The beginning of a new financial year is often when employers take a moment to sit down with their team members to hold performance reviews and set goals for the upcoming period. But what does good goal setting look like, and is it really necessary for the health and success of your business?
“The power of goal setting for SMEs occurs at several layers of the organisation,” says MyHR Chief Evangelist Sylvie Thrush Marsh. Not only can goal setting as an activity force you to carve out time for long-term, strategic thinking – a task notoriously difficult for owners to fit into the churn of running a business – but there are positives that can benefit your individual employees, teams, and the business overall. “We know there is research showing that organisations that run performance reviews or show an interest in their employees’ development and progression see returns in terms of lower employee turnover, higher employee engagement, and better business outcomes.”
Sylvie says that goal-setting conversations should cascade from the top down. Before booking individual chats with your employees or holding a team meeting with a blank whiteboard and a listening ear, start by considering what you want to achieve with the business.
“As a business owner, your goals might be about growing revenue by 20%, or increasing your margin,” she says. “You might have some financial performance goals, or it might be about making sure you can still pull down a director’s salary in 10 years. You might ask questions like: ‘Are we resilient enough to weather economic downturns?’ or ‘Are we good enough at serving our customer base?’ There are all sorts of problems that are identified at the strategic level where the solutions fly down to the team and individual level to be implemented. Clear outcomes will inform the types of goals you set for your team, as well as the structure of the choices you make.”
With your business goals clear in your mind, says Sylvie, you can then make sure the teams within your business are all on the same page and working with you to achieve them.
“Especially if you’re a medium-sized business, and you’ve got a couple of marketing people, a couple of sales people, your production team, operations, and finance, all of those teams are going to have slightly different targets they want to achieve based on what each team thinks is important. Having a clear direction for the business means you can make sure everyone’s rowing in the same direction. Sure, they’re doing it with different activities, but they’re all working towards shared outcomes, which means you’re not wasting energy.”
At an individual level, the same logic applies. If you know what the business needs or wants and what the teams need to do to support that end, you can then work with your individual employees to make clear what you need from them.
Sylvie says that when you use “clear, kind communication” to inform your employees of your expectations, it transforms their understanding of what is required of them to achieve your business goals. In turn, this understanding sets the stage for conversations you can have about your employee’s opportunities for development and growth. Depending on your business goals and the role of your team member, the conversation could be about upskilling, hitting higher targets, or even just checking in that your employee is still happy to clock in, clock out, and do their job well as usual.
“If your employee is less interested in growing beyond their role, you can use the conversation to say, ‘The last time we checked in, you told me that you were just wanting to come in, do your job, and go home. Is that still the case?’ The purpose of the conversation has been to make sure we’re still on the same page. There is always value in having these conversations.”
But to harness the true power of goal setting, Sylvie encourages owners and managers to discuss more than what will strictly support the business. “Not only is it about goal setting in terms of ‘Here’s what I want out of you,’ it’s also: ‘What are your goals professionally and developmentally, and how do they fit into the picture of you?’”
Having this honest conversation can pay off in a myriad of ways, even if your employee voices goals that would see them move beyond their current role – or eventually leave the business.
“Whether you do or don’t talk about the ambitions or aspirations of your employees, they’re going to have them regardless,” notes Sylvie. “Would you rather have been given a six-month or a 12-month heads up and get the chance to address it? Talking about it means you’re aware of their ambitions and can do something about it, either to support them as they grow or to keep them in the business for a bit longer.”
She also recommends setting structured goals, such as following the acronym SMART (specific, measurable, achievable, realistic, and timed). “Setting goals without making sure they are specific, measurable, and time-bound means it’s going to be very hard for your employees to know what you’re expecting. By ‘more sales,’ are you expecting 5% more sales, or 50% more? It also means that when you assess whether that person has been successful over that quarter or 12 months, you can look back and measure it.”
Accountability is equally important. Sylvie says there’s little point in setting goals or asking your team to do so if you’re not prepared to take action to support those goals or to monitor how those goals are tracking. Plus, she adds, your team needs to know that you’ll be asking questions if their goals aren’t met.
“Keep in mind the outcome that you want to achieve,” she advises. “If the outcome of the process is to show your team you’re listening and involved, note down a couple of actions you can take for each employee to show you’ve responded. If the outcome is to realign the business on a brand-new strategy, which is going to require refitting company goals, team goals, and individual goals, there is obviously a bit more work to do in terms of making sure your strategy is served by your team goals, which is then served by your individual goals. So don’t overcook it, but also don’t under deliver.
“And make sure you’re checking in with your team,” she adds. “Find out how everything’s going so you can help your employees if they need guidance or have questions. If something happens – like, I don’t know, a global pandemic – and you have to very quickly lower your expectations, you can make adjustments to make sure that your employees aren’t set up for failure.”
Above all, she says, don’t take anything you hear personally – or ignore feedback you don’t like. “Most of your employees will share things that you really didn’t expect from them, and that’s a feature of this process, not a bug. You might uncover something you’re not aware of, because maybe you’re not as closely involved in day-to-day operations. It’s useful information you can use and do something about.”
Special thanks to Sylvie Thrush Marsh of MyHR (www.myhr.works).