Pay for Performance Requires SMART Goals

Making Sense of Goals and Objectives

Neelman offers the following suggestions for making goals and objectives truly helpful:

• Make performance management an important aspect of a manager’s evaluation.
• Limit evaluations to critical goals that employees can impact. Three to five goals is usually most appropriate. No more.
• Goals should enhance the employee’s performance in his or her current position.
• Goals must not be outside the realm of what the employee can impact.

Neelman is a principal and senior consultant with Compensation Resources, Inc., in Upper Saddle River, NJ. She offered her suggestions at a recent webinar sponsored by BLR and HR Hero.

SMART Model

You need to think “SMART” to set good goals, says Neelman.

• Specific
• Measurable
• Attainable
• Results-oriented
• Timely

Make sure that goals are well-documented and communicated, says Neelman. That facilitates evaluation of achievement at year-end.

Goal-Setting Worksheet

Here is Neelman’s worksheet for goal setting:

• Performance Goal: Provide a written statement summarizing the goal, including the expected end result(s).
• Accountability: Indicate the individual(s) responsible to lead the accomplishment of this goal.
• Performance Measures: Identify the key quantitative and qualitative performance measures that should be used to determine if, and to what extent, the goal has been achieved.
• Timetable: Indicate the target date for completion of the goal.
• Resources Needed: Identify the expected budget and staff requirements necessary to achieve the performance goal.
• Influences/Constraints: Identify potential obstacles, prerequisites, and intradepartmental activities that could impact the ability to accomplish the performance goal.
• Milestones: Identify the major milestones and corresponding dates that indicate the extent to which the goal has been achieved.
• Documentation: Identify documentation needed to support the achievement of each milestone, as well as goal completion.

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Avoid Changing Objectives

Objectives should not normally be changed, says Neelman. If you have been careful about setting goals, you shouldn’t have to change them. However, sometimes you have to. For example:

• Events that materially affect the ability to accomplish the goal
• Elimination or postponement of a goal by top management/board
• Elimination of funding or diversion of key resources
• Material change in the company’s business direction
• Significant change in participants’ duties and responsibilities

If you do have to eliminate a goal, try to substitute with an alternate goal, if possible, Neelman says. Be sure that there is sufficient time to work on achievement of the new goal and that it meshes with the existing goals.

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