Code Brain | Before Setting Goals, First Understand What a Goal Is

The very purpose of goals is to serve three core functions: motivation, tracking, and evaluation. That's why we invest our time, energy, and money in them. The only valid criterion for a goal is this: the person working toward it must have set it voluntarily for themselves. A goal must express values you personally care about — only then can it work. It doesn't need to be "SMART," doesn't need to be "big and hairy," doesn't need to include KPIs, and doesn't need to follow the OKR framework.

01

Over the years, we've given this type of organizational goal many different names. It started with MBO (Management by Objectives), a term popularized by Peter Drucker's 1954 book The Practice of Management. Then came "SMART goals" — specific, measurable, actionable, realistic, time-bound — followed by KPIs (Key Performance Indicators) and BHAGs (Big Hairy Audacious Goals, coined by Jim Collins). The latest label is OKR (Objectives and Key Results), originating at Intel and now widely adopted across Silicon Valley to define goals, track progress, and measure against "key results." Across all these methodologies, goal-setting consumes enormous amounts of time and money. Consider two concrete examples: Deloitte, the consulting firm, reportedly spends an estimated $450 million annually on goal-setting, tracking, and evaluation; Accenture, another consultancy with over 500,000 employees, spends roughly twice that amount. When companies invest nearly a billion dollars a year on something, there must be substantial returns.

What exactly are those returns?

Of course, every company is different with its own agenda, but there are three most common reasons organizations set goals: first, to align everyone in the same direction and enhance or regulate employee performance; second, to track "percentage completion" of goals, yielding valuable data on team or company progress for the year; third, to achieve goals so the company can evaluate team members' performance at year-end. Companies invest in goals because goals themselves serve these three core functions — motivation, tracking, and evaluation. That's why we spend our time, energy, and money on them.

And here's where the problems begin.

From the perspective of goals as motivators for improving performance, senior leaders worry that employees are pulling the company in different directions, like a rudderless ship tossed on stormy seas. With goals at every level, this anxiety is alleviated — leaders can believe that everyone on board is rowing in the same direction.

Of course, if the goals aren't directed toward higher-level action — if the ship has no destination — alignment has little value. There is no research showing that goals set by senior management can motivate you to become more productive. On the contrary, evidence suggests that cascading hierarchies of goals actually backfire on employee performance. Goals slow the ship down.

The same holds for sales quotas. Leaders set sales targets to provide motivation and improve salesperson performance. Yet sales quotas don't actually serve this purpose. Top performers often hit their annual sales targets months before year-end, then start procrastinating on closing deals, "banking" transactions to get a head start on the next year — much like taxi drivers who go home after hitting their daily fare target. In other words, sales goals actually reduce the performance of top salespeople. Here, sales targets function like the daily quotas for New York taxi drivers: they become a performance ceiling, not a catalyst for better performance.

What about average performers struggling to meet their quotas? Can goals motivate them to try harder? Not necessarily. In reality, sales quotas increase pressure on mid-level performers. This isn't the self-generated pressure we feel when pursuing something important (like the pressure that gets a marathon-running friend out of bed on Sunday morning). It's pressure imposed by company-mandated targets, and that coercion breeds fear. In the worst cases, employees driven by fear keep striving yet still fail, eventually resorting to unethical or even illegal means to hit their targets.

Wells Fargo's cross-selling goals for its branches worked exactly this way. The bank required personal bankers to pitch savings accounts, credit cards, checking accounts, and loans to every customer who opened a checking account. These goals didn't produce more cross-selling; instead, they led to the creation of over 3.5 million fake accounts. This doesn't mean sales targets are useless. Sales goals can be excellent forecasting tools. Senior leaders can use sales figures to estimate revenue for specific periods, report to boards and investment communities, set expectations, and evaluate costs, investments, and cash flow accordingly. Skilled executives are good guessers — they have intuition born of deep experience that lets them estimate reasonable sales targets, the "sweet spot" for overall salesforce performance. Some salespeople will exceed this by 10%, others will fall short by 10%, and year-end totals will roughly hit the target.

But such sales targets don't drive sales growth; they only predict sales outcomes. Sales goals are designed to forecast performance, not improve it.

So can goals help companies track relevant performance? Hardly. Many companies require employees to write annual goals and use software to track progress. Teresa Amabile and Steven Kramer, in their book The Progress Principle, note that humans love tracking progress and derive joy from every accomplishment. In recent years, we've seen goal-tracking increase, not decrease. Yet despite this, tracking fails to achieve its intended purpose for one simple reason: progress toward goals is not linear.

This is true of all real-world goals. You either achieve them or you don't — there are only two states of goal completion. You might set interim milestones and mark them complete (or incomplete), but you cannot calculate a "percentage completion" for the larger goal based on these smaller targets. If you try, or if your company requires you to, you'll only get precise but fundamentally false data about your progress.

Finally, can goals be used to evaluate employees? Can you judge a person by how many goals they've completed? Many companies do exactly this, but here's the problem: unless every employee's goals are standardized for difficulty, you cannot objectively evaluate relative performance. Suppose we assess two employees, Victoria and Albert, each with five goals to achieve. At year-end, Victoria has hit three goals while Albert has achieved all five. Does this mean Albert performed better? Not necessarily. Perhaps one of Victoria's goals was to govern a nation, while one of Albert's was to make a cup of tea. To use goal achievement for evaluation, we'd need to calculate the difficulty of each goal, requiring managers to assess the stretch of every goal with perfectly uniform standards, and all managers would need to use identical evaluation methods. This level of calibration is impossible, so we can't do it. Sorry, Albert.

02

Even so, goals — especially top-down cascading goals — retain an immediate appeal for leaders trying to ensure efficient, aligned operations within their organizations. Yet frontline employees experience goals as incomprehensible, mechanical, inauthentic, even punitive. Why?

Because that's exactly what they are. First, there's something strange about the very act of sitting down to set goals: you already know what work you're going to do. This isn't your first day on the job, bewildered and unsure. At this point, goal-setting simply asks you to write down work you already know you need to do. The work goals you write aren't ahead of you, unlike a marathon goal that propels you forward — they're beside you, constrained by your existing understanding of your existing work.

Categories like strategy, operations, innovation, talent... these are odd classifications because work doesn't come in categories. You don't do time planning thinking "Tuesday I'll do some operations, hopefully Wednesday afternoon I can squeeze in some innovation." Work generally comes as projects with deadlines and deliverables. So when someone asks you to break your work into categorical goals, you just fake it — force your work into a few categories and hope nobody notices. Most employees do exactly this.

Wanting your work to align with what your team leader wants you to do is perfectly reasonable. But taking part of the leader's goals as your own, or modifying your goals based on the leader's goals, is a very strange practice. Your team leader knows what work you're doing because in the real world, you constantly report to them. If you're folding paper and they want you making beds, they'll tell you directly. A few days later, if circumstances change and they need you blowing glass, they'll tell you that too. Even if they don't tell you and you're wasting time on the wrong things, they'll find ways to redirect your focus — they certainly won't secretly revise the goals you wrote, hoping you'll notice.

To repeat: top-down goals lag behind actual work, they don't lead it. In the real world, goal-setting is more documentary than creative.

That's the reality. Well-crafted goals don't guide you forward. The idea that goals direct work is simply wrong.

What about year-end self-assessment of goals? Your boss expects you to honestly review the past year, while you're probably wracking your brain for the most diplomatic way to say you completed all your goals — which might make you seem arrogant, or dishonest. If you admit you didn't complete some plans, your boss or other senior leaders might use that as grounds to reduce your bonus. In other words, goal self-assessment isn't an evaluation of your work — it's self-promotion and political positioning, a careful calculus of how much to reveal and how to phrase it.

This isn't a criticism of you. Carefully calibrating self-assessment to maximize advantage is a pragmatic response to abnormal circumstances. The company asks you to evaluate yourself against a string of abstract goals you wrote long ago, goals that became disconnected from reality within two weeks of being set. This exercise is meaningless, yet you're expected to pretend it matters. That's strange enough. Your team leader has it even worse. As the year ends, they must sit down and process piles of team members' goals, giving a sentence or two of feedback on goals you wrote months ago, describing your performance. What's actually on their mind? Certainly not your performance or their assessment of you — it's how to get through this pile quickly and check "goal evaluation" off their to-do list. Like you, they feel this is a waste of time. Not long ago, you thought about things you'd probably do, randomly selected a few, forced them into categories, tried to make them sound impressive, and now added carefully polished self-assessment — that's what your leader is facing.

They know the actual work has long since changed and has little relation to the goals originally written. They already praised you during actual work conversations throughout the year. For leaders, this is the worst kind of "paperwork disguised as management," so their feedback gets shorter every year, hoping no one complains.

In the real world, there is work — things you must handle. In the theoretical world, there are only goals.

Work looks ahead. Goals look behind, at your rearview mirror.

Work is concrete and specific. Goals are abstract.

Work changes quickly. Goals change slowly, if at all.

Work makes you feel empowered. Goals make you feel like a cog in a machine.

Work makes you feel trusted. Goals make you feel suspected.

Work is work. Goals are not.

This can change. Goals can play a positive role.

03

The only valid criterion for a goal is this: the person working toward it must have set it voluntarily for themselves. A goal must express values you personally care about — only then can it work. It doesn't need to be "SMART," doesn't need to be "big and hairy," doesn't need to include KPIs, and doesn't need to follow the OKR framework. The only standard for making goals work, for helping you contribute more, is that you must be completely voluntary in setting your own goals. Goals imposed by leaders cannot serve the purpose goals are meant to serve.

This doesn't mean we shouldn't have top-down goals within organizations. The right goals — expressing what individuals most value — are often the only way to unite an entire company, so we should do everything possible to help everyone in the organization understand what matters most.

Author: Marcus Buckingham, data analytics expert focused on workplace strengths and performance improvement. Spent 17 years at Gallup, led multiple workplace effectiveness studies, and is the bestselling author of Now, Discover Your Strengths. Source: Nine Lies About Work, Citic Press Corporation. Excerpted and published by ClecChina (ID: ClecChina)