Episode 127: How do you set someone SMART Objectives?

If you believe an article in Fast Company last October, “Accenture, GE, Adobe, Netflix, and dozens of other organizations are killing annual performance reviews as they aren’t enough for today’s workplace.” In Forbes they declare at IBM that “… yearly goals are a thing of the past.” It’s all because these annual reviews, according to Kris Duggan, CEO of BetterWorks on CNN Money, are “entirely demotivating.” Cleary we can all breath-out and relax knowing there is no need to fuss anymore about our company’s annual review cycle.

Not so fast.

This desire to kill the old-fashioned review process is part Millennial-reality and part HR frustration. Whatever you do, or don’t do, the need to set objectives and goals doesn’t go away. The framework in which you provide feedback to employees on how they did against their goals is, however, changing. In this episode of The 3 Minute Mentor, I reviewed how to set good goals using SMART, but let us think for a moment about the review cycle.

Some people in HR’s view

There seem to be two arguments against annual reviews. First comes from the over-worked and ‘down-trodden’ HR departments, and one comes from people who are actually looking at the changes in the workforce. The first, in my experience makes no sense. The second will become the way of working for all of us – more on that later. First to the HR departments.

Over my career I have worked with many great HR teams and partners. I do not mean to paint them all with this broad brush but there are some recurring messages on the annual review cycle. They go something like this:

“Most managers are bad at doing annual reviews or do them badly. They either rush through them and give poor or useless feedback or they look to avoid them all together. This frustrates the employees and demotivates them. Worse still, if you force a skew (tell some people they are better and more valuable than others) you disrupt and destroy everyone’s productivity. We should all back away from this very 1970’s GE view of ranking people and move to a more modern approach. We need to more regularly review employees progress against their goals and give them better feedback.”

Does that sound familiar? I know I have heard this a number of times. This statement does have four points to it, each of which is worth discussing.

While there may be some managers who are doing bad reviews, there are many who are good at it. What is often cited as the problem here is managers having to tell people they are performing badly. The difference between those who can do this and those who cannot is training and experience. While it takes time to get the experience, most companies do a poor job of training their managers to give reviews. If you find a manager reporting to you that is bad at doing review, mentor them and if your company has no management training, encourage the creation of some.
They are often rushed through and poorly designed systems and tools don’t help. It’s the review not the tool that should be the focus of the process but few companies invest in good on-line review tools. Having a 15 stage process that makes reviews a grind is as much a problem as anything. HR tools are never the top of the investment list. Pity really if people are our biggest asset (see Dilbert).
Having a sense of ranking is not a bad idea – forcing it on a team of 10 people is. That is why I do agree that a forced skew within a small team makes no sense. However, across divisions and companies, having a sense of your talent is important. We have all been confused by a team of top rated people who misses all the objectives. Maybe it’s not the people but the manager, or it’s something.
If the problem is people not doing an annual review well, it’s hard to believe, unless you change something, the same people are going to do more regular reviews any better. Of course the implication is that the more regular review would be a different type of review – more focused on the task at hand. While that’s good, at some point you still have to tell the employee whether they are doing well or not. If the problem is a manager’s inability to be clear with employees where they stand annually, they are not going to do it any better monthly or weekly.

This is not an argument for keeping things the way they are – they need to change. But they need to change because the workforce is changing, not because people ‘suck’ at doing reviews.

The Millennial Change

By 2020, around 50% of our workforce will be Millennials or younger. By Millennial, I mean that they were born on and after 1980 and started work in the 21^st Century. There has been a lot written about managing Millennials and if they are a mystery to you, I would suggest some good reading. I wrote a blog called “5 questions that will stop you talking to yourself and motivate your Millennials” which might a good starting point.

One of the stereotypes I hear about Millennials from managers who are struggling with them is a perception that they need constant ‘reaffirmation of their value’. What I think that manager is seeing is not a need for constant ‘reaffirmation of their value’, but a desire for continuous feedback.

In Anna Liotta’s book “Unlocking Generational Codes,” she talks a lot about how the different generations think and work. Using her perspective, and my experience, here is how I think the different generations view the issue of feedback from their manager.

Baby Boomers (born 1946-1963) like an annual process
Gen Xers (born 1964-1979) like a monthly process
Millennials (born 1980-1999) like a weekly process
Nexters (born after 2000) like a daily process

While this view is a little simplistic, I do think it can help us to think through how to feed back to our teams. It does imply that one size does not fit all. Managers and leaders are going to have to tailor their review process to the people they are reviewing. This clearly supports the idea of a more regular process, but it does not necessarily deny the need for an annual process of some sort.

There will always be winners and losers

We create organizations and companies to achieve objectives and goals. Without these unifying elements there would be no need for us to come together as a group other than to achieve purely social connections. If these end-games exist, then we need to have a view as to whether we are moving towards them and achieving them. In business, there are greater pressures than just pure strategic goals. We need to pay wages and this requires money. This money is probably derived from selling a good or service. If we fail to make enough money, then at some point we cease trading.

Setting objective in a SMART way, maximizes your ability to achieve your aims. If you don’t both communicate and delegate these down the organization, then you cannot be surprised if you fail. Once you delegate them, in whatever form you do that, you have to hold the people who receive them accountable for their role in achieving them.

Across the whole team, some people will do more to help you achieve these objectives and some will do less. Some work harder and some slide-by doing just enough. In the end, while it may not be politically correct to say so, business has winners and losers. Unless you can find a Utopian world where everything is fair and equal, there are tough decisions that have to be made.

Some people take bigger risks than others – those risks need to be rewarded
Some people contribute more to the success or failure of a goal – if you assume all do equally then you punish high performers and reward those who perform sub-par
Not everyone can get the same pay raise – unless you ‘peanut butter’ (divide equally) the money, which will motivate no one
Not everyone can get the promotion – unless you have no hierarchy at all

Whatever the reason, it is clear that you are going to have to judge how each member of your team did and tell them what you judged them by.

Bottom Line

While the rigid system based tools of the last century seem out of date with today, talking to your team is not. Telling people what you expect them to achieve and letting them know if they achieved it, is never going to be out of style. If once a year is too infrequent, then do it quarterly or monthly. Do it daily if you need to. Whatever the cycle, you still have to do it. So if the idea of no annual review makes you or your management team think they are getting out of anything, think again. The alternative is clearly more often, not less.

Finally, all of this can be made better with training and mentoring. You need your team to get clear feedback and you need your managers to know how to give it. If they don’t, the answer is to help them, not to prevent them talking to their teams.

Let me know what you think.