When reviewing or automating their employee performance appraisal process, many HR professionals wrestle with the question of whether they should allow managers to make changes to their employees' goals during the course of the year. Choosing the goal management model that's best for your company will depend on the market/industry your company is in, as well as on your corporate culture.
To give you some guidance in your decision making, we've listed some of the typical characteristics we've found in companies who prefer to set goals once, at the beginning of their performance appraisal cycle, and in those who allow their managers to change their employees' goals.
Companies that set goals once:
- Tend to be in industries that are more stable and mature.
- Typically have fairly formal performance management processes.
- Believe that goals form part of a "deal" that managers, as representatives of the company, make with their employees. Changing their employees' goals would be tantamount to "breaking the deal".
- Are often meticulous in documenting goals and performance.
- Require an audit trail for goals and accomplishments.
- Sometimes have goals driven from the top or set by a higher level manager.
Companies that manage goals throughout the year:
- Often work in industries that are emerging, volatile, or highly competitive.
- Are characterized by agility and responsiveness.
- Tend to be highly dynamic.
- Believe that managers need the flexibility to respond to changing needs or requirements.
- Have a high level of trust in their managers and empower them to make decisions.
Questions to ask yourself
In addition to reviewing the above characteristics, you might want to ask yourself:
Why would your managers need to change their employees' goals?
Does your organization as a whole need to review goals more frequently than you currently do? (e.g. semi-annually, quarterly)
Is your organization successfully aligning employee goals with corporate goals so they are relevant and appropriate?
Are managers sufficiently skilled at writing goals? Would they benefit from training or coaching in goal management?
Are managers setting goals that are very short-term and low-level? Would higher-level, longer term goals benefit the employees and organization as a whole?
Does your organization have a strong culture of communication, where managers and employees would discuss and negotiate changes?
The benefits of ongoing goal management
In their research, Bersin by Deloitte found that “organizations that have employees revise or review their goals quarterly or more frequently are 45% more likely to have above-average financial performance and 64% more likely to be effective at holding costs at or below level of competitors.”
They’ve further identified that goals should not be cascaded down the organization’s hierarchy, but rather employee goals should be directly linked to the organizational goals they’re designed to support, and employees and teams should be empowered to collaborate on goals with each other.
Read how others are aligning and managing employee and organizational goals
At CarVal Investors, individual and departmental goals are now firmly aligned with corporate goals. And the top leadership team is now more explicit in articulating, capturing and communicating their corporate objectives.
Black River Memorial Hospital can now capture and access their all-important organizational and employee goals and tactics in one centralized place, enabling them to effectively track and measure performance. The result is a transparent process that drives greater accountability and engagement.