Each January is a symbol for new beginnings, new strategies and setting up new yearly company goals.
Every company has a list of initiatives it could pursue: niche markets to enter, products to develop, partnerships to chase… and on and on and on.
Many of those goals might seem deeply important, each provides possibility to runaway success. But realistically, the company should focus only on few of these goals at a time.
For the ambitious CEO and leader, this feels like being at a mouthwatering buffet with a tiny saucer for a plate. Choosing yearly company goals to tackle and then fully committing to them. Sometimes is painful. So a lot of us end up pushing away the assignment, or we do it half-heartedly.
But, if leaders are not going to set clear priorities for the business, performance is going to suffer. Daily tasks will be driven by competing agendas, not by shared vision and purpose.
Instead of repeating SMART, I want to share a fresh set of five criteria for setting up your yearly company goals:
1. They’re set on a quarterly cadence
Annual goal-setting is valuable for any corporation in America. But everyone knows that the world is changing faster than ever. So yearly company goals become a lot more powerful when you re-prioritize every quarter.
Some businesses have some sort of seasonality, which means each quarter should be reviewed individually. How much revenue do you need to earn in the next 90 days to achieve the annual goal, for example?
Companies that set annual goals get a chance to regularly celebrate progress on the goals they hit, debrief on the goals they missed and adjust their plan as circumstances change.
2. They’re true priorities, not just something to do
There are two very tough moments in the process of yearly company goals setting.
The first is simply getting started. To begin making a focused goal list out of all the possibilities, think through the four key areas of a business (products/services, resources, process and markets). Require ideas from the leadership team and other employees, look at what competitors are up to and review your own previous company goals.
The second tough moment, is narrowing down all your ideas and making sure these are the true priorities of the business. Sometimes, it means saying “no” to some great-sounding ideas.
Maybe you’re dying to reach out to a new customer segment, but you know deep down you need to work on usability issues with your core segment first. It’s tempting to set both goals. Don’t.
Yearly company goals setting isn’t about just having goals for the sake of having them.
Isn’t about just having goals for the sake of having them. You have to think with clarity about which company goals are the real priorities, and keep the number manageable. I’ve found that 4–7 is a good range to aim for with only a couple at most being major new initiatives.
3. They’re part of a good mix
We can divide yearly company goals into two categories: (a) initiative goals, or new things to do or try, and (b) sustaining goals, or major operations to maintain or improve.
In any given quarter, consider setting just one or maximum two initiative goals (“Successfully launch iOS app,” “Expand American presence,” or “Close $1.5M in the next round of funding”). It’s usually way more difficult to handle more.
The remaining goals will likely be sustaining goals — “Raise employee engagement levels,” “Improve Sales Score,” “Earn $5M in revenue”. The ongoing operational company objectives that will drive your success. Make sure you have at least one sustaining goal tied to financials, and consider one around employee development and growth.
4. They’re feasible
It’s great to set goals that will push you and your team out if its comfort zone.
It’s not so great to set goals you know you’re unlikely to achieve. As Daniel Markovitz argues in Harvard Business Review, so-called stretch goals can demotivate employees and increase the possibility of unethical behavior and excessive risk-taking.
It’s very hard to run a company in which it’s “okay” to miss goals because they’re acknowledged to be a stretch. At the quarter-to-quarter level, you want predictable performance, and to know that goals are likely to be complete. Big, hairy, and audacious is good for goals on a 10-to-30-year timescale, but not for most quarterly goals.
Set goals that will inspire the whole team to stretch, but not past its breaking point.
5. They’re paired with the right analysis
At the end of the quarter, it should be crystal-clear whether you met the goal. Make sure this is the case by combining your goal with well-chosen measurements.
For a revenue goal, the measurement is simple: revenue earned or not earned.
When you outline company priorities following these guidelines, there’s a collective sigh of relief from employees: We all know what we’re supposed to be doing.