Tags

, , , , , ,


Adapting Tolstoy’s famous opening line about families to business: “every unsuccessful business is unsuccessful in different ways.” One way that I’ve encountered in numerous settings is the disconnect between corporate goals and the work that people do every day. As we’ve come to understand employee motivation more completely over the years through the work of authors like Daniel Pink, being able to tie daily tasks to larger objectives or a shared sense of purpose improves retention and performance.
Dilbert.com
But setting corporate goals is a difficult process because, by necessity, they are big. How can we phrase them in a way that is actionable — so that regular Joe and Jane can come to work each morning, do their best, and make a measurable difference? It’s a tough challenge, but surely the most profitable company in the world has this figured out…let’s see what we can learn from ExxonMobil’s goals!

Here are some excerpts taken from the 2011 Corporate Citizenship Report, which highlights performance and goals in six areas. Below are the first statements under “what we plan to do” for each of those areas:

  • Environmental Performance: “Continue to implement recommendations on improving oil spill response capabilities”
  • Managing Climate Change Risks: “Continue to improve energy efficiency by at least 10 percent between 2002 and 2012 across our worldwide refining and chemical operations”
  • Safety, Health, and the Workplace: “Continue to learn from personnel and process safety performance metrics to help achieve our goal that Nobody Gets Hurt”
  • Corporate Governance: “Continue to recruit highly qualified non-employee directors”
  • Economic Development: “Partner with the United Nations Foundation to develop a report examining the most effective investments to advance women’s economic empowerment”
  • Human Rights and Managing Community Impact: “Continue to review existing practices toward making appropriate adjustments relative to expectations under the U.N. Framework and Guiding Principles on Business and Human Rights”

Those are some high level, long term goals, and as the largest company in the world, they should be. But coming to work every day, how many of the 82,000 employees can make a direct contribution to these? The answer is none — not when the individual’s goals are worded this way. The critical step that leaders at all levels, in companies large or small, must take is to translate high-level business goals into aligned, measurable goals within an individual’s span of control.

How to do this? Just like you’d knock down a wasps nest: very carefully and with plenty of preparation. I’ll oversimplify in to these four steps; if you’re interested in a more complete set of instructions, please reach out to some of the folks in my network listed below who do this for a living.

  1. Set your overall organizational goals in specific measurable terms. For example, grow free cash flow at 20% CAGR for the next 3 years.
  2. Decompose the high-level goals into the measurable sub-goals based on how the system works. In the example above, the major levers on free cash flow are profit, net capital expenditure, and net change in working capital. At the next level of detail, the major drivers of profit are revenue and operating expenses; the major drivers of CAPEX are the number of capital projects and the size/schedule of each. Continue to expand out these measurable sub-goals until you reach tangible metrics that can be influenced by leadership teams and individual contributors (things like revenue from specific customers, OEE, and expenses by category).
  3. Measure the gaps and set targets for the detailed goals so that they add up to meet the overall goals. It’s math. This is the easy part compared to the next step.
  4. Have a series of conversations with your leadership teams and individual contributors to agree the targets, improvement projects, and timelines so that people understand the numbers, how they are mutually dependent, and take ownership of the outcome. These conversations can be truly defining moments for organizations.

But don’t take my word for it – seek out the advice of some talented folks who have made goal setting and translation a focus of their careers.

Advertisements