How SMART are You at Goal Setting?
Different theorists vary the terms slightly and the most popular alternative is "Agreed upon". In either case, what needs to be considered is that, whether for employees or customers, targets are a two-way street. They can't simply be imposed – you need buy-in for them to be effective.
Many volumes have been written about goal setting. Fortunately, in 1999, Dr Timothy McCarthy reviewed them all and produced a short article for CEOs summarising the approaches. He cites five key points:
Joint goal setting between supervisors/managers and their teams or individual staff is far more effective than a goal imposed from above. Employees are far more likely to be engaged if you discuss their targets and how to achieve them beforehand, using a more inclusive approach to create a more effective programme.
Customer loyalty programmes are generally set up from the top-down, so need to be flexible and adaptive to customer needs to be successful in the long-term. Having an expansive reward collection that tailors to all is a great way to get started.
The parameters for performance need to be crystal clear; for sales incentives these should be achievable with the rules spelt out as to what is and isn't included. For non-sales staff, thought needs to be given to exactly what measurements can be used (e.g. number of calls handled, calls lost, paperwork processing time, debt reduction, etc.) There is little more disengaging than going the extra mile only to find out you've been travelling in the wrong direction!
Without regular feedback on performance at all levels, you could be denying people the opportunity to modify their performance to improve; and those who are doing well could easily be turned off by lack of recognition and reward. As part of the setting up of a programme you need to consider how you will be able to measure and report performance in a frequent and timely manner, and how you can combine this data with feedback to improve your programme for your participants. Remember, success is a two-way street!
Of course goals need to be stretching – you'll need the return on investment to fund the programme. In terms of sales incentives, people (particularly in the sales arena) respond well to a challenge and stretching their target can be a good way of keeping them engaged, particularly if the reward is worthwhile. However, across loyalty and incentives, it may be worth introducing lower level rewards to keep them motivated while they work their way up to bigger targets. referring back to the Golden rule of "Participation", setting challenging goals needs to be agreed with the participants.
Finally, people need to be personally committed to their goals, which need to be relevant to their individual situation. If they don't feel they can affect the outcome, as can be the case in large companies where a bonus is based on overall performance, employees are likely to be less engaged and therefore less committed to their goal. The same goes for customer loyalty, any target you set, challenging or not, needs to be achievable to the participant for your programme to be effective.
To conclude, these five points offer a succinct summary of the main thinking on successful goal setting. So once you've decided what it is that you want from an incentive and what success will look like, you need to talk to your teams about how to achieve it.