How to Set Company Goals? The Formula of Objectives
When you examine great achievements, you see the same characteristics that the goal was set at the start; goals that are assertive, exciting, inclusive that allows collaboration. The most important element in the goal's formula is the story side of the goal that touches on emotions. Edwin Locke, Professor of Psychology at the University of Maryland, talks about the two important factors that increase and motivate the goal's performance in the theory he put forward. The goal should be inspiring and challenging, while non-ambitious goals do not create performance improvements. Secondly, the goal should be clearly defined; a strong but not clearly defined goal does not create motivation. A clear and well-defined goal motivates and activates the person if it is compatible with their competencies.
Deloitte also mentions goals in two different studies published in 2014 and 2015; it indicates that there is no more motivating and performance-enhancing element than the goals that are clearly defined, written and freely shaped. Correct targeting is defined as an element that increases employee loyalty.
Company goals to increase and motivate corporate performance
As Aswath Damodaran effectively explains in Narrative and Numbers, "The value of stories in business" book, if you are going to define a goal, you should have a story and the numbers that will support your story.
Goal's story: It is the dimension of the work that is inspired, motivated, meaning attributed. It is a narrative definition that is compatible with the vision and mission of the company. Or compatible with the principles and values of you in individual life and set for a certain time and is more accessible. It seems easy in individual life, but actually, it is quite challenging to define the right goal in personal life and also business life. If goals do not have the strength to create the motivation, the route will deviate, and you would need to set new targets.
Numeric Goals: When the numbers are involved in a job, the imagined scenes become clearer. Word and number are two important dimensions of goal definitions, and if they are separated from each other, the balance will be again broken. The route of the place you want to go may shift again in an instant. Therefore, add the numeric dimensions that determine the route best, it will put your dreams' feet on the ground and make your picture clearer.
Deciding on the peak targets means ensuring the right focus. So, with all your strength, it is critically important to focus the most important capital, time and energy, in the right direction. What does the future you dream of for your company or yourself look like? Picture this with words. How does each of your stakeholders look in this picture? What have they done and what has changed positively for them? What have they invested in which trust accounts to move forward together once again? And the magic question is, how did you achieve these? This is the second component of the goals formula.
“(Story + number) / Strategies = Goals"
Now we have the formula. So what else should be considered?
For strong company goals, the starting point of the goal must also be defined in detail with the same rules. So the story and number should also be defined for the current situation. This means that you should look back to the past and data you have got showing where you are. The SMART goals that have been used for long years to combine numbers and stories correctly, still remain valid.
Creating SMART Goals
For example, let's say you have a wellness goal or a successful project goal in business. Here you need some tools to define what your current situation is in the same way. You're aiming for wellness by losing weight; how many pounds will you have to lose to feel well, what activities you will do? Or for the second goal, what is the reason for your business project, what are your data defining this reason, what will you be accomplished when the project is finished and how will you define success from now?
“For each goal, you will make the most important investment; time, the single resource that is given equally to all people…”
When investing time, it is critical to plan time correctly for a balanced life. It's unrealistic to say that "I invest all my time and energy in A and then I do B". It will be necessary to manage and synchronize targets at the same time.
Another issue is that it needs to be compelling but achievable. Let's say you have an individual long-term goal that you have to work hard on. This could be learning Spanish or getting a new habit. Your goal must be difficult but achievable to motivate you. So, please ask yourself, which one is more motivating and achievable? A one-year plan to lose 10 pounds or to change diet and lose 2 pounds by exercising this month? At the first goal, you get a little intimidated and motivation drops as the time period widens. The second goal is more manageable, and the more you reach the goal each month, the more motivated you will be. To give a second popular example; is it more sustainable for a person who is just starting to learn Spanish to start saying, "I will make a Spanish presentation in a year", or to understand and use Spanish without confusing the tenses in a month? In the second, you are more likely to achieve a monthly goal and move forward by setting a new goal when you succeed.
This case is the same for business. While determining our company goals, the important need for correct targeting is the research that is obtained from reliable sources such as market, competition, economy, customer, employee, etc. and to have an objective based on the combined analysis. Vision and mission, on the other hand, guide how you will reach the targets while defining the address. The most important role in this process is leadership again. The leader decides which vision is the right address and which road is the fastest, most profitable, efficient way.
“In the business environment, each employee is also a leader. They are responsible for analysing their current status, determining their destination and deciding how to go.”
As leaders, we need to set our own story and our own numbers. In the past, once upon a time, company goals were visible on a longer horizon and we could quickly determine the 1-year roadmap or even for 2 -3 years. But now with dynamic markets and ever-changing competition, being able to plan the month beforehand is a great chance. Well, is it possible to define the targets and work with large teams by changing the path if necessar? Yes, it is possible.
“Define the peak goal correctly, define steps (goals), considering uncertainty design over and over again in short slices of 1-3 months. Test and measure if you are on the right track by trying, simulating. If you're on the right track, go ahead and redefine your steps (goals) again, again ...”
We know that there are successful companies that make this a habit with systems like OGSM and OKR. Define long-running top goals with OGMS (Objectives + Goals + Strategies + Measures) and with OKR (Objectives and Key Results), spread the peak targets to all employees quarterly. These models can be used effectively not only by companies but also individuals.
“A Performance Module that is compatible with management methods, where each employee can monitor the development of the company and see their own contribution instantly is critically important.”
With quarterly goals and maximum employee contribution to these goals, agility is instilled into the corporate culture thanks to these systems. A profound institutional transformation for change also comes with it.
For successful results in performance management, you will need to put the employee to the center and share the 3 - maximum 6 months goal based on your employees’ skills, and willingness of taking initiative.
Are you ready to set peak targets and leave the rest to employees?
Performance and Culture Development Expert