How to set effective SMART objectives

Why are SMART objectives important?

Every organisation, whether they state them explicitly or not, has at least one objective. For some, their whole focus might be as simple as generating enough income to stay in business. Others will have loftier and more diverse ambitions. Whatever their aim is, the most successful companies will be those that channel their energies effectively into getting where they want to go.

Once an organisation has more than one employee, it’s vital that these employees are clear about the objectives of the organisation and know what they are working towards.

Objectives are how organisations make their mission and values real. They are the signposts that let everyone know that they are going in the right direction and the bonds that ensure no one is left out of that journey.

When setting development objectives, it’s important to make them personal, relevant and tailored to each employee. Think of objectives as the foundation from which you can build productivity, engagement, and loyalty. The power of this is huge: when every individual has a decent set of SMART objectives, each person has the ability to think and decide for themselves, to act in the interests of the company without relying on constant senior intervention.

Key learning

SMART objectives provide focus and direction for employees, ensuring their efforts are channelled effectively.

What are objectives?

Objectives are the stated targets of an individual or a business.

To be effective, it must be possible to gauge progress against these objectives. They should therefore be:

• Specific – related to a particular person or team, and to a concrete task.
• Measurable – include a figure to act as a benchmark by that success can be judged.
• Achievable – not be dependent on other's performance for the individual to achieve so they have full control.
• Relevant – related to the current focus of the department or business, and the external environment.
• Timed – have a timescale for when it should be achieved, such as within three months.

An example of a SMART objective:

To draft and deliver training on how to give and receive feedback for the sales team within the next six months.

Do objectives need to be SMART?

Although SMART (Specific, Measurable, Achievable, Relevant and Timed) objectives have been around since the 1980s, they still provide a useful structure and an easy-to-follow framework. The traditional view of SMART objectives is that they should be attainable or achievable. This view has been challenged in recent years by organisations such as Google, who want to encourage their employees to really push beyond the stated aims of the objective if they can. This has led to concepts such as Stretch Goals and OKRs.

While it might be demoralising or unrealistic to set employee's objectives that appear to beout of reach, including some that do pose a greater challenge could be especially motivational. If employees’ bonuses depend on their objectives, it may also be unfair to include any that they are unlikely to achieve.

An alternative that some companies use is the SMART + C method, with “C” standing for challenging. This allows a stretching target to be included alongside a more achievable one. For example, the goal may be “To improve sales of widgets by 20% in the next six months.” Added to this may be an additional line such as “If possible, see if this target can be reached in four months.” This gives an employee something else to aim for but does not make them feel like they’ve failed if they don’t attain the more challenging target.

Remember

The key to set good objectives is to choose the approach that works best within the culture of your business. Experiment to get the right balance between encouraging creativity and recognising what’s possible.

What are the different types of objectives?

There are many types of objectives that organisations use, here are the main ones.

Individual – these are like they sound, set specifically for an individual to complete.

Shared – these are objectives that are shared between a team, a department or even the whole business. They are a way of ensuring everyone is aligned with a key goal and working together to achieve it.

OKRs (Objectives and Key Results) – this methodology was developed by Intel and was adopted quickly by many of the innovative tech companies in Silicon Valley and beyond. OKRs are based on outcomes, rather than outputs and are designed to be both aspirational and highly measurable. They are intended to push employees to new levels, encouraging creative thinking and measured risk-taking. They are completely transparent, available for anyone from the CEO to the most junior employee to see, contribute to, and even comment on.

Introducing OKRs into an organisation is a bold and radical step and requires a specific type of open culture to be effective. However, the concept is an interesting one and taking elements, like being more transparent, could be a first step to consider. Read more about OKRs in Appraisd.

Cascading - these are objectives that flow down from the most senior level in an organisation to those levels below. For example, executives in an organisation may set a strategic objective, such as building a social media presence. The objective may be passed down to the heads of marketing to create a team focused on social media and those in that team will be tasked with delivering that increased presence.

The process is designed to make sure everyone in the organisation is aligned with the same goal. They do have their drawbacks though. They can feel restrictive, they rely on everyone adhering to a strict timetable and it can feel like senior managers have all the power.

V2MOMs - these were created by Salesforce CEO Marc Benioff in 1999 when he co-founded the company. They are based on the following five questions:

• Vision - what do you want to do?
• Values - what is most important about your vision?
• Methods - how will you get the job done?
• Obstacles - what challenges stand in your way?
• Measures - how will you know when you've been successful?

Objectives are created from the answers to these questions. They are set at an organisation, department and team levels and shared across the business.

Here is how Exact, a global software organisation use V2MOMs.

Personal development objectives – these are about developing individual skills that will help employees evolve and grow. Some of our clients also encourage their employees to create objectives around what they want to achieve in their personal lives, to give them an insight into what motivates them. Sometimes, employers can help employees achieve these aims and it can create a much deeper bond between the two.

Remember

All of these types of objectives have their benefits and their drawbacks. The key for any organisation is to build a framework that keeps everyone aligned but allows and encourages creativity.

Who should be involved in creating objectives?

The purpose of objectives is to help employees make progress, be that in developing new skills, increasing productivity or working better with others. It makes complete sense that they should be involved in creating them. Companies spend huge amounts of time on effort on hiring the best talent, it is an enormous waste not to encourage them to share their ideas.

“It doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” <div class="author">Steve Jobs, former Chairman, CEO and co-founder of Apple Inc.</div>

If employees are actively involved in creating their objectives, and understand them and how they contribute to the overall success of the company, they are much more likely to be motivated to achieve them.

Setting development objectives cannot be done in a vacuum. To be effective they must take into consideration the following things:

• The overall aim of the business. What are the key things that the organisation wants to achieve?
• The aims of the department or division. What is it that your section of the business needs to achieve to contribute to the overall objectives of the organisation?
• The values and culture of the organisation. Consider the management style, hierarchy structure, and ways of working within the business. If your organisation is traditional in structure and outlook, it will be very difficult to try and introduce OKRs.
• The ideas and ambitions of the individual. What do they want to achieve in their role and their career? What will keep them motivated, focused and engaged with the organisation?

Effective objectives are a vital part of people management. Get them right and they aid employee retention, engagement, and progression. Enabling employees to have input in their objective setting empowers them to take control of the workload and their development.

Remember

Employees need to understand and be invested in their objectives. To be effective they should be discussed and agreed upon in a collaborative way.

How often should you create objectives?

For many years, organisations just set annual objectives, fitting in with the planning schedule and feeding into annual salary reviews and bonuses. This has begun to change to fit in with the needs of the fast-moving, modern work environment and, most recently, reacting to the challenges posed by the Covid-19 pandemic.

Our own survey on check-ins highlighted that one-third of employees still have annual appraisals and create objectives once a year. There is nothing wrong with creating long-term objectives. It helps employees to focus on the future and work towards their ambitions.

However, we emphatically believe that objectives need to be reviewed on a regular basis to check that they are still relevant. So much can change in a short space of time, failing to react can mean employee's efforts are going to waste.

Since effective objectives are the primary mechanism in implementing a business strategy, it makes sense to coordinate objective setting with business planning. When deciding what is a good time frame for your objectives, think about when planning happens in your organisation and how the two can work together.

Also, consider having different time frames for different objectives. Depending on the nature of each one, it might be worth considering creating some short-term (two to three months) and some long-term objectives (six to twelve months). It is also worth considering the needs of different departments. Many of our clients have different review cycles for different areas of the business, which take into consideration their needs and the way they work.

Our Customer Success team are expert in setting up Appraisd to support different review cycles for different teams within an organisation.

Remember

How often objectives are set should reflect the speed of change within an organisation, their sector and the economy as a whole. This can change as conditions alter. It also can vary by division or department depending on their needs.

Setting objectives in turbulent times

Often, organisations will tell us they can’t set objectives because such and such a change is happening or about to happen, or the strategy is up in the air right now etc. In our view, almost any objective is better than having none. So set an objective, even if it just covers the following month. Get into the habit. If you can’t work out any realistic outcomes, set priorities instead. Run experiments. Set a hypothesis you can test afterwards, for example, “If we spend more on trade advertising, we will see an uptick in leads to the tune of 10%”. This will get you started – the following month you can set more calculated and realistic objectives.

How many objectives should you set?

Finding the right number of objectives to create is not an exact science. Setting your employees too many objectives is likely to be counter-productive, as they will find it difficult to focus and be unsure which is most important for them to achieve. Setting your employees too few objectives may mean they easily achieve them and are left with nothing further to motivate them.

When collaborating with your employees on their objectives think about what you are asking them to work towards. Discuss with them how much time is likely to be devoted to achieving each one and come to an agreement on what seems feasible. If everyone is agreed at the outset, then it is more likely that the objectives will be successful.

From our experience between three and eight objectives is about the right level, but every situation is different so it’s important to have an inclusive discussion at the outset.

If you are creating OKRs, it is advised that no more than five should be set. Again, this is not a hard and fast rule and on occasions, it might be appropriate to set more.

Remember

If you do find the number of objectives set unrealistic, don’t be afraid to make changes. It’s important to review objectives regularly to ensure employees are working towards something that is relevant and engaging. Find the balance to ensure they are fully but not over-stretched.

Appraisd’s top tips

• Involve your employees in creating their objectives – having an input, will make them far more connected to them and fuel their desire to achieve them. In Appraisd, employees enter their objectives themselves which can then be reviewed, amended and agreed upon by their manager.
• Consider the overall aims and objectives of the business – the most effective goals are the ones that clearly link to the success of the organisation.
• Make objectives specific, measurable, relevant, and timely. Think about each one and consider whether you should make it achievable or more challenging to push employees to be innovative and tackle things in a different way to usual.
• Set up regular check-ins to review objectives, track progress and ensure they remain relevant and appropriate. Use these conversations to adapt or ditch them if circumstances have changed. Be prepared to be flexible.
• Ensure everyone in the organisation knows what an effective objective should contain. Share the best examples.
• Keep an eye on objectives that become overdue – if they’re complete, close them down, if not, ask yourself why. Does the due date need updating or is the objective made more achievable? Don’t let employees end up with too many out of date objectives, it becomes confusing and will distract them from what they should be focusing on.
• It’s better to have a few short term objectives than nothing at all.
• Provide training for your line managers so they are comfortable with the process and with using Appraisd.
• Talk to us – our Customer Success team is always ready to help and offer advice on the best approach.

Book a 45min personalised demo and watch how Appraisd can help achieve your business goals.