10 Ways to Make Goal Setting Extraordinary in Your Business

Setting effective and achievable business goals is at the heart of any good business goal setting strategy. While many people say they want to achieve success in business, not everyone has the wherewithal to follow through and do so.

Determining the right direction for a business requires setting ambitious and inclusive—yet attainable—goals. If a business’ leadership team aims too high, it’s likely to create frustration, lost opportunities and unhappy clients, and if goals are too narrow, lagging areas are likely to affect the entire company before long.

Setting comprehensive yet achievable goals may not be easy, but it’s necessary if a business is to grow. Here is my top 10 list of the ways I’ve seen goal setting go from ordinary to something useful in aligning, enabling, and accelerating individual and organizational performance.

1. Align to Company Mission – Goal setting, at its best, is used to align the individual goals to those of the organization, in support of executing on a competitive strategy in service of the organization’s mission. Make sure the individual goals are consistent with, aligned to, and enable the organizational strategy or that they are relevant to the organization’s mission. The natural flow is: Mission >> strategy >> objectives >> plans (budgets) >> capabilities >> performance >> behaviors. A great check to see if the behaviors enable better performance to achieve the strategy is to ask: “If this person delivers 1000% above their set goal, what difference will that make to the organization achieving its strategic goals?” If the answer is “nothing” or “not much” then you are either measuring the wrong goal or you may have to look at how that job is designed.
2. Manage Risk – The riskier we make goal setting and performance reviews, the more defensive the activity will become. This risk is where people will maximize their outcomes. If you have a risky environment where people who fail to meet their goals get fired then that will drive a defensive approach to goal setting (e.g., sandbagging or under-promising to then over-deliver). First, risk mitigation is to de-couple goal setting and performance reviews from compensation discussions. Yes, performance and compensation should be aligned. But we all recognize that more goes into compensation than just goal setting. The more tied to compensation, the more likely you are to see ‘gaming the system’ or other manipulation for personal maximization.
3. Fewer, Simpler, More Meaningful Metrics – We have a growing capability to measure a lot of things. That data can become overwhelming. Some of the best people who are measuring performance boil it down to one, two, or three key things. Too many metrics, too many goals and they will invariably come into conflict with one another or get so complicated in tracking that the marginal utility turns negative. Even people who measure a lot of things, over time will tend to simplify things into a primary measure with a few supporting measures. For example, Apple Watch uses 10,000 steps as a proxy for activity. It is not complete or definitive, but it is directionally correct, easy to remember, easy to monitor, and easy to action. There are hundreds of other metrics they could use.
4. Focus on Outcomes, not Activity – Goals should reflect the outcome we are trying to create. I ask clients which they would prefer: the person who accomplishes a task in 2 hours or the person who accomplishes an outcome in 20 hours? Let’s not reward activity. The goal should be SMART, but also reflect the outcome. SMART goals are specific, measurable, are attainable, relevant, and timely. Avoid counting hours or number of times attempted or other work-in-process indicators. What is the result you are looking for?
5. Understand Your Contribution – One of the most important elements in a goal setting conversation is the discussion to understand how well the person setting their goals really understands their context. How well is the company doing? What is their contribution to key processes? Are they part of a cost center or a profit center? What are the key things the organization competes on in the marketplace and what is their contribution to achieving that. Be sure to ask a number of questions to check their level of understanding. If they don’t understand the business, then that could be one of their goals.
6. Motivate, Not Discourage – Goal setting and performance management is an opportunity to build the capabilities of the people in the organization. Only in a few cases does being critical to a person become motivating to them. Those people tend to do well in athletics or the military. Most people work better from encouragement, mentoring, and guidance on what to do. Often simply stating the impact their actions or inactions have had are enough to motivate a desire to improve, then the focus can shift on helping them to improve. That help should start with building on what they are already doing well.
7. Be Aware of Set Backs – Goal setting usually involves doing something more or different or new. If it’s a case of doing something different or differently or new, as the reviewer you need to expect performance to drop initially. This effect – where performance degrades as the person tries new skills or behaviors, but eventually returns to baseline then improves – is called the J-curve. Putting in new systems in warehouses or data processing, we knew it would take 13 weeks of practicing the new way to get back to baseline and within 6 months there would be significant year-over-year improvement. So, build that learning time into the goal setting.
8. Behaviors are More Important than Numbers – When you are trying to adopt new ways of working or achieving higher performance, focus more on the demonstration of new behaviors and less on the actual performance metrics. When Harley-Davidson moved to a new production method in their York plant in 2009, the focus was on the behaviors, not on the metrics. They knew that if they focused on recognizing and acknowledging their team members doing the right things, then the performance metrics would eventually show that improvement. Simon Sinek has a great example about working out and eating healthy – if you look in the mirror every day after working out, you won’t see much progress, and you’d be tempted to say after a few days that it’s not working, even though there is long-term data that exercise and good diets promote health.
9. Vertical Accountability – Goal setting is as much about the person setting the goals as it is about the person they report to. Goal setting for the manager and executives should be aligned throughout the vertical reporting chain. Meaning, as a manager, one of my goals should be that my team members achieve their goals. Getting the boss invested in helping their team members succeed is an important way to gain alignment and support. If a manager has a team where no one meets their goals, chances are good that it’s not entirely the fault of the staff. Know what your boss’s boss’s boss’s priorities are. Even better is to hold the leaders accountable for their teams achieving their goals.
10. Increase the Frequency – Employees entering the workforce today are digital natives. They are used to getting things on-demand (e.g., Amazon, Google, YouTube, etc.). They are feedback intensive. They want to know if they are doing a good job – and they want to succeed. If they are working for you, and you are still reading this, chances are they (and you) did well in school. Digital natives had instant feedback and constant pressure to get an A in school. So, the more you can move goal setting and performance feedback from annual to quarterly to monthly to constant, the more they will benefit from those short conversations where you check in on their progress, ask them what help they want from you, and offer some suggestions. They will love the feedback and strive to achieve their goals and, in doing so, achieve your objectives, and in doing so, help the organization deliver on the strategy and serve their mission.

Exceptional leaders understand that goal setting is not a one-time event; it is an ongoing process that requires commitment, resilience, and adaptability. By setting SMART goals, aligning personal and professional aspirations, developing action plans, tracking progress, and staying motivated, leaders can unlock their potential and achieve extraordinary success.