Exercise Your “Smarts” When Setting Business Goals
A time-honored carpenter’s axiom implores the diligent woodcutter to “measure twice, cut once.” Loosely adapting those words, the adage can also fit the business world, particularly when it comes to setting and achieving annual goals. We often use the beginning of the calendar year to reflect on – or measure, if you will – the past year’s accomplishments, then use those assessments to help shape the goals that we’d like to see “make the cut” in the months ahead. One year out, of course, we measure again.
But setting those goals can be an intricate proposition. It starts with selecting the appropriate benchmarks, then noting what worked and what didn’t so we can capitalize accurately on our successes and learn from our shortfalls. And, believe it or not, actually writing down those goals – rather than just openly postulating and suggesting – is a powerful step toward actualizing plans and progress.
In organizations served by Kaplan CFO Solutions, we’ve found that corporate goal setting is best accomplished when leaders and staff work together as a team. Including all stakeholders in a collaborative process invites greater creativity, generates buy-in, and increases the odds that the goals determined will address all key functions within the organization.
A useful guideline when setting company goals is to remember the acronym SMART, which stands for:
Specific. Be clear about what you’re going for. Ask yourself if, at the end of the year, you’ll be able to objectively say if you did or didn’t achieve the goal. If not, be more specific.
Measurable. Create metrics within the statement of the goal so it’s simple to measure accomplishment.
Attainable. Set goals for which you believe you have at least an 80 percent chance of success.
Relevant. Make sure the goal is significant to your overall success.
Time bound. Unless otherwise stated, assume the goal will be accomplished in one year.
Solid guidance, to be sure. Some groups like to add an “I” to the acronym for Inspirational, meaning the goal should be stated in a way that inspires those charged with achieving it.
Remember also to distinguish between goals that are results-oriented and those that are process-oriented. Results-oriented goals customarily state tangible, ideal outcomes like “we’ll reach $10,000,000 in sales.” By their nature, these types of goals often allow us to set interim monthly or quarterly targets that keep the organization on track as it works to achieve the established annual goal.
Process-oriented goals, meanwhile, speak to the “how” of things, e.g., “Contact 10 prospective customers each month.” These types of goals specifically outline the activity embarked on each period, with sustained consistency of the activity itself the goal.
Of course, any goal setting plan is only as good as how well the follow up and accountability are managed, so it’s critical to check in regularly with those responsible for the plan’s success to provide support and redirection if needed.
Kaplan CFO Solutions can facilitate the goal setting process at your organization. Give us a call today.