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The problem with most goal setting in organisations is that it ends up being a bit of a scattergun approach with most goals focussing on pure financials and customer acquisitions aiming for a marginal incremental growth year on year. This might bring some growth but rarely are the Big Hairy Audacious Goals that Jim Collins refers to in his fantastic book ‘Good to Great’ even close to being reached. And it is the companies that set such goals which are the most successful – hands down, no questions. And he has done the research to back this up.

Let’s look at an example of what takes place in most organisations at the start of each financial year. Taking business growth as the key objective – let’s say an organisation has followed best practice and have been very specific about the number they are looking to hit; they have put in a target date and broken down their goal into bite sized chunks which also have dates by which they expect to be achieved. A strategy is in place which should support the sales arm; the marketing team and the operations team and each department / division is set their own goals upon which they are measured throughout the year.

Everything is good so far. But then what tends to happen is that each of the areas/disciplines will separate off and look at what their area needs to do in isolation in order to achieve the specific targets they have been set as part of the overall objective. This will no doubt be cascaded to their teams who will be responsible for delivering according to the departmental strategy. Rarely is their strategy ever run past the other disciplines with whom they interact to just sense check that it won’t derail anything the other areas are planning. 

Meanwhile the individuals within each area will be setting their own goals – usually based around how they can demonstrate improvement to the extent that they can be considered from promotion and/or a pay rise. At the stage they are planning their own goals they will have little or no awareness of the bigger picture and whether their goals are beneficial for the organisation or would even in line with the direction the organisation is heading.

Give or take semantics – the above is generally how it all pans out. The trouble is, at each point the goals are separated down – they become diluted and sometimes even work against each other. Once cohesion is lost – so is focus. How many times do we hear of departments moaning about the processes in other departments which hinder them in some way from doing their job? Or even within departments, personnel moaning that xyz is suffering because Jane Smith is on a course to ensure she achieves her objective – which bears no relation to the departmental goals.

So how is it possible to create aligned goals that are transparent and supportive at all levels and that will help the organisation meet not just annual incremental targets but the Big Hairy Audacious Goals that will result in their huge success?

 

Using a Balanced Scorecard Approach

Developed in 1992 by Robert Kaplan and David Norton, the Balanced Score card framework enables organisations to link their vision and mission with strategic objectives and initiatives and then to track and measure them at all levels of the organisation.

The beauty of the Scorecard is that is doesn’t just focus on Financials, but it also considers Customers, Internal Processes and the Company’s ability to develop and retain knowledge.

I’m not advocating that the actual Scorecard ‘process’ necessarily has to be followed to the letter, however it is relatively simply to take the principle of the Scorecard and tailor it for any organisation, whether in the public, private or not for profit sectors.

The starting point is to identify the organisation’s longer-term goals and then to break these down into 4 distinct areas to focus on – creating sub goals in each area that will move the company towards the bigger goal.

For example, this may mean wanting significant growth for the company. Using the SMART formula to give some measurables, this could mean an improvement in its financial position with a 25% increase on EBIT by the end of the current fiscal.

Typical considerations (industry dependent) include: 

1. Financial (how do we look to shareholders)

a.Cash flow

b. Sales

c. Operating income

d. Return on Equity

2. Customers (what is important to our stakeholders):

a. Delivery

b. Return on Investment

c. Creativity

d. Industry Profile

e. Likeable, trustworthy, professional people

3. Internal Processes (what must we excel at):

a. Industry knowledge including future trends

b. Client Industry knowledge

c. Flexibility, scalability and adaptability in servicing demands

d. Service excellence – right first time

e. Having good connections throughout the supply chain

4. Innovation and Learning (How can we continue to grow and create value):

a. Development of new / improved products and services

b. Time to market vs competition

c. Industry thought leader position

d. Influence in the industry

Turning these into the chunked down company goals (again subject to industry – the below is tailored more for the events industry as an example) could be:-

1. Financials:

a. Improve cash flow by maximising creditor terms and minimising debtors list

b. Increase Sales (turnover) with Existing Clients

c. Increase Sales (turnover) through New Clients

d. Increase net profitability on jobs

2. Customer:

a. Demonstrate a Return on Investment for EVERY project

b. Proactively demonstrate expertise and understanding of their challenges / industry

c. Delivering Award Winning programmes

d. Delivering on KPIs

e. Improve rankings within the industry Top 50 agencies

3. Internal Processes:

a. Seek out new and up and coming venues and destinations

b. Developing a method to helpfully share this information as relevant to clients

c. Becoming knowledgeable about the industries in which our current and targeted client operate

d. Raise our profile through speaking and other industry events

e. Adopting a TQM approach to project management

4. Innovation and Learning:

a. Create a platform to share knowledge and ideas

b. Build time into the working week for innovation

c. Scan the environment to see what our competitors are doing

d. Connect with futurists and academics to develop a learning programme

It’s important to state here that specific targets / measurables should be attached to each of the above. These should then be chunked into Departmental Goals. Each department or area of the organisation should be able to apply what they do and how they contribute to each of the above areas. 

For example Finance could set themselves a target of reducing the late Debtors to 95% ; they could work with the marketing and operations teams to support ways to increase margins on jobs (by an agree %); they could provide statistical metrics and analysis templates to support demonstration of ROI; they could look to understand the financial challenges within client industries (this could be measured by the number of insights per quarter); they could work to develop more accurate budget templates (this could be measured through time saving and accuracy) and in the vetting approval of suppliers (in the absence of specialist procurement); they could also look to compare the financials of competitors in order to analyse improvements that could be made. 

Likewise, Marketing, Sales and Ops can also take elements from each of the organisational goals and see how they can apply them in their setting.

These departmental goals should be shared and amended so that they are complimentary and supportive of each other.

The organisational and departmental goals should then be shared on an open platform and individuals invited to shape their individual development goals around each of the areas.

So, as an individual in Ops for example, I may elect to commit to some or all of the below as part of my development for the company and my own development within the company: improving the net profitability on my jobs – by an average xx%. to growing my current client projects by xx %; to attending xx events per year and reading xx articles per month that are related to my clients industry; to sharing any pertinent information in a timely manner (maybe within 2 working days of reading) on the assigned platform; to creating copy for xx articles that can be shared in the industry press; to attending xx supplier meetings during the year; to delivering on the agreed KPI for all projects.

By allowing the individual to self-select, you are more likely to obtain buy-in. Others can see what people are committing to, which not only increases accountability but also a willingness for everyone to stretch their goals and contribution. Most importantly, the goals are measurable and are all focussed in the direction the company is aiming for.

I have personally witnessed this work in organisations that are driven to succeed. If this sounds like you then I urge you to try it or even be bold and brave and follow the authentic and original Scorecard as espoused by Kaplan and Norton.

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