Organizational Dysfunctions : Designing Goals

At The Brew, we are often posed with the ask of designing goals, especially for high growth organizations – high performance organizations, after elaborating on fundamental principles & goal setting, it’s time to give a taste of it. This post is the 3rd post in Organizational Dysfunctions:Goals & Goals Alignment series.

The precursors to this read, as mentioned above, are the Goal series & the OKR series.

The Brew’s philosophy for designing goals is laid out as below:

Tell me what you will measure, and I will show you how i will behave

Coming to goal setting & measurement, the scary truth is that above maxim holds true quite often. Human behavior, as proven beyond doubts (the hawthorne effect) tends to influence when under observation, extrapolating that further, to what extent can it be manipulated, should there be incentivizations & penalties, in other words, the carrots & sticks to govern its working, won’t need additional validation.

Of the organizations that have established practices of performance measurement, most of the times, we found them to be heavily focused on kpi’s & metrics. Essentially, leaving no room for other critical things which are equally qualified as necessary conditions to thrive within the organization.

1. Given the spread of  measures, ranging from contribution, behavioral / capabilities, to organizational embeddedness, a structure leading to balance of the lead drivers, essential to business success & organizational outcomes.
2. The metric design, which in our opinion, differentiates between incentivization (quantifiable business metrics) & nudges (behavioral & non tangible aspects), anchoring the elements, without mis-communicating   the significance of elements to weighted propositions assigned to them.
3. To enable organizations with holistic balance of critical success factors attributing to performance, effectiveness & sustainability.

Coming back to goal setting & design, let’s get started:

1. Taking inspirations from OKR, where objective determination happen both ways, from top to down & vice versa – while designing goals, atleast 60 – 65% of weightage has to be assigned to activities that move the needle directly (impact the PnL, and / or anything that enables organization to move closer to its objectives). These metrics can be across the spectrum, from efforts – results – outcomes – impact. Ideally, the unit of organizational objective should either be congruent to the unit of metrics, or the organization must have demonstrated clarity on function of metric units translation to organizational metrics (Also, see Organizational Stages & Presets for different strategies to adopt vis a vis the organizational stage).

2. While metrics are critical, and the most tangible truths, Critical Behaviors (See Organizational Dysfunctions : Critical Behaviors) come next, and more often then not are determinant of metrics determined in point a. As Albert Einstein puts it,  things which can be counted don’t always count, and things that cannot be counted often really do count. These metric is most often a 360 degree measure of colleagues, with consistent demonstrated behaviors of defined critical behaviors. In our experience, we max this criteria’s weightage to 15%. 

For Enterprises, that have Competencies framework in place, the critical behaviors can be replaced by it, with similar impact. Most importantly, it needs to be conveyed that lower weightage to the variables (also valid for point c & point d) does not mean its lower significance, rather it only reflects multidimensional variability & dependence of the measures on high spread of stakeholders – to highlight this, the metrics from point b to d, needs to have a minimal threshold for employees to be compliant with.

3. The 3rd category, that we recommend is making the organizational macros of Culture, Values & Expected behaviors count. The discrete values that embodies the organizational ethos need to find the place here – with a 360 reflection from colleagues, & maxing the weightage to 10%

4. The rest 10 % is divided between discretionary activities directly related to function & to organization each, nudging the employee to enhance organizational awareness, citizenship & advocacy.