Creating goals for your business that link through the entire organization is the key to successful goal setting from all sides of your business.
Link goals to strategy
For a goal to be really relevant, it has to tie to the broader purpose and goals of the entire organization. Your strategy is going to help drive that. The strategy consists of a desired future state and definition of how you’re going to get there.
You should break that strategy down into smaller interim goals on that path. Every goal that gets set in the organization should be linked to that broader element of your strategy. How do you do that?
Take your vision and your mission. Look at where you’re going as an organization. Break that down into major themes over the course of the strategic planning period. For each theme, break that down into actions you’ll have to take to achieve that theme. For each action, break that down into sub-actions until you can set an individual goal for each of those actions.
I worked for a lawn and garden company at one point and I was in the strategic planning group. We said, “We’re no longer going to “just be a lawn and garden company. “We’re going to move into outdoor living.” It was a much broader expansion strategy.
For each part of the organization, we set goals that were tied to that outdoor living strategy. Our consumer packaged goods business had goals for new product line expansion and getting into new categories. Our services business had goals for offering new services. Even in the strategy group, we had goals for achieving that outdoor living strategy. We had goals for how many acquisitions we would do, what categories we were going to enter, and for each acquisition we had goals related to targets we were going to make offers to. We had a time for when we were going to make the offer. We had deadlines for making a deal. We had deadlines and goals around integration, execution of the plan, and expansion of those businesses once they were acquired. Every single one of those goals tied to a broader strategic theme, and those themes tied to the broader strategy of getting into outdoor living.
We all knew how we were contributing to the broader strategy. Therefore, our goals made sense and they were meaningful and relevant to the mission of the organization. When you set your goals, make sure that you can go from strategy to themes to actions to goals, and then explain to the members of your team how those goals roll up to the broader strategy. It will give their work meaning and help them understand how they fit in.
Learn to build goals from the top down
Goals shouldn’t just tie from your strategy down to the individual goals. When you add your goals up, they also need to align from corporate goals down to the individual. Ensure everyone’s work is headed in the same direction and people know how they fit in, how their work contributes to the broader goals we’re trying to achieve.
The way you do this is to work from the vision down to subcomponents, then down to subcomponents below that, all the way down to individual goals. Goals should cascade from the highest levels down, and when you add them all up, hopefully it’s more than you’re trying to get to at the top level. Why? Well, you want to make sure that you hit that goal. By over-allocating that goal across the organization, you’re going to increase the chances that you hit the big goal.
I worked for an operating division at one point and we had a goal of $200 million of revenue. There were five regions in the organization. Each region was given a goal of $42 million. Now, that’s $210 million. Within those regions, each branch was given a goal, and when you totaled up all the branches, it came to $215 million worth of goals. We then looked at the individual sales reps, and every sales rep was given a goal. When we totaled up all the sales rep goals, it was $220 million. Adding up those individual goals exceeded the division goal by 10%, by $20 million.
The reason we did this was to ensure that we hit that top-level $200 million goal. Over the course of the year, obviously, some sales reps exceeded their goals, some met their goals, and some fell short. Working from the top down, ensured the primary goal was focused on. Everyone was focused on driving sales, and by over-allocating that goal from top down to individual helped us achieve that goal. Now, when you do this, if you’re going to go with an over-allocating approach to setting these goals from the big goal down to individuals, be careful about overplaying that hand because you may make it such that that goal is not achievable.
One time I’ve seen this dynamic is when I was in the army and we had to be at formation at a certain time. Our company commander would say, “I want everybody at formation at 6 am.” The lieutenants would then go to the organization and say, “I want everybody at formation at 5:30 am.” The platoon sergeants then went to the teams and said, “I want everybody in formation at 5 am.” The squad leaders then said, “I want everybody in formation at 4:30 am.” The next thing you know, you’ve got this poor private standing out there in a parking lot at 4 am waiting for a formation that happens two hours from now.
Bad things can happen when you over-allocate a goal down to the individual level so balance it out. Look at the high-level goal. Break it down into subcomponents. Look at the individual goals that are going to add up to that broader goal. Make sure the goals you set at the individual level are still achievable and they’re directly tied to the broader goal you’re trying to achieve. By doing so, people know how they contribute, how they fit in, and you’re going to make sure that you hit those top-level goals if everybody hits their individual goals.
Want to learn more about goal setting, and how to really think about the effects it will have on your business? Check out the video below or you can go directly to the course and start learning how to improve all different aspects of your business every week. The entire course is available at LinkedIn Learning. Enjoy!
Did you enjoy this post? If so, I highly encourage you to take about 30 seconds to become a regular subscriber to this blog. It’s free, fun, practical, and only a few emails a week (I promise!). SIGN UP HERE to get the thoughtLEADERS blog conveniently delivered right to your inbox!