Tuesday, December 1, 2009

Goal Setting and Alignment

We're reviewing this last year's goals. We'll look back at the achievement of such. We'll then set goals for next year. A yearly routine in the life of any corporation. But how can we do it in a way that makes sense?

We've got one obstacle: given the nature of the business cycle, the results of the first half of next year are already determined. Any changes or improvements we want to make now will not be reflected in the business results until mid-year. It will take us some time to form a research group, set a plan and get it implemented. Then the changes have to be reflected in the market and go through a whole cash cycle. Mid-year, if we start today.

However, we'll push ahead with the routine review. I wanted to have us determine if what we're doing at the individual and department level is really rolling up to the corporate results. I wanted us to look at this year's goals within a framework that would point out if we're working on the "right" things.

We're going to summarize the year on a matrix. Across the top: Achieved success; Didn't achieve success.

I started out with the other elements of the matrix, that define the quadrant, as Important and Not Important. Importance was determined by fulfilling the mission and core purpose of the organization. This will point out if we're working on the right things.

However, when I looked at the request to determine importance from the staff's perspective, I realized they would determine every one of their goals as important. Because their goals were aligned to the corporate goals, their goals had to be fulfilling the mission and core purpose...unless we did a bad job of selecting corporate goals. Did our corporate goals not fulfill the mission and core purpose? From their perspective, we'd have to say they do work towards achieving the mission and core purpose. Therefore, their departmental goals, if they are aligned, are important. Similar thinking when it gets down to individual goals.

Alright, so let's try a different framework. Using "mission critical" has the same logic.

Our goals were set up around the framework: doing the right things for ourselves; doing the right things for our customers. In the first, we had safety and financial goals (profits, cost reductions, inventory turns, etc.). In the second, we had quality and delivery goals.

If we plot our goal achievement on this kind of matrix, what will it tell us? We will be able to determine if we're focusing more resources to achieve success on the goals that are inwardly focused more than outwardly focused. We'll know if we care more about our success or our customer's success. (Our mantra is that we know we will be successful if we help our customers become successful.)

We'll also know if the alignment is appropriate. If the corporate goals that are achieved are more for ourselves, but the department's achievement is more externally focused, we'll know that the linkage between the department goals and the corporate goals is weak. In perfect alignment, the ratio of internal to external success should be the same for corporation as it is for the departments.

I'll let you know how the review goes.

As for the business cycle obstacle, we often set targets for the first half of the year, which are often continuations of the trends we see in the last half of this year. The second half targets are what we think we'll achieve with some additional changes that we initiate as a result of our review and thinking through what we need to do differently. This is realistic.

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