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Classic approach to setting SMART goals

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Figuring out how to set goals has vexed leaders for a long time.

In 1954, Peter Drucker devised “management by objectives,” in which an employee’s goals were tied directly to the organization’s goals.

Drucker said these goals were to be SMART (specific, measurable, actionable, realistic and time-sensitive). They were popular then and still are today.

But results often are disappointing, even with plenty of evidence that well-designed goals do improve performance. An employee with a goal that’s clear and simple, challenging yet attainable, will perform better than one told simply to do a good job.

There’s convincing evidence that it pays to set goals more often than once a year. Companies that set quarterly goals are nearly four times as likely to be in the top quartile of performers.

On the other hand, managers who feel they’ve been handed an unattainable goal are more likely to abuse subordinates—like taking out frustration by kicking the dog.

The bottom line here seems to be striking a balance between goals that are challenging and excessive. One solution is giving employees permission to fail. Google, for example, ex­­pects its goals to be met only 60-70% of the time.

— Adapted from “The quantified serf,” Schum­­peter, The Economist.

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