3 Ways to Set Effective Performance Goals

In short: 

• Amid disruptions, isolation and disconnectedness, employees need goals that help them manage their work.
• Gartner research shows that when employee goals are aligned to both organizational and employee needs, employee performance increases by up to 22%. 
• Organizations must establish a process for goal setting that helps employees meet changing needs, coordinate their work with peers and hold themselves accountable for results.

HR often struggles with effective goal setting, but ineffective goals make each part of the performance management process — ongoing check-ins, assessment and calibration, and reviews — more difficult. The result is poor employee performance, lower engagement and missed business goals.

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“To ensure that business performance consistently outpaces expectations, HR leaders need to get the goal-setting process right at the beginning of the year, rather than waiting to address the previous 12 months of performance at the end of the year,” says Brent Cassell, Vice President, Advisory, at Gartner.

Poor goal setting lags how work gets done

Current goal-setting practices often fail to align with the way work gets done. In fact, Gartner research finds three barriers to effective goal setting:

• Diverse work makes strategic alignment harder. The workplace is changing fast. More employees work remotely or in hybrid settings, and the gig economy is growing. At the same time, work is becoming more specialized. A recent Gartner survey found that 68% of leaders agree that only staff with a highly specialized mix of competencies and experience can successfully perform the work they need. As a result, an increasing number of employees feel disconnected from their organization’s goals. 
• Individual goal setting overlooks team-based work. Work today is more team-based, and goals should reflect that. According to the 2021 Gartner Employee Performance Management Benchmarking Survey, only 9% of organizations involve peers in goal setting, and 15% involve teams.
• Annual goal setting doesn’t keep up. Gartner research shows that nearly 60% of HR leaders feel that current roles are evolving rapidly and employees need to learn new skills and new ways of working with people to support changing business priorities. Gartner TalentNeuron™ data shows the total number of skills required for a single job has been increasing by 10% year-over-year since 2017. Many skills have also become obsolete. Despite the pace and extent of these changes, goal setting remains an annual activity for most organizations and fails to take into account the dynamism of most corporate strategies. As business needs and outcomes evolve, so too must goal-setting processes. 

3 best practices for goal setting

Talent is today’s single biggest cost and differentiator when it comes to business success, and organizations don’t have the luxury of failure when it comes to employee performance. Gartner research shows when employee goals are aligned with organizational priorities and help employees meet changing needs, coordinate with peers and hold themselves accountable, employee performance increases by up to 22%. 

Leverage the following three best practices to ensure goal setting is aligned with the way work is done today. Ensure that employee goals are impactful and drive business outcomes.

No. 1: Help managers provide context for goal setting

To help their teams set aligned goals, provide managers with information about business strategy and how it relates to employees’ diverse roles. Managers must then give direction that translates that information into specific tasks and actions. Providing information and direction together enables employees to see the link between their work and overall company strategy.

HR plays a critical role in helping managers understand business strategy and translate it to their teams. Getting manager contextualization right can have a big impact on employee performance. Organizations with managers who are most effective at contextualization can boost the percentage of high performers from 44% to 60%. 

No. 2:  Make goal setting more collaborative

Given the increasingly collaborative nature of work, transform goal setting from a solo activity to a team activity. This requires several shifts. For one, have individuals share goals with their team and ensure that everyone understands how their goals relate — and that they are jointly accountable for achieving the results outlined in their business strategy.

Also, implement team goal calibration sessions, rather than just requesting peer feedback at the end of the year during the formal performance review process. This enables teams to discuss what they will need from each other and calibrate expectations rather than performance.

No 3: Empower employees to update goals regularly

The 2021 Gartner Goal Setting Employee Survey reports that less than half (44%) of employees say they update their goals following significant changes in role expectations — such as sudden staff changes or when new projects are assigned. Moving forward, organizations must build flexibility into the goal-setting process so employees can evolve their goals as their roles and the business change. Have employees review their goals with their manager quarterly, at minimum, as well as at the start of the year. Help managers and employees identify triggers for adjusting goals, including changes in company or business unit financial performance, staff turnover or technology advances.

This article has been updated from the November 2020 original to reflect new events, conditions or research.