How to Set Business Unit Goals

When you go to set your business unit goals, there are a few principles you should follow. Any goals you set should be SMART—specific, measurable, achievable, relevant, and time-bound.

Performance expectations in your organization are probably pretty high. A key to hitting those expectations is a solid goal-setting process. Setting department and business unit goals requires leaders to translate higher-level corporate goals down to the business unit and then break them down further into team and individual goals. This means defining goals, then linking them to strategy, financial results, and incentives.

Leaders must also sanity check goals to ensure there are no unintended consequences arising from goals that are improperly set. Going from corporate to business unit to individual goals helps drive alignment of activity with the company strategy. For more on team and individual goal setting, watch my course on that subject.

I have one client that was trying to grow internationally. They set a corporate goal for a portion of revenue coming from outside the United States. The business units were each given a target. Functions that supported those business units were given enabler targets, like building a pilot plant in India for the R&D group. If the R&D built that plant, then they could sell product in India, which would help drive the high-level goal of driving revenue outside the United States. Individuals on that project had milestones for their personal goals. By linking the corporate strategy to the business unit to functional goals down to individual goals, the organization had the alignment it needed.

When you’re thinking about the goals for your organization, make sure you’re making those clear linkages from the highest-level strategic goals all the way down through your business unit or function down to your teams and down to the individual level.

5 Goal-Setting Principles

When you go to set your business unit goals, there are a few principles you should follow. Any goals you set should be SMART—specific, measurable, achievable, relevant, and time-bound. These principles improve the team’s understanding of what they need to deliver. These principles also help you ensure you’re able to track performance against the achievement of the goal and gain the team’s commitment to achieving it. There are multiple versions of SMART, but they all get to the same thing—creating clear and actionable goals that matter.

Specific

Specific gets to spelling out the behavior or outcome that you desire. It lets people know what to focus on and what actions are expected.

Measurable

If you can’t measure it, you don’t know if you succeeded. Setting measurable goals also ensures you’re driving the right outcome, like profits versus sales. You’ll get very different behaviors depending on how you measure.

Achievable

Your goals should be achievable. If it’s not realistic, people are going to give up and not even try. They’ll get halfway through the year and say, “We’re off course, so you know what? Forget it.”

Relevant

Goals need to be relevant. This drives the activity that’s tied to a broader organizational goal. If I set a cost-cutting goal for the company, but we’re trying to grow sales, that cost-cutting goal is not going to be relevant or helpful in achieving the broader goal of hitting sales.

Time-Bound

Your goal should also be time-bound. People need a sense of urgency. Specifying time also enables better work and better project planning.

I worked in an organization where we were trying to increase the number of dollars that we were getting back from consumers who owed us money. The goal was specific. We said, “Here is the metric that matters. We need to achieve 100 million dollars of incremental dollars collected.” It was also measurable. We knew exactly what data to get and how we would track it. The 100 million dollars was achievable. Sure, it was a big number, but we looked at last year and we said, “We think we can hit 100 million this year.” That goal was absolutely relevant—one of the bigger goals for the company was driving down our losses. It was really dependent upon bringing in these incremental dollars collected. Finally, it was time-bound. We said, “By December 31st, we need to collect these incremental 100 million dollars.”

By setting that SMART goal, everyone in the organization knew exactly where we were going and why it mattered. When you’re setting your business unit or department goals, take the time to think through every goal and make sure that those goals are SMART.

Want to learn more about setting business unit goals? How about taking an entire course on it? Check out the video below to learn more about the course and get started. Or you can go directly to the course and start learning how to set business unit goals. The entire course is available at LinkedIn Learning. Enjoy!

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