With 2017 entering its final months, many businesses are gearing up for the new year. Part of this vital next-year prep is setting business goals to help guide the activities of people at every level of the business—from the front-line personnel who deal with customers directly to the leadership at the top.
Most business leaders are already familiar with some variant of the SMART goal framework. This framework calls for goals to be Specific, Measurable, Achievable, Relevant and Timely (hence the acronym SMART). However, before you can start setting smart business goals, it’s important do a few other things first.
Create a Long-Term Business Plan
“Where do you see yourself in 5 years?” This is a basic question that gets asked in a lot of new hire interviews. However, it’s also a good question for businesses that are setting their goals for the next year.
Before setting business goals for the next year, it’s important to consider where you want your business to be 5+ years from now. In one Inc.com article, Maria Marshall, an associate professor at Purdue University, states that companies should “start by distinguishing your long-term goals from you short-term ones. Your long-term goals should have a timeline of about three to five years.”
By separating out long-term strategic goals from your short-term operational goals, it becomes easier to assess and prioritize the goals for the upcoming year. The short-term goals for the next year can be created, assessed, and reprioritized based on whether or not they bring the company closer to meeting its long-term strategic goals.
Marshall later highlights that these goals fall into four categories: “service, social, profit, or growth.” Basically, strategic goals are designed to do one or more of the following:
- Improve customer service, satisfaction, and/or retention.
- Give back to the community and improve public perception.
- Make more money.
- Increase the size of the company—its market reach, facilities, employees, etc.
Companies shouldn’t be afraid to make these long-term goals big and audacious. One example of an aggressive long-term goal mentioned in the Inc.com article was Sony, who had a goal “to change the worldwide perception of Japanese products being of poor quality.” This long-term goal would fall under the umbrella of both service and social goals—it called for increased quality and customer satisfaction with the products as a means of improving the public image of the company’s products.
Sony’s pursuit of that long-term goal seems to have paid off, considering how the company ranked No. 2 on a “Most Reputable Companies” list featured on Forbes (Google was No. 1). Sony also ranks high on Forbes’ list of the World’s Biggest Public Companies at #449 out of the top 2000 (as of May 2017).
Create Short-Term Goals for Each Quarter Based On Your Long-Term Objectives
Once the business’ long-term goals have been established, it’s time to start creating goals for the upcoming year that will help the organization reach those goals.
The SMART framework makes for a handy method of creating and vetting potential short-term goals—at least once you’ve established what your company’s long-term goals should be. For each short-term goal, consider if it is:
- Specific. Does the goal have a detailed objective that can be put into action by someone in the organization?
- Measurable. Can a set figure/value be attached to the goal? For example, “X units produced in Y time” or “10% reduction in overall call resolution time” are two concrete and measurable goals that different types of business units in a manufacturing company might use.
- Achievable. Is it possible for the person or persons being held responsible for meeting the goal to accomplish it in the time given? Here, assessing past productivity and consulting with employees about the goals they’re being assigned can help keep goals reasonable.
- Relevant. Will meeting the goal have a positive impact on the business? If so, how does it move the company closer to meeting its long-term goals? Relating short-term goals/objectives to long-term goals helps keep the business on track.
- Timely. Can the goal be accomplished in a reasonably short time frame (such as a month or a quarter)? Aggressive deadlines are important for keeping employees on track, but they also need to be realistic.
Gaining employee feedback about the goals they’re to be held responsible for is an important part of this process. Making employees a part of this process can help get buy-in from them, improving engagement and productivity. This is because it makes them feel like they have some control—some agency—in their performance assessments.
Also, getting employee feedback about short-term business goals gives leaders the opportunity to gain some valuable insight from the front-line workers who are expected to execute those goals.
Prioritize Goals from Most to Least Important
One problem that some organizations run into with the goals they’ve set is that some goals may conflict with one another. For example, say a manufacturing company sets a goal of improving manufacturing output while also increasing parts quality and reducing rejection rates. Building things faster might mean sacrificing quality—meaning more risk of parts getting rejected on delivery and lower customer satisfaction. This can lead to implementers and decision makers being paralyzed by indecision on the production line—do they make the best parts they can or do they make as many parts as possible?
Prioritizing goals based on importance helps avoid conflicts by letting those responsible for meeting them know which goal is most important. For example, if quality is the top priority, then the people on the production line know to emphasize that over raw production output when possible.
Setting smart business goals for the upcoming year isn’t always easy—and getting employees to buy into new goals and priorities isn’t any easier. However, with some effort and a little know-how from leaders and luminaries who are either at the top of or disrupting their respective industries, it can be done.