete.
- Have goals with one clear owner. Having more than one employee tied to a specific goal can make accountability a mess.“You want to create goals that have a clear picture of who is accountable and when action items are due,” advised Matthew Burr, MBA, SPHR, SHRM-SCP, HR consultant and owner of Human Resources consulting firm Burr Consulting. “Once your name is next to something, it makes it harder to avoid being held accountable, especially in a team environment.” While some cross-functional projects might require dual ownership of goals, try your best to create goals with one clear owner.
- Refresh their goals as needed. How often employees revisit their goals depends on your company’s size, industry, and growth rate. It’s essential to balance giving your staff sufficient time to accomplish their goals with staying up to date on any changes in company priorities. According to Lattice customer data, over 50% of companies have individual goals with a timeline of 90 days or less. So start with quarterly goals and adjust from there based on your organization’s unique needs.
Objectives and Key Results (OKRs) are often organized at the company, team, and individual levels and define one larger objective with several measurable results that track progress. OKRs divide a goal into the desired outcome and any measurable actions that support it.
This goal-setting framework was first introduced by Intel’s management scientist Andy Grove and later popularized by Google in the late-1990s. Today, many leading organizations use them to inspire teams and drive innovation, including Netflix and Amazon.
To give you an example, here’s what an OKR might look like at the individual level for an employee in the go-to-market/sales department:
Example OKR-Style Goal: Close $1M in business by the end of Q1
Example Key Results:
- Average 50 cold calls a day in November/December
- Generate a total of $3M in qualified pipeline by January 1
- Achieve a close rate of 33% in Q1
In the OKR above, the individual’s objective might tie to a team-level objective of “Close $25M in business by the end of Q1” and an organizational-level objective of “Grow our sales and become a market leader in North America,” while their key results spell out the actionable ways they will achieve their individual objective. These key results should follow the same criteria as SMART goals, meaning they should also be specific, measurable, actionable, relevant, and time-bound. Easily create your own OKRs with our Quarterly OKRs Template.
6 Tips for Creating Effective OKRs
If you want to use OKRs to drive alignment, transparency, and accountability at your organization, here are six tips to get you started.
- Set OKRs from both the top down and the bottom up. Before every new business quarter, your senior leaders should brainstorm and agree on three to five quarterly organization-wide OKRs. Once they’ve made these goals public to the entire company, each team and employee should then set their own goals. This gives employees ownership of their own objectives, so they can ensure that their day-to-day responsibilities not only support their personal goals but also cascade up to align with the larger company-wide objectives.
- Start with strict alignment. If you’re introducing OKRs for the first time, it’s best to stick with strict alignment at the beginning — meaning your organizational key results translate directly into the objective of the level below them. For example, if your organizational-level objective was “Become a market leader” and your key results were “Launch a new product and acquire 10,000 new users,” then, “Launch a new product” would become the objective of your product department’s team-level OKR. This top-down approach ensures that your entire organization is aligned thanks to explicit, cascading goals that leave no room for confusion.
- Switch to directional alignment over time. Once employees are familiar with OKRs, your company can switch from strict alignment to directional alignment for greater flexibility in the goal-setting process. Directional alignment is when organizations establish objectives that feed into the key results of higher levels, but don’t mirror them exactly. It gives teams and individuals more say in how their objectives and key results tie up to the organizational OKRs. For instance, the product department in the above example might instead make their objective broader, like “Build an outstanding product,” so their key results can include everything they’re doing to build new features and improve the client experience, such as creating more self-service tools, fixing product bugs, and launching a new product offering.
- Opt for weighted key results. Not all key results are created equal, so adopting a weighted scale can help you convey which ones are more important or contribute more to the overall completion of the objective. For example, if a team’s objective is “Grow the business operations team,” the key results “Hire a business operations manager” and “Set up an internal onboarding process for all new team hires” don’t contribute evenly to that goal. Instead, you might say hiring the new employee is valued at 30%, while creating the new process is 70% of the goal, allowing this team to prioritize their efforts accordingly.
- Get executive buy-in. When HR teams are the sole driver of OKRs, the rest of the organization might tune out. Enlisting the buy-in of an executive, like your CEO, can help drive home the importance of goal-setting and its impact on the overall success of the company. Executive support like this can help get every employee in your organization to set meaningful, personal goals that help move the company forward.
- Falling short of perfection is okay. Goals are meant to be ambitious, so if your employees don’t achieve a 100% success rate, that’s okay! Usually, OKRs are rated on a scale where 0 means there’s been no progress made toward a given goal, 0.6-0.7 means an individual is on target for completion, and 1 means the goal has been achieved. If your entire organization is scoring 1’s on every goal, your goal-setting wasn’t ambitious enough and you could be underutilizing your employees. Encourage employees to set stretch goals that push them outside of their comfort zones, even if it means falling short of what they set out to do. Having room to experiment and learn new skills can help engage your workers — and allow them to find more efficient and effective ways to do their jobs.
You can’t go wrong with whatever goal-setting framework you choose; the important thing is to have a process in place, and stay consistent and organized so your employees take it seriously. Goals should motivate employees, not stress them out, so be sure to create a culture that celebrates innovation, creativity, and success — no matter how big or small.
For more actionable tips on how to implement goals at your company and a comprehensive overview of the different goal-setting frameworks, download our free eBook HR’s Complete Guide to Goal-Setting today.