How to Set Effective Goals for 2024

As we approach the end of the year, it’s time to start thinking about goals, priorities and responsibilities.

This is the time of year when people start to make their New Year’s resolutions. From a work perspective, that means goals and priorities, and if you don’t have yours set out yet, now is a good time to start.?

In my previous post, Managing and Motivating Remote Teams with Goal Setting , from two years ago, I talked about goal setting and how we can work effectively with goals using Locke and Latham’s theory.? I won’t revisit that here, but instead I’ll concentrate on company goals and objectives and how to formulate them.?

Many businesses I’ve worked with over the years are pretty good at determining their financial goals, but often they stop there. So let’s talk about a simple process that you can use to set more far-reaching goals.?

The Psyschology of Goal-Setting

If we look at the psychology of goal setting, research has shown that the simplest explanation for why one person performs better than another is performance goals. The theory implies that setting and adjusting goals significantly impacts performance.?

‘setting and adjusting goals significantly impacts performance’

There’s quite a bit of research around this, which says that when we have goals that are achievable, it can increase employee motivation, and also commitment to the organisation.?

The more valued and challenging a goal, the more effort it takes to achieve it – and the more successful we feel afterwards. This means that our confidence and our belief in our own abilities grows, which impacts on our wellbeing. It also develops an internal belief in our own capacities. These are all really important things for motivating people in the workplace, and also for our own wellbeing.?

‘These are all really important things for motivating people in the workplace, and also for our own wellbeing.‘

Sometimes as our business grows, we can forget about structuring our goals. We’re too busy just trying to serve our customers, make sure that we’ve got the products right, and that we’re hiring people when we need to. We can deprioritise setting business goals.?

Goal Setting Models

There are lots of different goal-setting models that can support us in this process, and if you’re interested in looking into it further, I’d suggest three different models.?

• Balanced Scorecard This is based on the the book of the same name by Robert Kaplan and David Norton.?
• EOS (Entrepreneurs Operating System) This is described in the book Traction by Gino Wickman.?
• OKRs (Objectives and Key Results) This is based on the book Measure What Matters by John Doerr.

Combined Approach

I like to take components of these three approaches for an easy way to set goals in an organisation. For most businesses, there are four key areas for goal setting:

• Finance
• Operations?
• Customers
• People

Start by taking those four areas and writing down your goals, or objectives if you like. These goals should be things that:

• you want to measure
• you can measure
• will give you value when you measure them.

Finance Goals

Common goals for ones for Finance include:

• revenue – you can break that into an overall revenue target, and individual revenue areas
• costs
• profit?
• return on equity

Customer Goals

Under Customers, you might look at your sales cycle, including:

• how many leads are you getting?
• how many of those convert into sales?
• are you gathering an NPS (net promoter score) to assess you customers satisfaction with you?

You might also look at your retention of customers:

• what’s your retention rate??
• how long do customers stay with you??
• what’s percentage retention will you set as a goal??
• do you have a goal around getting customer testimonials?
• do you have a goal for increasing new customers or repeat business??

Operations Goals

Within Operations you might look at things like:

• on-time delivery
• quality
• reducing the number of defects
• labour utilisation
• product development
• billable hours

People Goals

Within People, you can measure things like:

• employee turnover
• employee engagement scores
• leadership capability
• cultural survey scores
• work health and safety statistics

Measuring Performance

It’s important to think about those four pillars and ask, what are our goals in those? And then how do we measure that??

For example, let’s say that I decided that for my company, I want the Finance goals to be:

• revenue per employee
• yearly revenue
• net profit
• weekly cash in?

Now I need to choose a way to measure this. How will I measure how much revenue we’re generating per employee? How will measure the yearly revenue? What is the net profit? What’s the percentage? How much weekly cash is going in and out??

Tricky Data

The next step is to ask, can I actually get that information? Because if you can’t get the information you need to tell if you’ve met your goal, it may not be a useful goal to set for your business. What you don’t want to do is to set a goal if you can’t get the data to show if you’re hitting that goal or not, or if it’s going to be very difficult to gather that data.?

Finance is usually not too much of a problem. Most people have systems and accountants that will deliver the data they need. But when you start getting into the Customer area, for example, things might get more difficult.?

If you want to track the retention of customers, how are you going to do that? Do you have a process in place to measure which customers are with you for more than 12 months, or more than six months? If you’ve set a goal to increase your testimonials, how will you measure the percentage of customers that you ask for testimonials, and the percentage that give them to you?

If you’ve set an Operations goal related to on-time delivery, do you have a way to assess that??

The trick is to be really mindful, as you’re setting goals, about how you’re going to assess your performance against them. You don’t want to have a bunch of goals that you can’t measure, or where the data is going to take you a long time or be difficult to gather.

Scorecard

Let’s say that you have set goals in those four areas, and have defined your measurements within those. That’s basically your company’s scorecard. You can use your scorecard throughout the year to communicate with your staff around where you are today, and where you want to get to by the end of the year.?

Cascading

Once you have your scorecard you can start to take things further by cascading it down through your management team. Let’s say I have a general manager in my business. I’m going to say to her, our financial company goals absolutely apply to your role. And now I’m going to sit with her and help her work out how she can apply this responsibility in her role.?

For example, if our business financial goals require the business to bring $X weekly cash in, and $Y net profit for the year, I need to sit down with my general manger and work out how she will achieve this.?

Perhaps she needs to monitor weekly and monthly financial reports, and we need to choose measures that she needs to look at. We may decide to have finance meetings on a weekly and monthly basis where she’ll create minutes, highlight off-track items, and have action plans around them.?

SMART Approach

Next we need to make sure those things are achievable, relevant and time bound. You may have picked up that this is the approach with SMART goals, which you’ve probably heard of:?

• Specific
• Measurable
• Achievable
• Relevant
• Time bound.?

Let’s have a look at Operations for a general manager. Say we have a company goal for billable hours of a certain percentage. The general manager’s SMART goals include:

• specific – monitoring specific staffing levels and labour use, and changing the team structure if required
• measurable – measuring the billable hours KPI and the revenue per employee KPI
• achievable – ensuring this goal is achievable
• relevant – ensuring this goal is relevant
• time bound – doing it every month.?

What you want to do is work out the big goals for the company within those four pillars of finance, customers, operations and people. Then ask, what are our measures for those goals within those four areas? And how can we actually tie our employees’ individual role goals to those?

Role Goals

You may start with your management team. It’s important to make sure that somebody is responsible for each of your goals. Because even if you have your four pillars, and your goals and your measures, if no one owns them, they’re not going to get done. And as I say, what gets measured, gets managed.?

‘what gets measured, gets managed.’

Yearly Review

It’s a good exercise to go through this process each year. But you also need to review your goals on a regular basis, at least quarterly. And if you want to, you can start to roll that through your whole organisation.?

Whatever you do, it’s important that you think about the goals for the organisation across the four areas, not just Finance, and you share them appropriately within your organisation. That way, your team members will actually understand what you’re trying to achieve.

As mentioned, the research shows this will increase employee motivation and commitment to your organisation. And if you want a little bit more information, you can go back to Managing and Motivating Remote Teams with Goal Setting .

Have your say

Does your organisation have shadow values? We’d love your feedback on this series, just head on over to Amplify HR or connect with Karen on LinkedIn .?