Learning Objectives

Building A Culture of Goal SettingPresented by: Chris Bergeron - Director, Consulting Services, Salary.comJuly 23, 2010

Learning Objectives • Defining the goal setting process and how it fits with other processes and programs • Reviewing tactics for making goal setting relevant, consistent and impactful • Discussing how to get started

Agenda “Organizational” (Executive Team) • Start with the Strategic Plan • Define Structure and Process • Get Beyond Finance Measures • Highlight the Manager/Employee Conversation • Questions “Individual” (Manager/Employee) Q/A

Annual Planning Meeting

Start with the Strategic Plan • Define Overall Goal Setting Program Objectives and Guiding Principles • Help Facilitate the Annual Planning Meeting • Set the Timeline for Goal Setting and Related Processes • Work with the Executive Team to Create a Goal Setting Framework that is Broad and Diverse

Define Guiding Principles - Example • An integrated approach should be provided for goal setting, development planning, mid-year and end-of-year reviews with separate, weighted performance criteria for goals and competencies. Drive performance thru the integration of “What” and “How” Single Combined Process • The process should emphasize both “results” as well as “contributing” goals. HR should be a facilitator and enabler for helping to build organizational capability, maintaining standards and managing this process. Enhance strategic alignment and planning Expanded Goal Setting Capabilities • Executive and manager focused training for engaging in a goal setting as well as development planning and review discussions needs to be provided. Supporting tools and techniques for guiding collaborative goal setting and management should also be made available. Require dialogue to reinforce individual alignment and development Collaborative Coaching Conversations • The organization should have a consistent approach to incentive pay where the assessment of goals drives the bonus, and the assessment of competencies drives base pay increases. Consider both business results and impact on areas of direct control Simple, Clear Guidelines for Compensation

Get Involved and Set the Timeline - Example Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Goal Setting Process Strategic Planning for New Year Year End Results Performance Management Process Goal Cascade Revisit Goal Performance and Development Planning Mid- Year Review and Discussion Year End Reviews (Goals and Competencies) Succession Process Succession Meetings Compensation Merit and Bonus Determinations Payouts and Salary Actions

Define a Framework that Fits Your Objectives • Financial • Revenue • Cost • Return/Margin • Operational • Quality • Timeliness • Agility • Customer • Satisfaction • Referencability • Retention • People • Engagement • Alignment • Competency Planning----Execution----Improvement Adapted from The Balanced Scorecard and related works by David Norton and Robert Kaplan

Agenda “Organizational” (Executive Team) • Start with the Strategic Plan • Define Structure and Process • Get Beyond Finance Measures • Highlight the Manager/Employee Conversation • Questions “Individual” (Manager/Employee)

Define Structure and Process • Define goal setting terms • Set process guidelines • Determine rewards and consequences

Attributes of a Goal • Owner • Category • Linked Goal • Statement, Description and Activities • Target • Weight

Attributes of a Goal (Cont.) • Owner – Individual to be reviewed on the goal • Category – Goal alignment to strategy • Linked Goal – Impacted higher level goal • Statement, Description and Activities – Detail of what will be done and what the result or outcome will look like • Target – Measurement and target or target date • Weight – Weight for the goal on their performance review of the owner

Goals Are NOT Activities or Job Responsibilities • Goals should be defined at a level above the isolated activity or job responsibilities (for example, “taking a training class” or “completing monthly reporting on time” do not constitute a goal). • Goals are intended to produce positive change Managers are responsible to test that each goal goes beyond job responsibilities and truly constitutes an effort to creating an improvement or produce a positive change.

Set Process Guidelines:Goal Numbers, Linking and Weighting Examples • Managers and employees should focus on the “critical few” goals that are most important in contributing to the desired results and outcomes • As general guidance, goal plans should include from 3 to 7 individual goals for the year • Individual goals should be linked to higher level goals • Managers should be the ultimate decision makers regarding the number, linking and weighting of goals for their organization and director reports Q/A

What Type of Goal Setting Process Approximately 75 webinar participants, May 2010.

Set Guidelines for Cascading a Goal: Marketing Examples

Linking Goals to Compensation and Development Evaluation Process Compensation and Development Base Pay Adjustments PERFORMANCE “WHAT” (Achievement of KPI and Objectives during the period) Ratings (and Comments) Short Term Incentives Long Term Incentives Employee Ranking (for succession purposes, not to be communicated) Overall Rating COMPETENCY “HOW” (Demonstration of Knowledge, Skill and Ability consistent with high performance) Ratings (and Comments) Training & Development

A Balanced Approach to Goal Setting • Communicate that both results and contributing goals are expected • Provide coaching and training for managers • Highlight the best plans as examples Adapted from The Balanced Scorecard and related works by David Norton and Robert Kaplan and Path-Goal Theory by Robert House.

Results and Contributing Measures

Measurement Approaches • Quality • Error rate • Customer/client feedback/satisfaction – interviews, surveys, etc. • Employee satisfaction • Conformance to requirements or specifications • Compliments or complaints • Brand/product recognition • Quantity • Usually expressed as the amount of work completed within a time period such as units per day, calls per hour or shipments per quarter • Skills level/acquisition • Expenditures • Sales achieved • Services provided • New products introduced • New customers acquired • Sales activity • Market share • Margins • Cost • Budgetary guidelines met or exceeded • Overtime costs incurred • Dollars spent or saved • Cost of good/material • Timeliness • Schedules met • Deadlines met • Specific timeframes met • Efficiency • Reduction in cycle time • Elimination of waste • Elimination of unnecessary steps

The Manager/Employee Conversation • Clearly define roles and responsibilities • Build the process around the goal setting conversation • Emphasize ownership and (authorship)

Define Roles and Responsibilities People Manager Employee • Present and discusses organizational goal • Work with direct reports to define relevant goals for the coming year, related to the organizational goals • Document goal progress observed throughout the year and provide timely feedback • Coordinates mid-year review discussion • Completes mid-year review • Adjusts objectives as necessary for the reminder of the year • Coordinate end-of-year review discussion • Complete end-of-year review • Coach and re-directs behavior as required for the coming year “Set direction for goal setting, and define areas of emphasis” “Define specific goals, activities and tasks” • Meet with manager to discuss individual goals for the coming year • Help develop appropriate supporting goals and activities • Coordinate mid-year review discussion with manager • Complete mid-year self assessment • Meet with manager for mid-year follow-up discussion • Coordinate end-of-year review discussions with manager • Complete end-of-year self assessment • Meet with manager for end of year review Goal Setting Mid-Year End-of-Year

Collaboration Discussion Manager’s Agenda for Goal Setting Discussion: • Review organizational strategy • Review higher level goals • Propose or review (if completed by the employee) individual goals for the employee • Confirm alignment to higher level goals • Propose or review (if completed by the employee) weighting • Reinforce that goal achievement should be consistent with the Values and Behaviors of the organization (e.g. defining both the “what” and the “how”) • Confirm times for periodic review of progress Q/A

Standards of Goal Quality, Going Beyond the “Critical Few” Optimum number - Focus on the critical few factors that enable realistic prediction of performance. Balances contributions and results - Balance measures for predicting the future and analyzing past actions. Balanced level of precision - Value generated is precise enough to define information that can lead to productive actions. Ease - Easy to measure in terms of effort and simplicity. Right level of accuracy - Provides reliable, valid data for tracking business performance and making decisions. Consistency - Provides consistent data that can be interpreted for each measurement. Cost effectiveness - Is not too costly to gather and analyze, and aligned with business requirements. Right frequency - Balance timing for data collection that provides meaningful information in a timely manner.

Do You Use Quality Standards Today? Approximately 75 webinar participants, May 2010.

What Would be Useful in the Future? Approximately 75 webinar participants, May 2010.

SMART Goals SMART Goals are… • Specific – the goal includes exactly what you will do • Measurable – the goal can be measured, for example number of errors or rejects or percentage of cost savings • Attainable – the goal can be accomplished; it is not too difficult • Relevant – the goal supports the overall objectives of the department and division • Time-bound – the goal includes a specific period of time for completion Q

Implementation Change Phases for Goal Setting

Thank You for Joining Today Chris Bergeron Director, Consulting Services Salary.com (781) 851-8302 (904) 994-9072 cbergeron@salary.com

Learning Objectives