Goals on Every Level - Enabling Your Team to Become More Productive

Tom Sommer, tom.leadintech [at] gmail.com, https://au.linkedin.com/in/leadintech
Redbubble, http://www.redbubble.com/

Most of us have come across goal setting in one way or another, be that at work when your boss comes over and tells you that you have to reach a certain sales target next quarter, or when we make a new year’s resolution to learn a new language.

But why do we constantly set goals? Does it even work? Can’t we just all try our best at whatever we do and be much happier? It turns out that setting effective and meaningful goals can have a tremendous effect, not only on your performance, but also on other aspects of your (work-)life. After all, "it's forward momentum in meaningful work-progress that creates the best inner work lives" [1].

As we will discuss later in the article, we can set goals in all positions - it doesn’t matter whether you are in QA, an engineer or a manager - and any situation. So before we start our exploration of goal setting and how it works, I would like to present the objective I have set myself for this publication. We will dissect, analyse and discuss it in more detail soon.

Encourage 50 readers to set team or individual goals and contact me within 6 months with feedback.

Why Set Goals?

Research on the topic of goal setting has been around for more than 50 years and a lot of it has been aggregated to an area called Goal Setting Theory [2], with countless studies and experiments on a variety of topics highlighting plenty of good reasons to get into the habit of setting goals, both for teams and individuals.

One of the main advantages of a well-defined goal is that it gives you Direction and Focus. This is important so that everyone is on the same page about what should be worked on, but also what problem not to tackle right at this moment. For example, as a DBA your target could be to improve the database response time, which gives you a clear direction in order to decide what to focus your energy on.

When goals are used the right way, they can increase Engagement. A recent study by Gallup shows that worldwide only 13% of employees are engaged at work, while the remaining 87% are either not actively contributing to the company objectives (not engaged) or trying to undermine the team (actively disengaged) [3]. Objectives can increase engagement because employees have something to strive towards, like the company mission it relates to [4].

Further, goals can have a positive impact on Motivation, which is closely related to the effect on engagement mentioned before. A great way to achieve this benefit is if you are directly involved in the goal setting process. In other words, you decide yourself what your goals are instead of your boss telling you.

The effect that has been most researched is the impact on Performance. Multiple studies have shown that setting goals can increase quantitative output by up to 16% [5]. The harder the targets are, the more performance they can yield, but only to a certain point when the effects start to wear off as shown in the following graph:

When targets are set too hard, they don’t work as a motivator anymore and might feel like their unachievable - sometimes called stretch goals. An example for a stretch goal would be if you were a software engineer and tasked to deliver a 6-month coding job within 4 weeks. This clearly cancels out all potential motivational benefits, because it is completely out of reach.

The real challenge then is to set goals ambitious enough to yield good results, but not too hard as to become irrelevant. We will be exploring a couple of goal setting frameworks later in the article, which strive for the right balance by following some simple principles.

Limitations when setting Goals

After exploring some of the benefits, let us briefly talk about some of the negative effects that can occur when working with objectives, a good thing to be aware of when introducing goals into your company or team.

The most commonly known problem with targets is that it can lead to Unethical Behaviour. This is a well studied topic, with research showing that people with goals are four times more likely to lie about their performance, even if they are within reach [6]. More severe issues can surface when companies set unachievable targets, including employees falsifying financial statements to meet their earnings target [7]. While all these outcomes are bad enough by themselves, there is also the risk of creating a culture that is defined by isolation and competition instead of collaboration.

Another negative impact goals can have is Dissatisfaction, which can happen when goals are set too ambitious. This can in turn lead to less motivation and engagement, which are some of the main benefits to strive for as outlined in the previous section. A great example of dissatisfaction is a study of olympic medallists which shows that on average athletes winning bronze are happier than those winning silver [8], most likely because the silver medallist had her eye on gold, while the bronze medallist is just happy to have won a medal at all.

One last problem - which might not be as obvious - is the effect that occurs when goals are set too focused. Specifically, they lead to a sort of Tunnel Vision or Narrow Focus. So while a well-defined goal can give clear direction and focus, it can become a negative thing if taken too far. This then manifests itself in work where all innovation, creativity and broader thinking get lost.

One famous example of a narrow focus is the development of the Ford Pinto [9]. The brief that the engineers were given was well defined and had a clear goal: Build a car that costs less than $2,000 and weighs less than 2,000 pounds. But because management was very firm on these requirements, the result was a highly unsafe car that had the tendency to explode when hit at the rear.

Goal Setting Frameworks

Now that we explored the key benefits of goals as well as some negative aspects of it, we can explore some of the popular goal setting frameworks and analyse their usefulness in certain situations.

S.M.A.R.T.

First up, we will have a closer look at the arguably most well-known framework called S.M.A.R.T. [10]. SMART has been around since the early 80’s and is used by some very successful companies including Amazon, where CEO Jeff Bezos is managing over 400 goals himself [11]. There have been plenty of interpretations for the five letters that make up the word SMART over the years, but we will discuss the original definition here:

A goal needs to be Specific. It should clearly define what you are working on and which area to try and improve. A good indicator that an objective meets this criteria is that it satisfies the 5 Whys: What?, Why?, Who?, Where? and Which?

Once you have identified what to focus on, it is critical to be able to know when progress is made and the target has been reached, which means a goal should be Measurable. Being able to assess and communicate achievements towards a goal has the potential to increase motivation and engagement as discussed in the first section.

As mentioned in the paragraph about the positive impact of goal setting on performance, there exists a sweet spot depending on target difficulty. Keeping the goal Achievable aims to set a high bar, without making it a stretch goal. Another interpretation of this letter is Agreed Upon, which highlights the idea that objectives should be formed out of a discussion, which makes sure everybody buys into the target.

Another way to get your team excited about a goal and therefore drive engagement is to keep it Relevant. This is about making sure that the aim is to drive something of importance forward, be that something you are passionate about or related to mission of the company.

The last cornerstone of SMART is Time-bound. The idea is to instill a sense of urgency through a deadline, which can also have a positive impact on performance [12]. Let us look at an example, the goal that I have set myself for this article which was introduced at the beginning:

Encourage 50 readers to set team or individual goals and contact me within 6 months with feedback.

Why is this goal SMART? It is specific because it clearly defines what I want to achieve and how - I want to get you to set goals. It is measurable by providing a clear definition of success - 50 readers contacting me. It is achievable due to the fact that it depends on my ability to write an interesting and engaging article. It is relevant because I care about this topic and I would like to see more teams and companies use it. And it is time-bound by setting a deadline 6 months from the date the article is published.

When carefully defined, a SMART goal is gonna be crisp, specific and measurable and can get you all the benefits of setting goals without many downsides. There are however a couple of things to look out for, which can have a negative effect [13], most notably the creation of tunnel vision as discussed with the example of the Ford Pinto and the fact that it is not very easy to align multiple goals across departments and teams.

Objective and Key Results

The second framework we will be looking at are Objective and Key Results or OKRs, which have been around since the 70’s and were invented by Intel [14]. Many successful companies have since adopted it, including at Google since 1999 [15].

OKRs consist of an Objective, which is an ambitious description about what you want to achieve and is meant to be inspirational and give meaning to the work you are doing. Some qualities a good objective should have are to be ambitious, qualitative, time-bound and actionable [16], which has a lot in common with how SMART goals are defined.

The objective is then combined with one or more Key Results, which define the measurable part of the goal and allow you to keep track of progress and whether the goal has been achieved. One key part is to make sure key results are set high enough to have a positive performance impact as mentioned in the first section of the article. As an example, Google aims for its OKRs to be graded at 0.6 to 0.7 [17] with everything below meaning that either performance wasn’t good enough or the goal was set too hard. On the other hand, a score above would mean that the target was set too easy, and the maximum benefit of performance wasn’t achieved. This is just one example of how to analyse and grade OKRs, while another uses the regular use of confidence levels [18]. The reason so much effort is spent on the grading is to try and get as close to possible to the sweet spot of performance and effort as presented early in the article.

Goals on every Level at Redbubble

At Redbubble [19], we are creating a global marketplace for independent artists. The company itself is structured into small, self-organising teams that are responsible for a certain area of the business, for example making sure that our customers get the best possible shopping experience. Each of our teams is as cross-functional as it needs to be in order to achieve the best possible results and as autonomous as possible - one of three elements of motivation, together with mastery and purpose [20].

We have been using goals in one form or another for a quite a while. More recently though, we started using Objective and Key Results throughout the company. The reason to choose OKRs is to give us the autonomy each team needs to operate in a way that enables full ownership of a problem while maintaining a strong focus. In other words, the big benefit OKRs provide is that they define the What and Why, not the How. Another way of explaining this concept is that each team is largely responsible for finding the best path to reach a their target.

Creating meaningful objectives plays a big role in this setup, because it helps us to stay focused and relevant, while keeping a high rate of engagement and motivation at each level. During the goal setting process, objectives are cascaded from the top level to the individuals. Each team or individual is responsible to come up with the targets for the upcoming year and then check in with the one level above to make sure that it makes sense in regards to the overall company mission and to ensure different team’s don’t work in conflicting areas. Let us look at how this works in an example:

Goals at the company level - which are defined first - are used to create direction for everybody else. In our case, the mission is to create a long-lasting company that makes a difference for artists.

Each team then formulates a set of objectives for the area they are working in. These drafts are subsequently clarified and signed off by the layer above, in this case the company. As we can see in the example, one of our teams is focusing on creating loyalty amongst our customers, which very neatly ties in with the company objective. During the creation of the goal, we usually involve the whole team to make sure our targets are relevant and engaging for everybody.

Once each of the team’s has finalised their objectives, we ask each member of the team to come up with personal goals for the year. The example above shows one of my objectives for the year in my role as an Engineering Manager. Other roles should have a different focus. A visual designer might set herself the target to create a welcoming and engaging experience for return visitors. An engineer might want to speed up the test suite in order to be able to develop features quicker. A data scientist could have the goal of discovering lots of insights about repeat buyers so we can better tailor our solution to them.

Using this overall process and setup gives us a very high level of engagement and motivation, because every individual is responsible for his or her own targets, no matter what role they are in. It also ensures all goals stay highly relevant since their cascading underneath the company-wide mission.

Best practices when working with Goals

The model described in the previous chapter works quite well for us, and some of the presented ideas might or might not work with your team so please apply it with an Agile mindset and adjust it in ways to fit your situation. There are however a few general concepts which should be taken into account universally.

First and foremost, you have to make your goals meaningful. Meaning in goals can be achieved through a multitude of things, be it that it is directly related to an inspiring company vision - the way we use it at Redbubble - or simply an area the team is passionate about, for example modernising a certain part of the software stack. Wherever meaning comes from, it is highly desirable because it leads to more engagement and motivation as discussed earlier.

Almost equally as important is to measure progress and be able to tell when an objective has been completed successfully. Most goal frameworks have this concept already embedded, like SMART and OKRs. The one thing these frameworks won’t tell you is when to set checkpoints and take count. From experience, there is almost no downside in fairly regularly check-ins, even weekly. This allows you to quickly adapt to problems and change direction if necessary.

Lastly, it is crucial to pivot when necessary. This can be necessary due to changes outside of the team, like an adjustment to the direction of the company as a whole. Or because of internal reasons, for example when the team discovers a new stream of work that is a bigger opportunity. In either case, it is important to identify the need for a change, discuss the options and - if it is deemed necessary - go through the goal setting process again in light of the new situation. If a goal is blindly followed even though it becomes irrelevant, all meaning in an objective is lost.

Summary

Goals set the right way can have a lot of benefits and often the desired outcome is a boost to performance. Objectives can achieve this by giving direction and focus as well as increasing motivation and engagement.

In order to fully leverage the advantages of setting goals, it is important to be aware of some of the limitations, predominantly the effect it has on affected people. This can lead from unhappiness and dissatisfaction to more severe problems like unethical and illegal behaviour.

Popular and proven frameworks can help minimise the risks, with SMART and OKRs being two of the prime candidates. Other best practices can help as well, one of the main concepts being to make sure every objective is meaningful to the group and individual.

Last but not least, it can be very efficient to create a cascading hierarchy of goals. This starts with the company-wide mission and ends with every single person in the company, no matter what role they are in. The result is highly relevant goals on every level.

References

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This article was originally published in the Summer 2016 issue of Methods & Tools