Setting Goals that Challenge

As I promised in “Management Tips 2 – Managing Performance Through Indicators,” today we’ll talk today about setting goals.

When I talk with company professionals, one of the issues that arises again and again refers to the setting of goals. Entrepreneurs and executives both want to better understand how to set goals that leverage the reach of business results.

I begin by saying that a good goal should be both practicable and challenging: practicable in the sense of being achievable by employees and challenging so as to motivate them to achieve it.

But what, after all, is a goal?

A goal, one could say, is a result to be achieved. Goals specify the quality or quantity of the desired results and, therefore, orient how decisions should be made in the company.

To be well expressed a goal must meet two fundamental requirements: it must have a measurable and a time frame.

Here are examples of goals: Increase revenue by 16% over the next 12 months. Maintain market share this year at a level of 22%.

Another issue that arises is confusion between objectives and goals. Objective and goal are different concepts. An objective is a description of what is intended to be achieved. For example, “increased profitability,” or “developed collaborators.” A goal is a quantitative definition within a given time frame. In other words, a goal is the quantification of an objective.

Setting goals in a company is important for several reasons. Goals:

  • guide individual and team decisions and efforts;
  • help in the planning process, i.e., after challenges are identified, managers set goals to indicate the intensity of the team’s expected effort;
  • motivate people and stimulate better performance, if properly established. Clear, specific goals increase productivity and, generally, improve the quality of work performed;
  • help in performance management and evaluation.

Even with so many advantages it is only natural that there is some resistance when it comes to setting goals in a company where the culture of managing performance isn’t fully established. This is due to several factors, including: people do not understand the importance of setting goals, they don’t know how to set goals, they fear exposing themselves, and they fear failure.

Thus, it is critical for those who will undertake performance management with a panel of indicators to not skimp on building awareness, so that employees can understand performance management as a management practice aiming to improve the company’s results by making it competitive and, therefore, sustainable.

It is crucial that people see goal setting as their ally.

The next Management Tips issue will cover how to structure a panel of indicators.

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