KeyneTalk

SMART Goal-Setting Isn’t so Smart After All

 by Kelly Nelsen

A problem with the typical goal setting process

I don’t know about you, but I’ve missed plenty of the goals I’ve set for myself over the years.  I don’t live on a cliff overlooking the ocean, I don’t own a baby grand piano (although I do own an upright), and I didn’t get my doctoral degree by the time I was 40. I faithfully followed the SMART goal setting process for these things, too.  (You know, making your goal Specific, Measurable, Attainable, Realistic, and Time-Bound?) 

As part of the SMART goal setting process, we’ve been taught to set a target for a goal – a measurement that defines whether the goal has been met or not.  It may be an amount, a percentage, a date, or some other criteria.  “Complete Microsoft Excel training class by December 31^st, 2009”, or “Lose 20 pounds by Christmas”, or some such thing.  Did you ever wonder, though, how to account for losing only 19 pounds rather than 20 by Christmas?   After all, shouldn’t 19 pounds count for something?  Usually, what we end up doing is considering losing 19 pounds as having met the goal, when technically, the goal was missed.  We didnt' actually lose 20 pounds. As a result, our goal setting and scoring at the end winds up being rather sloppy and vague in order to account for “almost-met” goals.  This leads us to start believing that falling short on a goal is okay, and pretty soon, it screws up the whole goal setting and achievement process.  At issue here is how the measurement criteria are developed.

We’ve discovered a much better process in working with clients over the years.  Instead of simply indentifying how to judge the goal and selecting a target to hit, we help them develop clear missed, met, and exceeded criteria when setting goals.  By determining these three different measurement criteria up front, the need for interpretation and “almost met” goals at the end is completely eliminated.   Setting missed, met, and exceeded criteria involves 1) setting the missed criterion, 2) setting the exceeded criterion, and 3) identifying the range between the missed and exceeded criteria as the met criterion.

Let’s take a sample business-related goal and discuss how to create measurement criteria for it:  To increase total power drill sales to $3.1 million by FYE 12/31/09.

In order to figure out what it means to meet a goal, it’s easiest to first determine what it means to clearly miss the goal.  For example, we may clearly miss the power drill sales goal if we only hit $2.8 million by FYE rather than the $3.1 million we determined earlier.  However, we’ve also thought about it and determined that it’s probably acceptable to hit $2.9 million.  This makes our $3.1 million target a little fuzzy, doesn’t it?  So, we can set the missed criteria to indicate that the goal will be clearly missed if power drill sales are less than $2.9 million by FYE 2009 (missed equals < $2.9 million). 

The next step is to identify the exceeded criterion.  The principle question to ask in this phase is,” What is clearly worth double the kudos (whatever those may be – points, benefits, bonus money, etc.) if a person exceeds this goal?”  If you think of the exceeded criterion as being a target that, if hit, is worth double the value of merely meeting the goal, you have the right idea.  In our power drill example, maybe $3.2 million isn’t worth double the points, but $3.5 million is, given the stretch that might take to get there.  If this is the case, the exceeded measurement criterion becomes anything equal to or greater than $3.5 million in power drill sales. 

So far, we have the missed criterion set at anything less than $2.9 million and exceeded set at anything equal to or greater than $3.5 million.  So what becomes the met criterion, then?  It’s not really $3.1 million, is it?  The met criterion becomes a range rather than a number.   In this example, the met range is $2.9 – $3.49 million. 

Although it may seem counterintuitive to think of a goal target as a range than a number, it makes sense when you consider the reality of goal accomplishment.  Setting an arbitrary target point is essentially the same as trying to shoot a gun at a target at a shooting range.  With luck (and a lot of skill), we might hit it dead-on, but in all likelihood, we’ll miss it to one side or the other.  As with target practice, by using the missed/met/exceeded criteria, we are allowing ourselves a range of hits, a clear range of misses, and an opportunity to be rewarded for stellar performance.

To learn more about our philosophies surrounding goal setting and employee performance, click here.

Why We Don't Call KeyneLink a Performance Management System

by Kelly Nelsen

 

People ask us why we don’t call KeyneLink a performance management system.  Here’s our answer.

KeyneLink is a performance management system, but it’s unlike any other performance management system out there in the market today. Unfortunately, people have used the term “performance management” to refer to performance appraisal, and now the two have become synonymous.  True performance management requires managing the performance of organizations and the people within them on an ongoing basis.  It starts at the organizational level and extends all the way to the individual level.   A true performance management system tightly aligns the duties and goals of the people with the vision, mission, core values, and strategy of the organization.  For these reasons, true performance management is driven by top management, not by human resources. 

All of the so-called “performance management” systems out there today are really performance appraisal systems, and as such, they’re driven by human resources.  These systems have been dressed up just enough to appear as if they align with the organization’s vision and strategy, when in reality, they only give a passing nod to what the organization is trying to accomplish.  Instead, they retain the subjective, personality- and trait-based measures of the traditional performance appraisal.  They merely automate the performance appraisal process and provide some bells and whistles to make the process a little easier.  Sure, some of them incorporate goal-setting, but the goals tend to be of a personal improvement or succession planning nature and are based upon the results of the performance appraisal.  The goals in a true performance management system, on the other hand, are actionable goals that are directly based upon the organizational initiatives and step the organization closer to achieving its objectives for the year.

So, rather than to try to fight the tide and redefine performance management the way it ought to be defined, we’ve chosen to use a term that truly differentiates us from everyone else: strategy-driven execution management.  After all, KeyneLink is a system that does what a true performance management system should do: manage the execution of an organization’s strategy through its people.  Given that, the term “strategy-driven execution management system” defines KeyneLink pretty well, don’t you think?

Who Owns Performance Management?

It's amazing to me that conventional wisdom says HR is the owner of the performance management process.  This comes from the misunderstood notion that performance appraisal is the same as performance management.  After all, isn't performance management about evaluating people, and isn't HR responsible for everything to do with people?  The purpose of performance management is to ensure we're in compliance and have documentation for compensation decisions, right?

No, not really.

True performance management is about operationalizing the strategic plan and/or the annual operating plan of the organization.  It's about managing individual and group efforts toward the accomplishment of organizational initiatives.  It's about clarity of direction, alignment of all goals down to an individual level and engagement of the employees in the goal setting process.  It's about ensuring the clarity of individual roles and responsibilities.

So who should own the performance management process?  Senior management.  Actually, the process is owned by senior management, but it is a core responsibility of every manager down to the first line supervisor.

Radical? Maybe.  Out of step? Possibly.  But if you think it through, I believe you'll see that it is the only way to ensure its success in your organization.

To learn more about performance management visit us at www.keyneinsight.com

Performance Management - What's the secret?

"If you had to narrow it down to one thing, what is the most important component in performance management?" 

This was one of the questions I was asked last week while giving a presentation on the difference between performance management and performance measurement.  The answer is actually fairly simple.  Performance management at its heart, is clarification of expectations and communication.  There is no more important component in the performance management process than communication.

Unfortunately, communication is not the central theme of most so called "performance management" programs.  Yes, in these other systems there are communication meetings, usually once, or even twice a year depending on how your HR group has structured the program.  But these are performance "review" meetings.  What I'm talking about are the on-going dynamic performance "management" discussions that lead to the successful achievement of organizational initiatives.  These must happen at least once a quarter and should happen bi-monthly or even more often.  Who ever heard of managing something by reviewing it once a year?

The tone of these progress meetings is also different than a "review" meeting.  There is an inquisitive, coaching, mentoring, and partnering tone to a progress meeting versus a judgmental, tense and even competitive tone that typifies a "review" meeting.

I am convinced that if you were to go into most any organization and you did nothing more than get every manager and employee to sit down every other month and talk about the employee's performance and how the two of them can improve their working relationship, that alone will improve performance.

Communication is one of the major differentiators between true performance management systems and performance measurement systems (i.e. performance appraisal).

I know you all knew that already, but sometimes the obvious seems to get lost in the structure of the process.

The annual dance

  It's that time of year again!  Yes, it is Thanksgiving and the start of the Christmas season, but it's also the start of the performance appraisal season.  Manager's everywhere are starting to get the dreaded forms from their HR departments.  They will soon be dusting off last year's performance appraisal forms to see how many goals from last year have been completely forgotten.  Many are even starting to develop that knot in their stomach about having to go through the arduous process again. 

     It is also the season for all the articles about how bad the performance appraisal process is or how to make it at least somewhat effective.  I have had at least twelve people email the link to the latest Wall Street Journal article: Performance Reviews Need Some Work, Don't Meet Potential.  Every year there are a series of articles published lamenting the fact that we seem to be stuck in this trap with no effective alternative.

  I have a novel idea.  How about we stop appraising performance and start managing it?!

The problem is that their are many programs out there that claim to be performance management programs but are really just the same old performance appraisal process dressed up to look better.  How can you tell the difference?  An effective performance management process has several characteristics:

1. The most important element of performance management is communication.  So the process should facilitate frequent progress meetings and feedback between manager's and employees.  If there are less than 4 progress meetings per year, then you have a measurement/appraisal process.
2. The emphasis should be on goals that are linked to initiatives and not on competencies linked to training and development.  Performance management is about leading and guiding groups and individuals toward the accomplishment of organizational initiatives.
3. Goals should be linked directly to corporate initiatives thereby creating direct line of sight from the strategic plan to the initiatives and down to the individual goals within the organization.
4. Employees should enter their own data; managers should never enter the data for employees.
5. Core Values should be infused throughout the process.

     Why not set a New Year's resolution to change from the antiquated performance measurement/appraisal systems to a true performance management system? 

     Yes, we can help you with that.

Happy Thanksgiving!

Performance Measurement is Not Performance Management!

    

Traditional performance management systems have either measured organizational financial data and short-term profitability or individual employee performance. Neither method has proved successful, so each has evolved to include additional measures: organizational financial performance expanded to include customer, internal business process, and learning and growth measures via the Balanced Scorecard, and individual performance appraisal measures expanded from assessing subjective dependability and commitment to measuring performance on objective goals.  Over the years, both methods came to be known as performance management systems even though they continued to measure rather than manage performance.

     

As such, they both have retained the underlying philosophy that “if it can’t be measured, it can’t be managed.” This philosophy is rearward-looking rather than forward-looking. Measuring something implies that the thing has already occurred, while managing something implies that the thing is in progress and is continually being guided, directed, and, well, managed.  True, part of management involves measuring progress over time in order to determine where improvements and/or changes should be made going forward, but measurement is only part of management, not the end state.

     

We find that there is very little actual performance management going on in organizations; virtually all of it is performance measurement.  And organizations are so used to taking their yardstick out to measure things that they don't realize the tremendous positive difference it would make if they started managing those things instead.

Misconceptions about performance management

In working with companies over the years we’ve noticed a few common misconceptions about performance management:

1.     Performance management has become synonymous with performance measurement.  Most, if not all, of the automated “performance management” systems in the marketplace today are actually performance measurement (i.e. performance appraisal) systems.

2.     When we use the term performance management, what most people think of is performance measurement – a process of looking back to see what’s been accomplished during the year, usually through performance appraisal- and Balanced Scorecard-type measurements.  Performance measurement is not the same as performance management.  True performance management, as we define it, is “dynamically and actively leading, guiding and directing groups and individuals toward the accomplishment of organizational initiatives.” 

3.     Many executives think of performance management as an HR function, probably because they intuitively understand that the performance “management” systems out there are actually glorified performance appraisal systems.  Indeed, managing the performance appraisal process is an HR function, but true organizational performance management is not.  Organizational performance management is about managing the accomplishment of organizational initiatives and the strategic plan.  That’s owned by senior management and is a core responsibility of every manager down to first line supervisors. 

4.     Most organizations seem to treat planning as a task.  They get the management team together once a year, map out a plan for the upcoming year, and then check that task off their to-do list.  The plan tends to sit on a shelf and get dusty until the next year when they repeat the process.  Most management teams don’t do a very good job of communicating that plan to the rest of the organization.  They also don’t link all of the department and individual goals to the initiatives in the plan, so they never really operationalize the plan.

Read more about organizational performance management at www.keyneinsight.com.