Why performance goals matter—and 4 strategies to improve themAugust 6, 2019
What high-performing organizations are doing (and not doing)
We studied the performance management practices of more than 1,000 organizations globally across all industries to see what drives outcomes. We identified how high-performing organizations use goals and saw there are clear differences between the outcomes they are able to achieve compared to the outcomes of lower-performing organizations. Not only do they use goals differently, but they also avoid using goals counterproductively (like our exhausted runner) and focus on using goals that are workforce centered and productivity oriented.
Figure 1: High-performing organizations use goals to foster productivity
Source: Bersin, Deloitte Consulting LLP, 2019.
It’s not that lower-performing organizations want their goals to fail. Most organizations are using goals to both efficiently execute and ensure compliance with their performance management processes. So, why aren’t goals that are process centered (see Figure 1) generating great outcomes? Two things are happening:
1. Goals aren’t being linked to the work being done now.
2. Goals aren’t being used to enhance workforce performance.
Bringing goals into the here and now
The crux is that much about work has changed—how people work, the type of work an individual actually performs, how teams manage work, even the definition of workforce (hello, gig workers). Organizations simply can’t continue using goals as many traditionally have, disconnected from workers’ daily reality. Annual goals are going the way of the dinosaur, and for good reason. Who can remember with any clarity what they did a year ago? In this compressed, fast-paced, ever-changing environment, traditional, old-school, static goals that don’t relate to how work has changed won’t help workers to perform better or develop needed skills.
Forget compliance; use goals for development
Goals for the sake of goals—ticking the box, essentially—is great for compliance. But without a connection to performance outcomes, organizations won’t gain in productivity, and people won’t see how their work connects to the purpose of the organization and how they can derive personal meaning from their work. When organizations use goals to encourage workforce development, they are 3.2 times more likely to effectively develop the workforce1—a necessity in a world where skills become obsolete by the minute. High-performing organizations also are using goals to increase engagement and foster culture (see Figure 1). Workers find their work and place of work to be more meaningful because goals are helping them stay focused and achieve better outcomes overall.
4 practices that make a difference
Our recent look at high-performing organizations dug into how they use goals differently and examined the mindset shift needed to drive productivity using goals. We identified four success factors that can enhance workforce performance:
- Focus goals on progress and growth.
- Set and manage goals transparently, collaboratively, and autonomously.
- Enable leaders to support their teams to accomplish goals.
- Align goals with business cycles (at least quarterly) and embed them in the flow of work.
We have shared, often and with good reason, how much the workforce despises performance management. Our High-Impact Performance Management2 study revealed an abysmal Net Promoter Score® (NPS®)3 of -60. Goals done well play a key role in increasing an organization’s NPS; the research points to a 42-point positive swing when workers have autonomy over their own goals. The urgency exists for every organization to use goals with a human focus.
Think about where your organization falls on the compliance-development continuum. If you have been using goals to tick a box, it’s time to consider how to use goals as a development tool in your performance management toolkit. If your organization only does goal-setting annually to document expectations and then abandon them for the rest of the year, it’s time to figure how and when the work is being done and align goal-setting with the flow of work.
In Top Findings for Using Goals to Drive Productivity and Performance, not only can you learn how high-performing organizations apply these four practices, but we dive into real-life examples of organizations using these practices to advance their performance management, workforce experience, and business results.
1 Top Findings for Using Goals to Drive Productivity and Performance, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Nehal Nangia, 2019.
2 High-Impact Performance Management, Bersin, Deloitte Consulting LLP / Kathi Enderes, PhD, and Matthew 1. Deruntz, 2018
3 The “Net Promoter Score” (NPS®) is based on the fundamental perspective that every company’s customers can be divided into three categories: promoters, passives and detractors. Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Originally published at Capital H blog