Goal Setting May Improve Performance, But Does It Improve Performance Management?

By: Rachel Mendelowitz

Photo via flickr.com under Creative Commons License

When considering how to assess employee performance, your first instinct may be to assess whether or not individuals are meeting their stated goals. Wikipedia defines performance management as “activities which ensure that goals are consistently being met in an effective and efficient manner.” This has become so intuitive that we don’t think to challenge it. But what if reaching our goals no longer equates to high performance?

Consider two sales associates: John sets three goals and surpasses all three. Jane sets three goals and reaches none of them, but delivers better results than John in each case.

Who performed better? Easy, Jane did. But typically, performance management systems reward employees based on meeting goals, so you would likely conclude that John is the higher performer.

This error is easy to catch when comparing identical, quantitative types of goals. But most objectives in a knowledge economy are not so linear. Most organizations require collaboration, innovation, discretion and interdependence not captured by one number. For many of us, its unlikely that two team members would have identical goals.

Perhaps John is generating sales for a new product that requires significant relationship building in new industries. Maybe Jane is selling a well-established product to a stable of recurring customers. Now who is the higher performer? How do we balance the ambitious and the achievable when context is king?

Not only can we not determine who is a higher performer, we also have no basis for what constitutes “high performance.” And, we have yet to consider how John and Jane behave, how they impact the teams they lead and the relationships they have in the organization.

Most of us can easily recall a colleague that has incredible expertise or “makes it rain,” but whose behavior also causes pain or inefficiency for the organization. How do we measure his performance?

When we equate reaching a goal with high performance, what we’re really assessing is Jane’s ability to predict what she can achieve by a deadline. Is this really how we should measure and reward our most valuable resources?

When compensation and upward mobility depend on predicting what one can accomplish in a year, how does that impact goal setting? We have tendencies to:

◦ Set easily achievable targets

◦ Focus on short term, predictable outcomes

◦ Maximize control, perhaps to the detriment of collaboration

◦ Create linear goals that do not require innovation or creative risk taking

◦ Pursue achievement of goals, perhaps at sacrificing responsiveness to the environment, poor decision making, or even unethical behavior

Do we want to incentivize John to calibrate his behavior based on his own gain rather than organizational success? By rewarding adherence to goals, we encourage employees to effectively predict the work that they will complete. It is rare that we are also rewarding the best work or the employee’s ability to adapt to changes in the landscape.

All of that said, goals have their place. Goals give individuals a target to aim for and can be motivating. Goals can help us to achieve better outcomes; the important caveat is that goals are not the outcome. To make the point, let’s trot out a sports metaphor: athletes are assessed on outcomes (scores, speed, execution) not on how well they adhere to their training plan (weights lifted, calories consumed).

The remaining problem, then, is in defining high performance. How do we assess people when we can’t accurately predict what is expected of them?

At McChrystal Group, we have developed a model that clearly delineates between driving high performance and measuring high performance. We know we can’t accurately predict what elements of work will be critical within a year. When companies do this, they unintentionally steer the efforts of the individual rather than encouraging adaptability and relevance along the way.

To assess high performance, we ask employees how well their colleagues performed in the context of their evolving environment. What is “critical”, therefore, is defined only after the definition is apparent. The roadmap isn’t handed to them and individuals are encouraged to adapt along the way.

Each employee navigates a path that contributes most to the organization, allowing for changing conditions. Our system provides every employee the flexibility and power to do the smart thing in each situation. In this way, we measure how well individuals are calibrating to shifting priorities, not how well they adhered to a target that was outdated as soon as it was set.

Rachel Mendelowitz is an organizational psychology expert and managing partner at McChrystal Group, an elite advisory services firm where she leads the internal product development and research team. She and her team conduct original research, develop new products, and consult on performance management and leadership development solutions. She received her Master of Arts in Social-Organizational Psychology from Columbia University, with a concentration in organizational change and consultation.