eBook Extract: How Adaptive Goal-Setting is the Future of Performance

A new approach to targets, goals, and reviews

Our eBook, "Powering Performance: How People Teams Can Create A Performance Culture That Really Delivers," delves into how rapidly changing work environments and traditional methods of performance management are being put to the test, offering fresh perspectives and innovative solutions. 

This blog post focuses on a crucial section of the eBook, "A New Approach to Targets, Goals, and Reviews." Here, we explore the necessity of rethinking how goals are set, performance is reviewed, and feedback is integrated to create a more effective and adaptive performance management system. This part of the eBook is particularly relevant for HR professionals and business leaders looking to stay ahead in a world where the only constant is change.

How to Set Goals That Align With Business Vision

As many as 95% of companies have a formalized performance management process. Yet just over 20% of respondents to the same survey said their process was either highly or very effective. So what’s gone wrong?

Clearly, most companies have a system of employee reviews or appraisals. But too often, performance management starts and ends there – without a clear strategy for linking that back to wider business goals. Too often, it can become a tick-box exercise, with the quality and effectiveness differing wildly from manager to manager. In fact, as many as 68% of people team respondents to one survey think performance management is “seen as an obligation to get through.” 

Of course, formal reviews, performance scoring, and target setting will always be important. But for it to really deliver on your goals, it needs to offer incentives and support as much as it does clear standards and targets.

Done right, this should have several key benefits:

Better products, better results: The main purpose of this exercise: To make better use of the resources you have to drive results for the company. Whether it’s speed-to-market, quality of product, or lines of code written – the business case should already be clear.

Improve your talent pipeline: A proper process should lay a path for employees to grow into new roles, making the company less dependent on external hiring in the long run.

Boost employee engagement: The days of performance management being a purely negative thing are over. The best employees want to grow toward the next step in their careers – and a lax approach to performance can’t help them with that.

So, how can people teams define a performance management process that delivers on these goals? This involves three key steps:

1. Regular Reviews & Target Setting

To get good performance, you have to define and quantify it. Then, you need a clear process to set targets, align them with business goals, and track them over time.

While much of this will be administered by managers, it’s down to the people team to codify this process and hold team leaders accountable for delivering it. Here’s what that looks like:

- Regular scheduled reviews to maintain consistency and quality of feedback.

- Managers and employees should both review strengths and weaknesses and create targets. You could also consider 360° feedback from other team members or peers from different functions.

- Targets should be clear performance metrics that align with your business goals, such as the number of bugs, CSAT scores of 95%+, or wider priorities like developing management skills

- Compensation, bonuses, and progression opportunities should be linked to clearly defined targets. Employees and managers should work together to define career goals and timelines - so employees all know what they’re working towards. Employees are more likely to perform if they know what’s in it for them and have a clear framework to achieve that.

- Learning and development priorities should be clearly linked to career goals and the performance targets required to deliver them. See chapter 7 for more details.

- Keep thorough documentation for reviews, including feedback, strengths, weaknesses, targets, and career goals. Managers should be held accountable for ensuring this is filled out and delivered back to the people team shortly after the review

2. Robust Manager Training

Team leaders will have differing approaches and levels of experience - so they can’t be expected to deliver a consistent, effective, and constructive approach to performance without clear direction. This is particularly true of first-time managers – who are incredibly common in fast-growing tech companies.

In fact, building effective managers is such a challenge for people teams that 60% of HR respondents to a Gartner survey considered it a top priority – making it the #1 priority on the list for 2023. Another survey suggests that as few as 12% of leaders can provide high-quality feedback and coaching, and fewer than 2 in 10 companies require leaders to be formally trained on setting goals, transparently coaching, or conducting bias-free reviews.

The vast majority of managers were promoted for a good reason - and all they need is clear direction and support to succeed. It’s important for people teams to be proactive in identifying and offering this support where needed, as managers might not always ask for help. 

Here are some ideas of how to deliver effective management training:

- Train managers on giving constructive feedback
Giving good feedback isn’t easy. Done right, it has to be clear, constructive, and actionable. This goes both ways; ‘great work’ can be as unhelpful as ‘this is rubbish’ if it doesn’t specify what worked (or didn’t) and how that compares to other work. The quality of managers’ feedback has a direct impact on the performance of their direct reports – so it’s essential to get this right.

- Mentoring/buddy system for first-time managers
Consider proactively offering external mentoring for new managers. This can be a helpful outlet for them to share concerns and ask questions privately – without fear of it reflecting badly on their own performance. If external mentoring isn’t an option, consider creating a buddy system that pairs up new managers with more experienced colleagues from different functions.

- Workshops for relevant skills
Providing workshops for all managers can be a great way of communicating the basics. In these sessions, you can provide tips for feedback, coaching, how to deal with struggling employees, time management, delegation, and much more.

Often, the challenge with new managers is psychological – the last thing they want to do is admit they’re struggling or still learning the skills for the job they were just promoted to.

Ultimately, people teams need to have an open dialogue with new managers. The solution is to be open and transparent about where support is needed and be clear that learning isn’t a sign of failure – it’s the path to success.

3. Implement Strict Anti-Burnout Policies

Performance management can’t deliver on its goals if it just causes unnecessary stress, burnout, and further employee attrition. In fact, data from McKinsey suggests that a median-sized S&P 500 company could expect to lose as much as $355 million a year through disengagement and high attrition.

McKinsey estimates a typical attrition rate (10%) can cost $228 million a year, and a high attrition rate (20%) up to $355 million. Based on a medium-sized S&P 500 company.

So, how do you banish burnout once and for all?

‍There are a few steps you can take here:

Proactively avoid burnout 

By training managers to spot the warning signs, like employees contributing to chats less or demonstrating less attention to detail in their work. This requires empathy; people might be having trouble outside of work, need some time o, or be well overdue for some new responsibilities. Encourage open dialogue and find proactive solutions.

Encourage work-life balance

Through breaks, digital disconnect days, and regular time o. Overworking might help the business in the short term, but it only creates lower employee satisfaction and attrition in the long run. Managers, execs, and the people team need to lead by example here, and actively discourage a culture of working overtime and on vacations

Offer mental health support

So employees can work on their own mental health. This could take several forms, such as employee assistance programs, workshops on stress management and resilience building, counseling services, and more. Try asking your employees what’s valuable to them here – ultimately, they’ll know better than anybody what they need to stay healthy and productive,

Whether it’s defining the performance management process, offering clear management feedback, or defining an anti-burnout culture – building an effective performance culture requires clear direction from the people team. It’s your job to define what good looks like – and hold managers accountable for delivering it.

To learn more about powering performance and how people teams can create a performance culture that really delivers, check out the rest of our eBook to learn about:

- Understand the skills you have - and those you need

- Build a long-term strategy for talent and skills

- Define a winning employee value proposition

- Democratize learning for better results

- Get the right learning tools for success.