January 9, 2019
How to Set Corporate Goals and Objectives
Setting corporate goals and objectives has always been essential to workplace success, but only recently have executives began to see the power behind corporate goal setting frameworks like OKRs. Here, we’ll discuss why they’re so critical to driving performance, as well as how you can begin setting them in your own company.
Corporate goals and objectives supports alignment.
When you strategically set corporate goals using a system like OKRs, you can achieve corporate alignment. And, there’s a direct correlation between effective goal setting and alignment and financial performance. Companies that have goals aligned tend to outperform organizations that lack a direct connection between top company priorities and employees’ individual goals.
When you create alignment, employees have a direct line of sight as to how their efforts impact organizational success.
Company goals helps you execute your business strategy.
One of the most common reasons organizations fail to achieve their goals is that there’s a disconnect between the CEO’s priorities and the employees’ goals. When you set top company goals and cascade them from the bottom down (as well as aligning them upwards), you guarantee that all employees’ goals are directly supporting the most important priorities to the company right now. As a result, every single contributor is supporting the execution of your business strategy.
Moreover, cascaded and aligned OKR goals allow all teams to see each other’s goals. This prevents redundant efforts from taking place and gives managers a clear understanding of exactly what their direct reports are responsible for, so they can track progress and coach their people to keep them laser-focused.
Goal setting improves employee retention.
Another benefit of corporate goal setting is an uptick in employee retention. Gallup research indicates that companies with a dissatisfied workforce unsurprisingly have a 51% higher rate of turnover than others, along with lower productivity rates and more employee absences. Because OKR goal setting can drive employee satisfaction by giving teams a way to see how their contributions support company progress, corporate goal setting is one of the most powerful tools you can use to retain your top talent.
Clearly, setting corporate goals and objectives has its advantages. So, if you aren’t already using a system like OKR goal setting to create your company goals, how do you begin? Let’s take a look.
7 steps to set corporate goals and objectives.
Step 1: Get executive input
If you’re a CEO, it’s mostly up to you to determine your most important company-level goals. Some organizations use a SWOT analysis to identify Strengths, Weaknesses, Opportunities, and Threats, then develop goals based on how to use each to their advantage. You can also ask fellow executives to weigh in.
If you’re unsure of where to start, consider identifying where you’d like to be in five years. Then, take that information to the next step to figure out where you’d like to be within one year.
Step 2: Choose corporate goals and objectives for 1 year
Even though you have a vision of where you’d like your company to go within the next five years, company goals should never extend further than one year. Otherwise, you’re looking at long-term strategies, not goals. Strategizing for the long haul can be beneficial, but without the ability to focus on broken down, measurable goals, you won’t be able to laser-focus on what’s most important right now.
To set yearly goals, identify what you have to do within the next year to support your five-year vision. For instance, if you hope to have 500,000 users within 5 years, your goal for your first year might be to focus on growing your global business. Another goal might be to launch a new product successfully.
Step 3: Break it down by quarter
Once you’ve developed your goals for the year, break them down by identifying what you need to accomplish for each quarter. Set specific dates for your Key Results. Recall that the Objective is the thing to be accomplished, and the Key Result is the set of 1-3 KPIs to measure the achievement of the Objective. It can be either a qualitative milestone or a quantified metric. Feel free to look here for more specific instructions on how to use OKRs.
Step 4: Make goals SMART
In addition to making goals Time-bound, you should also verify that they satisfy the other components of SMART criteria: Specific, Measureable, Aligned, Relevant and Time-bound. By using these five guidelines to create your goals, you’ll ensure clarity and make it easier to track progress when it comes time for follow-through.
Step 5: Set no more than 3-5 OKRs
At any given time, you should have no more than 3-5 OKRs per quarter. Having more than that will make it too difficult to focus on goals. Remember, these are your most important priorities. Even high-performing organizations like Google use caps on OKRs to allow their teams to laser focus on the most critical current company Objectives – read more about why here.
Step 6: Use examples
The corporate goals and objectives you decide to set on your company will depend on a few key factors, including your current opportunities and threats as discussed in the first point. Thus, no two organizations will have the exact same goals. However, it can still be helpful to look at other companies’ corporate goals for guidance. To make sure you’re on the right track, take a look at our list of OKR examples. For your convenience, we’ve also included OKRs for every department, making it even easier to see how goals can be cascaded down and aligned up, which brings us to our next point.
Step 7: Cascade down & align up
After setting 3-5 SMART company goals for the quarter, you can then begin cascading them down through departments or units. These will then be broken down further among teams and individuals. Keep in mind that individuals should also be setting some of their own OKRs, creating a system by which goals are both cascaded down and contributed up. The end result is an aligned network of goals that gives all employees a direct line of sight into how their contributions are driving progress on company priorities.