Goal-Based Performance Management: Whose Goals Are They?

There is strong research evidence that an effective goal setting/feedback process can positively impact performance if done continuously and done well. One of the factors influencing the effectiveness of goals is the degree to which the employee psychologically “signs up” for them. The pre-requisites for signing up are:

1. the employee is competent to deliver the desired results AND believes (s)he is competent to do what is required,

2. the employee is allowed the appropriate amount of autonomy in deciding how to pursue goal attainment,

3. the employee understands clearly what is required and what is permissible to do when making the effort, and

4. the employee is motivated to pursue the goal.?

The two most common reasons an employee is not motivated to do what it will take to meet a goal are: 1.the employee does not feel capable of meeiting the goals, and 2. because the benefits accruing upon success do not justify the costs to the employee.

Common reasons for lack of goal acceptance are:?

1.Too many goals are assigned. If a goal is not resident in short-term memory it will not be actively pursued?

2. Assigned goals have so much “stretch” that they are not believed to be attainable

3. Goals are added onto the responsibilities of the employee’s job when that job already totally consumes all the effort the person is willing to supply. When that is the case there is nothing left to use for pursuing extraneous goals?

4.The rewards associated with meeting goals are considered inadequate when considering the effort required.

Rewards associated with meeting goals can be intrinsic, in the form of satisfaction, or extrinsic, in the form of compensation, recognition or career progression.?Monetary rewards are commonly used to reinforce successful goal attainment. Despite periodic pop literature claims that research shows extrinsic rewards destroy intrinsic rewards these are based on invalid and irrelevant research. A large body of valid research indicates money can motivate effort and satisfaction if used appropriately. But there must be a belief that rewards are contingent on performance and that rewards are viewed as equitable, competitive and appropriate.?

Equity theory, which also has strong research support, explains the process used by people to evaluate how fair their treatment is. Individuals will inventory the “inputs” they bring to the organization, in the form of qualifications, effort and performance. They then inventory the “outcomes” that they realize. Determining whether they are being equitably treated will require them to compare their outcome/input ratio to some reference point, since it is difficult to assign values directly to inputs. How much is a BA degree worth in dollars??Ten years of experience? Meeting/exceeding a goal? Instead, people generally compare their input – outcome ratios to those of others when making an equity determination.

If an organization uses a merit pay sysstem or incentive plans that link awards to goal attainment it is important to convince employees there is a “level playing field.”?Employees tend to believe the people down the hall have a better deal than they do, due to cognitive bias (although they are probably right in some cases). Goal-based incentives can create a suspicion that others have easier and/or less important goals. Training managers to use equivalent standards in setting expectations requires a considerable investment. Frame of Reference (FOR) training has been found in research studies to be useful in calibrating the expectations used by individual managers to create equivalent performance standards. This involves working in groups on cases that require participants to calibrate their understanding of what constitutes “outstanding” or “fully meets expectations” performance.?

The FOR approach could also be used to calibrate goals across employees, but due to contextual differences this may be impractical.?Goals change more frequently than performance standards and managers distribute responsibilities differently.?An alternative is to use a system much like the one used to judge Olympic diving. Scores are the product of two factors: 1. the degree of dive difficulty and 2. the quality of execution. This enables the rewards to be fitted to individual goals. Exceeding a softer goal may get the same credit as meeting a more difficult goal... or not. It could be argued that the key is to give everyone goals of the same difficulty, but that may not fit operational requirements. Making an effort to align the level of expectations across employees can contribute to perceptions of equity. It may also provide employees some latitude in choosing the goals they sign up for, assuming goals are not mandated by operational requirements.

Conclusion

Assigning a goal to an employee that the employee does not accept responsibility for accomplishes little, except to frustrate all those involved. The costs of pursuing a goal must be justified by the benefits associated with meeting it for it to be acceptable to the employee. Perceptions are people’s reality, so equity must both exist and be accepted as existing. Some goals are mandated by conditions and may have to be unilaterally assigned, without negotiation. Yet explaining why the goal must be met and what the implications are can help employees understand the reasons and to decide whether the goal will be accepted. If not, it is incumbent on employees to honestly convey their views. Managers must then decide whether the goal is modified, withdrawn or reassigned, based on the realities. Pretending the goal is accepted to maintain peace will be likely result in failure to meet the goal. A clear, mutual understanding of what is required?and who is responsible is mandatory.

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About the Author:?

Robert Greene, PhD, is CEO at Reward $ystems, Inc., a Consulting Principal at Pontifex and a faculty member for DePaul University in their MSHR and MBA programs. Greene?speaks and teaches globally? on human resource management. His consulting practice is focused on helping organizations succeed through people. Greene has written 4 books and hundreds of articles about human resource management throughout his career.

• Strategic Talent Management: Creating The Right Workforce
• The Most Important Asset: Valuing Human Capitol
• Rewarding Performance Globally [with Fons Trompenaars] ?
• Rewarding Performance: Guiding Principles; Custom Strategies? (2d Edition)