Why goal-setting is a must for equitable performance management

How can you evaluate someone’s job performance fairly if you don’t know what you’re measuring them on? It's a fairly basic question, but an important one to ask. Performance management is the process of setting goals, giving continuous feedback, and reviewing results. Goals are foundational because they steer the scope of all performance feedback conversations. And, it's well worth the time and effort to set thoughtful goals for your whole team. When you do, you're making sure that everyone has access to the clarity they need to do their job well. 

Why goal-setting is important 

Performance review templates and language guidance produce higher-quality feedback, but goals center that feedback on the most important aspects of someone's job. Without structured goals in place, it's easy for performance feedback to creep into biased, irrelevant, or unhelpful areas. Textio's recent Language Bias in Performance Feedback report highlights the negative impacts on equity when performance feedback veers into irrelevant areas. The results are concerning: women, employees of color, and other underrepresented groups receive more of this type of out-of-scope feedback. This is often in the form of feedback on perceived personality characteristics. That means certain groups are more likely to receive feedback on personal attributes—both critical and positive—instead of on their job performance. As you can imagine, this can impede an employee's advancement and professional growth. 

Setting relevant goals and offering high-quality feedback are defining characteristics of an excellent people manager. Maintaining a consistent goal-setting culture that follows through with frequent feedback on goals throughout the year is crucial for employees, managers, and companies. Despite this, goal-setting tends to be a frequently skipped step in performance management.   

Goals clarify priorities 

Clarity about what’s in scope helps your team make better decisions and prioritize work. Sharing expectations before kicking off a new project, quarter, or role can mean the difference between success and failure. Aligning with your direct reports before they invest their time, energy, and resources into projects allows the whole team to work smarter together, instead of harder in silos. When goals are set well, it can be an immensely clarifying exercise that helps the whole team identify and agree on the top priorities.  

Goals can unlock performance  

Though goal-setting can feel time-consuming, it's well worth the effort. Research shows that a regular company-wide goal-setting practice can increase performance by as much as 22%! But, of course, this assumes that the goals being set are thought through deeply. Goal-setting is the time to measure twice and cut once. Try not to rush the process, and allocate enough time to set SMART goals. When goals are meaningfully set, it can lead to more aligned, collaborative, and enjoyable work that produces better results in more successful outcomes. 

Goals maintain consistency 

Part of ensuring organizational equity is establishing fair and consistent systems. When the whole company is expected to set formal goals, it creates a consistent framework that is fair and standardized. From the employee perspective, when you know what you're being measured on and why, it elicits more confidence and trust in the whole performance management system. 

What are SMART goals and how do you set them?

No matter which goal-setting framework your company uses—MBOs, KPIs, OKRs, etc.—it’s the quality of the goal that matters most. It’s incredibly helpful to standardize one approach to goal setting across the company. Generally, the SMART goal framework is a helpful checklist to run through when setting goals with your direct report. SMART goals have been around since the 1980s, and many companies swear by them. When goals are rigorous and well-scoped, it’s a lot easier for managers to give high-quality performance feedback.

SMART is an acronym that stands for specific, measurable, attainable, relevant, and timely. There are several variations of this acronym, but most cover the same general concepts. Next time you are setting performance goals, check to see if your goal hits all of the SMART criteria.  

Specific

Being specific about the desired outcome is very helpful. If the goal in question were accomplished, what would be true? Compare the goals below. Which one is more specific about where the employee should start? 

Goal 1:

"Contact your entire book of business for product feedback."

Goal 2: 

"Identify customer pain points and success stories by touching base with 75% of your customers and synthesize top insights for the product team by the end of the year."

The first goal is extremely open-ended and vague. How will the person receiving this goal know where to begin or what a successful outcome would be? The second goal starts with the bigger picture, so rather than prescribing the action of contacting customers, it begins with the why: identifying customer pain points and success stories. It also feels reasonably scoped, knowing that not every customer will likely be responsive to outreach. Lastly, it explains what to do with those insights: synthesize them for the product team. If you are wondering if your goal is specific, you can ask yourself a few questions.   

Questions to ask:

• Does the goal clarify what the desired result is?
• Is it easy to understand which steps to take next? 
• Is the why behind the goal apparent? 

Measurable

Roughly 90% of organizations that miss the mark with their goals are failing in the execution phase. Measuring goals will keep you updated on progress and boost individual accountability for achieving the goal. Measurement usually translates to quantitative indicators. As an example, for a customer support role, you might measure a specific response time to incoming inquiries or CSAT (customer satisfaction) ratings. The indicators you use are going to vary based on your industry, role, and company. But, trying to find 1-2 concrete quantitative indicators to measure success helps ensure accountability and clarify expectations early in the process. 

Questions to ask:

• How will you know when you achieve success? 
• Are there 1-2 quantitative indicators you can use to measure progress?
• Is this an indicator your team has the ability to measure today? 

Attainable

Context matters. Goals need to be realistic and take into account the current context your team is operating in. For instance, setting aggressive goals for a new hire that are equivalent to those set for more tenured team members, is not realistic. They’ll likely need time to ramp up and learn their role before delivering the same amount of value as their peers. Or, if you increase a salesperson’s quota during an economic downturn in the hardest territory, that will set the person up for failure. This in turn can lead to disengagement, frustration, and at worst attrition. Staying realistic and focusing on what's attainable when formulating goals is critical.  

Questions to ask: 

• Is the goal a reasonable ask in the allotted period with the current bandwidth?
• Is the goal something that you could expect to see in the employee’s job description? 
• In what environmental context is this goal being set? 

Relevant

Connecting the dots and showing employees how their goal supports the company's objectives is important. You should be able to answer how the goal relates to the direction of the team and company. Why is the company investing in this particular goal at this moment in time? Also, make sure to articulate how the goal helps the employee's growth and development. Is it a goal that will help the employee grow and demonstrate their abilities in new areas that help them continue to progress at your company? 

Questions to ask: 

• Does it have a direct tie-in to company-wide goals? In other words, how do the dots connect to other efforts at the company? 
• Does the goal help the employee continue to learn, grow, and develop? 

Timely

When does this goal need to be accomplished? Is it a top focus area in the next quarter or two? If not, that’s a good sign that it might be important, but not an immediate priority. For long-term goals, it can be helpful to break the goal into smaller pieces. Just as you would with any work assignment, specifying a timeline is crucial to helping the employee prioritize what’s most important. 

Questions to ask: 

• Is the timeline clear?
• Is it a fair timeline? 
• What are you willing to deprioritize to achieve this goal if trade-offs have to be made?

An employee's work-related goals should be the main focus of any performance feedback they receive, especially in performance reviews. The quality of the goals being set matters, and knowing a framework like SMART goals can establish regularity in goal-setting. All employees should be fully aware of what their goals are in advance of any performance review, and goals should align individual efforts with company-wide initiatives. Formal goal-setting as a company-wide practice is worth the investment. Not only does it nudge equity and fairness, but it helps managers and employees prioritize, align, and keep a consistent feedback loop.