Basic goal-setting for small businesses
I’m the CEO of an upstart but a small company engaged in food manufacturing. We’ve already drafted our vision, mission, and values with the help of an external consultant. However, we missed one important point during that two-day, out-of-town event. We feel that we’re back to square one as we don’t know how to achieve our goals and connect them with our performance appraisal system. Could you please help us? — Short Changed.
Charlie Brown was playing baseball. When “strike three” is called on him, he slumps over to the bench and exclaims: “My goodness! I’ll never be a big-league player. I just don’t have it! All my life, I’ve dreamed of playing in the big leagues, but I know I’ll never make it.”
Lucy turns to console him. “Charlie Brown, you’re thinking too far ahead. What you need to do is set yourself more immediate goals.” Charlie looks up and asks: “Immediate goals?”
Lucy says: “Yes. Start with this next inning when you go out to pitch again. See if you can walk out to the mound without tripping this time!”
But Charlie Brown was right. If you don’t have long-term goals in your life, like playing in the big leagues, you’ll never be able to tell if you’re a failure. Just the same, heed Lucy’s advice and start with your immediate goals by not falling on your next steps. Take it easy. And start with what you can do tomorrow and until you’ve become confident about yourself.
The same thing can happen to your upstart company. In your case, the first hurdle to overcome is to come out with one basic management framework. For a start, I’d like to recommend the simplest and easy to accomplish: Management-by-Objectives (MBO) that was popularized by the famed management guru, Peter Drucker in The Practice of Management (1954).
I can see MBO or its derivatives remaining popular among small businesses rather than a complicated system like the Balanced Scorecard that is often practiced by major corporations. You’re an upstart, and you can settle with MBO, until you’ve gained the confidence to move to a sophisticated version.
What’s important is you don’t need to hire another management consultant to help you follow an MBO template. The Internet offers an ocean of information that you can use as a framework. Follow the basic model and adjust it according to your taste. If you’re being drowned by too much information offered by the Internet, you can simply explore the following steps:
First, define SMART (specific, measurable, attainable, realistic, and time-bound) goals. This means requiring all employees at all levels to answer one basic question: “How can I help my department and ultimately — the organization to accomplish its task for the year?” This should be limited to a one-page format so that it does not appear insurmountable to people.
Of course, this requires that top management explain its own plans and programs for the year, using the same SMART template to a town hall meeting attended by all workers and managers.
All SMART goals of the workers must be blended with the department goals with the help of the concerned managers, who must ensure that the workers’ submissions do not appear trivial. This is where the SMART goals must be developed and agreed jointly under the spirit of co-ownership.
If this is followed strictly, both the line supervisors and their workers could create the strongest commitment to achieving their respective goals.
Second, develop an objective performance evaluation system. The second hurdle is to overcome and make the MBO successful is the creation of an evaluation system that is clear, succinct, and easy to implement. There’s nothing worse than starting to prepare for a performance review, then drawing blank when you try to remember the actual performance of people, in the absence of a systematic evaluation system.
With this system, you only need to come up with a simple form that you can use to assess and record the accomplishment of every employee, say on a quarterly and annual basis. To make it easy, make the evaluation form conform with the SMART template.
This way, and with the specifics clearly spelled out, it’s easy to assess the work performance of people. If there’s a need, proceed to review the form as you see it fitting and make it applicable prospectively.
Third, monitor the workers’ performance and review their progress. A periodic review is necessary to ensure that action plans as stated in the SMART goals are working. The review may be done formally or informally, between line managers and their workers, as long as the results are properly documented for future reference.
The periodic review may be done daily, weekly and monthly on certain minor projects and done quarterly, semestral, and annual on major work assignments. However, managers and their employees should not be locked into a predetermined review schedule and must be willing to take whatever steps are required to achieve meaningful results.
This way, both parties can readily adjust as soon as there are signs that goals are not being met on time.
Last, appraise overall work performance of the individual and team efforts. Success or failure of the department in particular and the organization, in general can only be measured by a no-holds barred one-on-one discussion process. This can become easy, if only the parties have done preliminary talks during their monthly or quarterly talk.
The result of the work performance of everyone can be the basis of the organization in the giving of salary increase or bonuses, or other rewards.
As soon as this last step is completed, the MBO cycle repeats itself annually to take on bigger and more meaningful tasks, which are often referred to as a “stretch target” for the following year.
ELBONOMICS: Management by objectives can only work if you know the objectives.
