In NAW’s Optimizing Human Capital Development: A Distributor’s Guide to Building a Sustainable Competitive Advantage Through Talent Strategy, my coauthors and I talked about how goal setting is directly linked to profit, performance and productivity. When goals are well set, they can

  • provide guidance and direction
  • facilitate planning
  • motivate and inspire employees
  • assist with performance evaluation and management.

Setting goals should be an interactive process involving open discussion, authentic collaboration and consensus-making among different levels of management and frontline employees. Doing so will ensure that your goals are realistic and relevant and that your employees feel valued and respected, thus increasing their commitment to the goals.

While goal setting is a powerful way to increase organizational effectiveness and drive employee performance, it is not easy in practice. Distribution managers sometimes underestimate the difficulty involved in setting effective goals and are attracted to the benefits without recognizing the challenges. For example, many distributors cascade goals, a good idea in concept, but can be problematic in practice. This is because cascading goals downward from senior management to the individual employee level requires supervisors and managers to have both a solid understanding of the organizational goals and the ability to clearly articulate the goals and individual job expectations to their employees.

Research tells us that pre-set goals do not necessarily drive desired organizational performance. Only when set smartly, in alignment with the organizational strategy, will goals be truly impactful for your organization and your employees. We encourage distributors to follow the S.M.A.R.T. principle in order to set meaningful goals with their employees.

SMART is an acronym for Specific, Measurable, Achievable, Relevant and Time-bound, representing five characteristics of well-defined goals. They can be used as criteria for your benchmarking purposes.

  • Specific. What do you want to accomplish? Think about this as a mission statement for your goal by answering the “W” questions — Who, What, Where and Why. Research shows that the more specific the goal, the higher the performance. For example, telling your employees to “do your best” or “provide the best customer service” will not help boost their performance because these goals are vague with no point of reference.
  • Measurable. What metrics are you going to use to determine if your goals are met? As a popular saying goes, “What gets measured gets done.” Without specific measures, it would be difficult for both distribution managers and their employees to evaluate progress and the degree to which their goals are achieved. Measures should be well-thought-out and linked to well-accepted corporate metrics like ROI or profitability. Also, set some milestones by considering specific tasks to accomplish at different stages.
  • Achievable. Is the goal set in a way that it is attainable yet still stretchy and challenging? Research shows that difficult goals, as long as they are within reach, draw out employee potential and boost performance. On the other hand, unreasonable or unrealistic goals discourage rather than inspire motivation. So to ensure goal attainment, think about how to accomplish a goal and what skills/tools are needed.
  • Relevant. How is the goal aligned with the overall business/division objectives and individual employees’ job responsibilities, values and needs? The relevance of a goal directly affects the degree to which your employees accept and commit themselves to the goal. Even if the goal is specific and attainable, your employees may still reject it for a number of reasons. For example, they feel the work is meaningless, the goal is not aligned with their personal values or the goal is not tied to company success.
  • Time bound. When should the goal be completed? Is the goal short-term or long-term focused? Is the time frame realistic for achieving the goal? How do you determine the time period? Without a specific and realistic time bound, chances are that you are not going to succeed; therefore, providing the goal deadline for deliverables is imperative. For example, if the goal will take six months to complete, it will be helpful to set two to three milestones through the process. Doing so also helps create a sense of urgency.

The bottom line: the smarter your goals, the more impactful they will be. So be intentional with your goals and engage your employees in setting goals.

George Pattee, Chairman of the Board at Parksite Inc., said:

“This is the best book I’ve ever read on human capital strategy, and it’s customized to the distribution industry! Love the process map and explanation as well as the specificity of the action plans. All people managers, the HR staff and senior executives need to read this book.”