You should set two types of goals - the "commit" and the stretch. The "commit" is absolute and if you miss it, you can get fired. The stretch is the "what's possible" goal. To build a commit, work from the bottom up. Be sure, as the leader, you reconcile all the "commits" and ensure they add up to your "commit" to the organization.
- When you set goals I'll encourage you to set two kinds of goals. First is a commit goal and the second is a stretch. A commit goal is something you're committing to to the organization. If you miss it you can get fired. There should be extreme consequences for missing a commit goal. To build your commit goal work from the bottom up. Work directly with your team and have them make commitments to you as far as what they're going to deliver for their goals.
You'll then need to reconcile the teams commits and make sure they all add up to your commit to your organization. At one point I had three different teams and we were tasked with a major cost reduction project. My boss came to me and asked me how much cost reduction would I commit to removing from the system. I went to my team and I asked them how much cost they could take out. And I asked them for their goals. They gave me commit goals of 1.5 million, two million and three million dollars for a total of 6.5 million dollars that they would commit to.
When I went to my boss I hedged on that number a little bit. And I told him I could commit to six million dollars. Now he knew better and he knew I was hedging a little and he pushed me on it. He eventually got me to a point where we negotiated and I committed to 6.25 million. Over the plan period we exceeded that goal and we hit seven million dollars of cost reduction. Obviously there were no negative consequences for the team but the result of having that commit was the entire team was focused on delivering 6.25.
We tracked it over the course of the year. It was something that was at the top of our priority list cause we knew we had to deliver it to the organization. Our commit was fed into the budgeting process at the beginning of the year. And by doing so we ending up with a very accurate budget that people could plan for. When you're creating your commit goal sit down with the team and make sure they understand what they're committing to is going to have implications. The organization will plan based on that number and if they miss that number there will be consequences for them and for you.
Having that clear commit will drive the focus you need in terms of achieving a goal and making sure that the rest of the organization can plan for what you're going to deliver.
Along with providing guidance on how to link individual employee goals to organizational strategy, Mike walks you through the different types of goals, including bottom-up, zero-based, commit, and stretch goals. He also helps you use goals to change behaviors, build new skills among employees, and make goals actionable by using incentives and tying them to specific activities. He concludes with a comprehensive plan for setting and implementing goals, and some tips on dealing with challenges such as conflicting goals.
- Identifying goals and goal types
- Setting SMART goals
- Linking goals to business strategy
- Building goals from the bottom up or top down
- Creating stretch goals
- Outlining activities and resources to help employees achieve goals
- Reviewing and revising goals
- Reconciling conflicting goals