Employee performance goals are used in management systems to build accountability, create alignment, and measure success.
On face value, performance goal setting appears simple, but so many times we hear how employees start off with good intention but then drop the process, they’re too busy, or priorities change too fast and there’s no time for goal setting.
Most advice focuses on example performance goals, example SMART goals, or example OKRs, but in this article we unpack key considerations to help implement a successful performance goal framework.
Moreover, a framework that integrates, and plays well with other company processes, culture, and ways of working.
- Should employee performance goals link to remuneration?
- How should employee goals link to performance appraisals?
- Measuring goal success: Outcomes or outputs?
- How to avoid set and forget performance goals
- Integrating the performance goal framework
- Avoiding employee overwhelm from a new framework
- Which employee performance goal framework?
- How many goal levels?
- How many performance goals per employee?
- Private or public employee performance goals?
- What cadence for employee performance goals?
- Understanding performance drivers
- Four types of role specific performance goals
- Cascaded or aligned employee performance goals?
- Who should own employee performance goals?
- Changing employee performance goals mid-cycle
- Key points when designing an employee performance goal framework
Should employee performance goals link to remuneration?
In traditional performance processes, the achievement of employee KPI’s often lead to the automatic payment of a bonus. This type of linkage can work well for:
- Individually owned goals,
- measured by clear metrics, and
- performing work in accordance with a known process.
An example performance goal in this scenario might be to complete 5 safety audits per week to the standard specified on the audit form.
With service or knowledge-based work, linking performance goals to remuneration can unfortunately create a tick-box approach to setting and completing KPI’s. For this type of work (where there is a requirement for higher levels of cognitive work) research shows a directly linked incentive can reduce performance outcomes.
This understanding has led to a shift away from directly linking employee performance goals with a pre-determined bonus for cognitive work. Instead, goal results feed into the performance review process - see next section!
How should employee goals link to performance appraisals?
The performance appraisal process first needs to be aligned with the performance drivers of the business, which will determine the right questions to ask in the appraisal.
For example, if individual goal achievement was a driver of company performance along with behaving in a way that aligns with company values, then it would make sense to rate performance against these two criteria.
Historically, these types of ratings have relied on memory and were subject to bias , but in a system like Crewmojo, the supporting data collected throughout the year makes for more fair and accurate assessments.
This approach means the achievement of employee goals feeds into the performance decision, rather than the data making the decision. Additional contextual data can then to be included to drive more informed decisions, such as:
- How ambitious were the goals?
- What challenges were overcome?
- How complex was the knowledge required for the goal?
- How many paths were explored to get to the final outcome?
Measuring goal success: Outcomes or outputs?
There is a subtle but important difference between outcomes and outputs. An example goal outcome might be getting 1000 new visitors to the website, whereas an example goal output might be to write 10 blog articles.
So which is best? A lot of advice will advocate for outcomes - because this is what matters, ie. I might write 10 blog articles but if they generate no traffic to the website, we didn’t get the desired outcome.
However, when a performance goal is only focused on outcomes, we might miss valuable context on all the hard work (outputs) that went into making progress. We know that outcomes are what really matters from a business perspective, but from a human perspective it’s nice to acknowledge all of the effort that went into a goal, especially if it wasn’t quite achieved - which can be the very nature of knowledge or service-based work.
Crewmojo empowers customers to track goals by outcomes, however, the flexibility is there to also track outputs and tag them as “non-contributing”.
For those employees working with KPI style performance goals, the outputs can be set to contribute to goal progress which makes sense for this type of goal.
How to avoid ‘set and forget’ performance goals
Imagine the beginning of a new strategic year and the leadership team contemplate company goals for the next 12 months - there is great motivation and excitement for what can be achieved. Fast forward 6 months and there has been tiny amounts of progress towards the strategic goals across the company.
There are usually two reasons why this may happen - the goals have become irrelevant because the world changed, or employees have been distracted with everyday busy work.
To increase the success rate for achievement of goals, we recommend managers have at least monthly one-on-one discussions with team members about goal progress. This discussion may only be a few minutes, or longer if needed, and covers:
- Are your goals still relevant?
- What are your confidence levels for achieving them?
- Are there any blockers that I can help you with?
This quick check-in on goals raises accountability, maintains focus, and identifies goals that have become irrelevant.
Integrating the performance goal framework
It’s easy to view goal setting as a standalone process but it’s connected to multiple other systems. Ensuring these all work together as a cohesive and complimentary set of systems is essential for success.
Furthermore, system contradictions that arise from siloed processes can create friction and ambiguity in the business. Some common examples we often see:
- Having a company value of teamwork, but all goals are based on individual achievement.
- Employees performing knowledge-based work, but goal achievement is directly linked to incentive remuneration
- Striving for an agile workplace, but introducing an admin heavy goal process
- Communicating the goal process is important, but no transparency or reporting of process adoption
- A company value of transparency, but all goals are private
Avoiding employee overwhelm from a new framework
It may seem logical to research a modern ‘best-practice’ goal framework, then roll out with an expectation of great success. However, taking the time to understand where the organisation is at now vs where you want it to be can avoid overwhelming employees with a radically different process for tracking performance.
For example, an organisation with a traditional, annual KPI process that moves to quarterly OKR’s in one leap is likely to experience some hurdles. It’s not a simple change of cadence, it is a completely different framework with many concepts that employees need to become proficient and comfortable with in the new way. If employees feel like they are failing with the new framework, they will naturally avoid the discomfort of adoption.
Consider a roll-out plan that introduces new concepts slowly, blending previous paradigms with incremental change, so employees feel success and confidence with each step. In truth, the process is never finished - we see our customers on a journey where they continually listen to feedback from employees, iterate, and increase the maturity of their performance goal framework over months or years.
In the next sections, we look at key concepts for employee performance goals where decisions can be made to match culture, work, and timing.
Which employee performance goal framework?
OKR, SMART, or KPI - which framework is best? This is often seen as a critical starting point.
We have learnt the framework is not so important, and in some cases, can be a distraction. Employees just want a way to track and measure their achievements in a way that aligns with the type of work they are doing. In fact, it’s unlikely an off-the-shelf performance goal setting framework will be effective for everybody in an organisation. For example, front-line employees might be working with daily metrics that are best tracked with KPI’s, while IT are working towards longer-term business improvements that are best tracked by OKR’s.
Seeking input from each business area to understand the type of performance goals that employees are working with can help ensure the goal process will connect with employee reality. Taking this another step and discussing how these goals can be tracked with minimal administration is an even greater multiplier for achieving good adoption of the performance goal process.
How many goal levels?
Company, Team, and Individual goal levels - Is every level essential in the goal setting framework?
Only introduce the levels that make sense for the organisation. For example, in smaller businesses it might make sense to have less levels and only implement team goals or individual goals.
Consider the purpose of each level and how it contributes to the business outcomes sought from the goal process:
Company level performance goals
- Share top level priorities
- Communicate overall business direction
- Help employees understand how their work fits in the big picture
- Give employees a mechanism for prioritising their own initiatives
Team level performance goals
- Good for creating shared responsibility
- Ideal for reinforcing company values relating to team contribution
- In isolation, can reduce individual accountability
- A reference point for assessing team performance
- Give team members more relevant goals to align their work with
Individual level performance goals
- Great for individual focus and accountability
- Potential to drive individually competitive behaviours at the expense of team
- Setting expectations on what is required to be successful
- A reference point for assessing individual performance
- Increased administration associated with more goals to manage
How many performance goals per employee?
There is no right or wrong number, but we are seeing a trend towards being more focused and more realistic about what can be achieved. This means approximately 2 to 5 active goals at any one time.
Historically, employees have had a long list of KPI’s to achieve over 12 months, but research tells us too much workload is a whopping 46% contributor to workplace stress. Helping team members to prioritise a handful of performance goals and what to say ‘no’ to is not only effective leadership, but also fosters a mentally healthy workplace.
This number of goals also ties in with the choice of cadence, it can be easy to over-estimate what can be achieved in 12 months and then set too many. A shorter goal cadence such as quarterly can help employees build a more realistic outlook. Questioning what you can fit in to the next 3 months feels quite different to what you think you achieve over the next year.
Even with a healthy number of goals defined for employees, it can be easy for ambitious team members to create too many. Or with a shorter cadence there might be a tendency to lose discipline after the first few cycles and employees don’t set new goals for the period.
With Crewmojo you can set tailored goal ranges that employees should be operating within, customers then see real-time insights into the health of the goal process across every level of the organisation. This allows easy identification of teams or individuals with too few or too many performance goals.
Private or public employee performance goals?
There are many reasons why public goals (visible to all employees) make sense. Improved collaboration, increased accountability, and better team alignment for goals requiring multiple contributors.
However, we can’t forget where we’ve come from, traditional goal setting was tied to KPI’s which were associated with a job description and often linked to bonus payments. This stuff is deeply personal to many employees and the thought of their goals and progress being made publicly visible can be awfully hard to come to terms with. Recognising the current culture and offering options to cater for differing comfort levels can remove tremendous friction for employees adopting the performance goal framework.
Crewmojo empowers customers to set default private or public goal permissions across teams and individuals. Employees can then set granular permissions at the goal level. For example, managers can have a team goal such as a sales number visible to all, but the contributing key results are only visible by the respective owners. This means anyone on the team can see overall progress, plus their specific contribution, but not the individual contribution of other team members.
We have learnt it is the nuances like this that can be the difference between employees embracing the goal framework or resisting it.
What cadence for employee performance goals?
Best practice tells us quarterly goals is the way to go. However, there are many questions to consider and it’s not as simple as taking the old annual process and doing it every quarter.
Before implementing quarterly goal cycles, consider some of the below trade-offs and if the quicker cadence will add value to employees.
A major reason for implementing quicker goal cycles is when the environment is rapidly changing. This might include changing work priorities, competitive drivers, lots of employee role changes, varied customer demands, or working with a lot of unknowns or uncertainty.
While becoming rarer these days, when an organisation does operate in a consistent, stable and predictable environment - an annual performance goal cycle might be preferable.
A more agile, adaptable, and responsive goal process can be very appealing, but the big trade-off with quicker goal cycles is the associated administration. The time taken to think of meaningful goals, ensure alignment, review previous goals and report on outcomes is significant and often under-estimated.
We are seeing most businesses adopt an annual cycle for company level goals with half-yearly or quarterly cycles at the team and individual levels.
Even with this hybrid approach employees often struggle with the admin of a goal reset every 3 months. This was a key driver of why we built a performance goal flow that delivers the agility of quarterly cycles with the minimised admin of annual goals.
By enabling customers to set an annual target that is automatically broken into smaller cycles and assigned to nominated contributors, there’s no need to manually set every target across each person and each period.
Understanding performance drivers
Traditionally, business performance has been defined by productivity measures which cascaded to a focus on individual role-specific work achievements.
Today, it is essential to consider a more holistic definition of business performance. A definition that places attributes such as employee well-being, growth, purpose, and values at the centre of the performance proposition.
Defining Performance Drivers unique to the organisation will bring this concept to life and inform what should be included in the performance goal framework. For example, there might be a balance across individual achievement and company values - this tracks ‘what’ was achieved and ‘how’ the employee went about it. Other performance drivers might include team contribution, professional development, or personal development.
Some example performance drivers we’ve seen across different industries:
There are many options (none right or wrong), however a common example for employee performance goals we see with our customers include:
- Role specific goal 1
- Role specific goal 2
- Role specific goal 3
- Professional or personal development goal
Four types of role specific performance goals
Diving a bit deeper into role specific goals, Stanford University identify 4 different goal types with their ‘Grow and Perform’ program:
1) Quantified job responsibility goal
- Used when job responsibilities take up most of the daily work time, for example an accounts receivable officer might set a performance goal to ensure 100% of funds received are accurately reconciled within 2 days of receipt.
- This type of metric goal is great feedback for employees to know they are on track with their key job responsibilities.
- A KPI style goal is ideal for this type of work.
2) Innovated job responsibility goal
- Used to drive innovation in current processes so tasks can be completed more efficiently (with less resources or in quicker time).
- This type of performance goal is great for building a sense of ownership while increasing business performance.
- A SMART style goal is good for this type of work.
3) New project goal
- Used when an employee’s role is significantly project based and holds few ongoing responsibilities.
- This type of performance goal is great for one-off projects such as IT or system migrations, or the implementation of a new performance management system.
- An OKR style goal is great for this type of work as there is going to be multiple success criteria to track.
4) Team goal
- Used when most of an employee’s day is contributing to a larger team goal or project.
- This type of goal is ideal for tracking the contributions and progress of multiple people involved in team initiatives
- An OKR style goal with aligned Key Results is a great fit for this type of work.
Cascaded or aligned employee performance goals?
A collaborative approach where goals are aligned from the ground up is often cited as the modern way for setting goals.
However, it is not unusual for an organisation to implement a mix of cascaded and aligned goals. Again, it comes back that a one-size-fits-all approach is ineffective and highlights the importance of flexibility to match individual work.
In the case of project or team goals, a process of collaborative goal alignment makes a lot of sense, baring in mind that this also relies on public goals, so employees can see what they may align their goals to.
In the case of KPI work, a process of cascaded goals can make more sense - especially when multiple employees are individually contributing to a company KPI. In this example, it is essential to know that the overall KPI has been properly delegated across employees.
Who should own employee performance goals?
At first glance this might seem like an obvious decision, however there are many work situations that require different goal ownership structures. It’s important that goal tracking software can accommodate these scenarios or employees will find a way outside of the system.
Individually owned performance goals
A common structure where individual employees have responsibility for achieving their specific goals. This is sometimes known as the individualisation of responsibility and is considered effective for driving accountability. However, this can also drive highly competitive behaviours to the expense of team relationships or outcomes.
Shared ownership performance goals
The ability for two or more employees to share mutual responsibility for delivering an entire goal. These goals should show up on each employee’s list of goals to achieve as if it were their own.
Jointly owned performance goals
The ability for two or more employees to own a specific segment of an overall goal (usually a portion of a target), these goal types should also appear on each contributor’s list of goals.
Team owned performance goals
The most collaborative goal ownership model where the name of the team is listed as responsible for goal delivery. However, without a culture of accountability, this structure can lead to ambiguous responsibilities.
Changing employee performance goals mid-cycle
Traditional performance goal processes never allowed for changes over an annual cycle, but we all know this can lead to stale goals. There is a significant movement towards ‘agile’ goals where updates can be made mid-cycle to cater for changes in the environment.
We see some organisations trying to accommodate agile goals with the implementation of a formalised change process. The process usually involves the employee making a change request and their manager approving or declining the request.
This might sound like a sensible approach, however, in practice it usually creates too much friction and administration.
An alternative that we see many customers succeed with, is allowing employees to make changes, but every change is tracked to a goal audit log for transparency and history.
Key points when designing an employee performance goal framework
We see companies put a lot of effort into goal setting. There is a common approach of researching how to set SMART goals or OKRs, viewing example employee performance goals, and learning the ins and outs of different goal frameworks. This all helps but it assumes a one-size-fits all process.
Knowing the process options and designing a flexible goal framework to fit the culture and type of work being performed will ensure a much higher adoption rate across employees, and ultimately the achievement of company strategy.
In summary ensure any goal process contemplates these key criteria:
- Goal Type: Allowing people with KPI style work to implement KPI’s, not ramming OKR’s or SMART goals into everybody.
- Goal Progress: Achieved through regular 1-on-1 meetings between manager and team member to discuss goal progress.
- Minimised Admin: Quarterly goals sound nice when you read the books but in reality, it is a LOT of admin to have a full reset each quarter. Consider a hybrid of annual goals with more frequent tracking periods.
- Goal Accountability: To bring true accountability for goals, they should be feed seamlessly into the performance review process.
Crewmojo’s platform captures all of the above when goals are implemented in conjunction with 1-on-1’s, feedback, and reviews - these are the tools we use to help customers foster a culture of accountability, performance, and team alignment.