When SMART goals are dumb

Many organizations have adopted a pattern of regular goal-setting for employees, with a focus on SMART goals: those that are Specific, Measurable, Attainable, Realistic, and Timebound.  Though the acronym is memorable and intended to drive greater fairness in evaluations of performance against goals, it is a prime example of the desire for a streamlined and consistent process leading to perverse consequences and interfering with optimal outcomes.  The greatest problem is what is not on the list: Importance/value to the institution.  If managers want employees’ individual goals to roll up to the organizations’, it is imperative that value be included in every goal.  This also promotes discussions about corporate strategy, improving employee engagement, and allowing them to better prioritize among competing tasks.

The second problem with SMART goals is measurability.  While certain tasks can and should be measured, by making measurability an expectation of all goals, management communicates a focus on the goals that are easily articulated and tracked, and downplays others that may be at least as important.  Employees who internalize this focus will make their own decisions about how to work in the same way.  Albert Einstein’s office famously had a sign stating “Not everything that can be counted counts, and not everything that counts can be counted.”  Consider the two areas of mentorship and continuing education: senior leaders in many organizations are expected to spend some portion of their time identifying talented employees, developing their skills, and forming relationships with them.  Meaningful relationships within an organization can improve trust, employee satisfaction, and cross-functional collaboration, but there is no way to concretely measure the quality of those relationships.  Formal mentorship programs can encourage such relationship-building, but cannot make the depth of those relationships measurable.  If leaders are required to meet with those they mentor, they are likely to do so, but it is a rare organization that actively rewards those who invest significant additional time or energy into those activities beyond those who view it as simply one more set of meetings.  Firms are made up of people, and some element of subjectivity will always be present in comparing activities to goals.  Being honest about that subjectivity and discussing it openly is far more productive than pretending that there exist objective, knowable metrics for an employee’s total contribution to an organization.

If a company is too uncomfortable with discussing subjectivity, my preferred solution to the specific challenge of rewarding relationship development is to make voluntary attrition from a team a core detractor from leaders’ performance evaluations/bonuses, with the possible additional element of considering whether or not departing employees left their role for another one within the enterprise.  Some organizations have made leaders dependent on the feedback from his/her mentees, but this introduces a risk that mentees will lie about the quality of the relationship or their satisfaction to curry favor with their mentors.  Even the anonymous surveys that are popular tools for gauging team morale, are not a full solution to this risk- if there are fewer than 7 respondents or outliers in responses, a leader may well be able to assign particular results to particular team members.

An additional weakness of the “SMART” test is that its attributes are redundant: unattainable goals are definitionally not realistic, and sufficiently specific goals will inherently have a time limit on them for future review.  Redundancy may not seem like a major problem- if employees are completing a form they can put the same information in both places, or segment it at their discretion, but it can lead to frustration with the goal-setting process and a lack of faith in management/HR’s ability to articulate clear distinctions, particularly for employees working in collaborative roles that have elements of success beyond their control.  By attempting to take the subjectivity out of reviews, SMART goals make the annual or semi-annual performance review more a matter of how accurately the employee predicted the events of the year than a discussion of the value that s/he brought to the organization.  This is efficient for managers and HR professionals at review time: it is a lot easier for them to identify whether an employee’s written goals are SMART, than it is to identify whether or not they are the right goals for that employee’s development and for the organization.  But this simplification reduces the volume of meaningful conversations and engagement within a team, and can create distance between the individual workers and the organization’s goals.  A better approach is to make sure that your goals are FAIR:

  • Flexible: acknowledging that priorities may change in the course of the year, and preparing for that contingency so that employees are not penalized for changes made by senior management,
  • Ambitious: for the employee, requiring genuine growth/improvement,
  • Individual: to the employee and his/her role- employees are less likely to accept goals that they feel are dependent on the performance of others, and
  • Relevant: to the organization’s goals and strategy.

Because SMART goals may not always be smart, but FAIR goals are fair.

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