Three steps to setting effective performance goals with your team

Research shows that goal-setting can have a powerful effect on employee – and therefore, business – performance. Arj Bagga, Director, HR Advisory (Performance & Rewards practice leader) at Gartner explains three key steps to setting performance goals that work for your your team and your business.

Talent is today’s single biggest cost and differentiator when it comes to business success. As a result, organisations don’t have the luxury of failure when it comes to employee performance.

While it’s easy to underestimate the role that goal-setting plays in getting the most from your employees, Gartner research shows that when employee goals are aligned to both organisational and employee needs, performance increases by up to 22 per cent.

When ineffective goals are set, the result is poor employee performance, lower engagement and missed business targets.

Three steps to setting effective performance goals

As we commence a new financial year, it’s an ideal time to establish a goal-setting process and get it right from the outset. These three best-practice tips ensure managers and employees can set goals that are impactful and drive business outcomes.

1. Help managers provide context for goal-setting

Provide managers with information about your business strategy and how it relates to employees’ diverse roles. Managers must then give direction that translates that information into specific tasks and actions.

Providing information and direction together enables employees to see the link between their work and overall company strategy.

Business leaders play a critical role in helping managers understand business strategy and translate it to their teams. Getting manager contextualisation right can have a big impact on employee performance. Organisations with managers who are most effective at contextualisation can boost the percentage of high performers from 44 per cent to 60 per cent.

2. Make goal-setting more collaborative

Given the increasingly collaborative nature of work, transform goal-setting from a solo activity to a team activity. This requires several shifts.

For one, have individuals share goals with their team and ensure that everyone understands how their goals relate – and that they are jointly accountable for achieving the results outlined in their business strategy.

Also, implement team goal calibration sessions, rather than just requesting peer feedback at the end of the year during the formal performance review process. This enables teams to discuss what they will need from each other and calibrate expectations, rather than performance.

3. Empower employees to update goals regularly

The 2021 Gartner Goal Setting Employee Survey reports that less than half (44 per cent) of employees say they update their goals following significant changes in role expectations – such as sudden staff changes or when new projects are assigned.

Moving forward, organisations must build flexibility into the goal-setting process so employees can evolve their goals as their roles and the business change.

Have employees review their goals with their manager quarterly, at minimum, as well as at the start of the year. Help managers and employees identify triggers for adjusting goals, including changes in company or business unit financial performance, staff turnover or technology advances.

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