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Smart Goals : A Performance Multiplier

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Accountability in employees is vital to the growth of an organization. This paper illustrates, with the help of a case study, how setting clear goals allows employees to drive performance

Before the AGM- 2005

Goal Setting for employees across the organization chart and its influence on growth of the organization. Initiatives a management has to take to implement them.The Board of Directors, managers and the CEOs found that productivity at the company continued to decrease, which made it difficult to justify performance to investors and other stakeholders. On the other hand, employees groused that they had to work above and beyond their capacity to fulfil obligations. It was clear that the client required a partner to analyze performance and understand why productivity kept declining.

Diagnosing the Problem

A study revealed the following problem areas in the organization:

  • The CEO had not defined any specific objectives to be achieved during the year.
  • Nothing was quantified as the corporate goals, nor were any measures used to monitor performance.
  • As department heads were unaware of their objectives over the year, there was no way to formally review or measure progress.
  • Although employees continued working, there was no supervisor to trac daily/ weekly output from his/ her subordinates. Typically, employees continued with their routine work and no one was able to accommodate other activities.
  • There was an all pervading sense of complaisance among the employees and the wishful hope that their output was far more than that of their immediate competitors.

Management Initiatives

After partnering with Saigun in a consulting role, the client’s management decided to lay down SMART goals for the company: these were a set of objectives which were Specific, Measurable, Achievable, Re viewable & Trackable. While the client was not immediately prepared to introduce the Balance Score Card (BSC) approach, which Saigun had initially recommended, it then decided in favor of the following mechanism to launch their improvement initiatives:

Mandatory goals for managers and supervisors

The two goals outlined below were made mandatory for all employees:

Performance appraisals for subordinates (direct reports) to be completed by the respective managers within 15 days of the closing period (every year. Performance monitoring will be –goal-based and the HR manager would track the completion and assist in the goal setting process.

All employees will undergo skills/competency development training for a minimum period of 6 working days during the year depending on the needs identified by the respective managers.

Corporate Objectives

All functional heads/heads of departments aligned their departmental goals to the company objectives, which were defined as follows:

Revenue to double every four years – this means that the increase during the current year needed to be 20%.

Current year’s Profits After Tax (PAT) to increase by 2% over the previous year.

Recoverable outstanding to be reduced from existing 42% to 25% of revenue during the current year.

Inventory carrying costs to be cut by 1% during the year.

Employee to Company Turnover’ ratio to improve by 5% over the previous year.

PCMM level 4 certification to be acquired by end of the next year.

Top-down Approach

The CEO would draft a report allocating departmental goals, which are aligned to organizational objectives.

Key Result Areas (KRAs) would also be created for each employee which must be tied to their job description.

Each individual to have 5 to 7 KRA-based goals which are specific, measurable, achievable & trackable.

All employees shall also identify one self-development goal in consultation with their respective managers.

Unfinished goals will be transferred by the manager to another employee who replaces or takes over from any individual leaving the company.

Problems experienced while launching the initiative

Goals setting process was started immediately as the corporate objectives were laid down.

It took only three days to finish the process for direct reports of the MD.

For the remaining 486 employees, it became a herculean task for the Managers at various levels to study the Job Descriptions, identify vital KRAs for each Job Position, apportion their own corporate goals to the subordinates and allocate weights & measures.

Managing so many goal sheets & reviewing the status of each goal as per the periodicity for its completion surfaced as a major stumbling block.

The date for completion of the Goal Setting activity (31st Jan 2006) was over, but the Manager HR found it difficult to capture the exact status.

After visiting various departments, it could be approximated that goal sheets in respect of merely 30 % of employees had been signed off.

It took another ten days to compile the department wise status after the instructions were issued to submit the signed off goal sheets to HR.

Some departments overlooked the need to retain duplicate Goal sheets for the employees to recapitulate their targets & for the Managers to track performance.

There was chaos all around with each blaming the other. The CEO was unhappy & the Head HR was feeling helpless.

The initiative could not be launched fully till 30th April despite another trial to complete the goal setting process.

Search for a Solution

Someone who had recently joined the company proposed having a look at the ‘EmpXtrack: Goal Setting module’, a software seen by him in his previous organization.

Head HR found that it could meet all their requirements & would help them in completing the Goal Setting process for all employees within a month.

The system was an obvious choice and was installed within a week.

All goal sheets became accessible to the Managers & their direct reports at all times. Manager HR found this to be a useful tool to monitor status of the goal setting process & expedite the defaulters.

Right upto the CEO, alignment to the corporate objectives was viewable.

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