There’s no one right way to set goals. It’s a process that varies from company to company depending on the culture and structure of the team. But there are definitely some wrong ways of setting team goals that can have zero impact or worse, a negative impact on your business.
Here are the most common pitfalls to avoid as you set objectives and goals for your team.
Pitfall 1: Setting a lagging goal
Lagging goals can only be measured after a project or quarter is complete. While these types of metrics can be helpful for measuring the overall success of a project, they’re not useful for day-to-day or week-to-week tracking and discussion with the team.
A good alternative is to set goals based on one or more leading indicators that can measure progress throughout the project or quarter.
For example, suppose the product and engineering team has a hypothesis that you can increase revenue by adding new features to higher value plans that will increase the average sale price of new trial signups. It takes you two months to build the features and roll them out and then the free trial signups have 30 days to try the new features. By the end of the quarter, no change has been made to either average sale price or revenue.
Rather than focus on those laggy goals of increased revenue and sale price, it may have been better to set a goal focused on the number of trialists who use the feature within the quarter. If trialists are using the features, it’s more likely they will purchase a higher value plan when they do convert. Of course, this is an assumption and it's important once you have the data to check whether or not it was a good leading indicator.
Pitfall 2: Aiming for extreme goals that are either too safe or too aggressive
Goals can fall any number of places on the spectrum of attainability. The danger is when a goal is set too far towards one extreme. (i.e. safety) If you play it too safe, it’s guaranteed you’ll hit the goal and the team won’t be stretched at all. If the goal is too unrealistic, it’s impossible for you to achieve and the team will become demotivated.
Finding the right goal is challenging and will certainly vary depending on the team, culture, and business. At Geckoboard, we use a scoring method for our Objectives and Key Results (OKRs) that ranges from 0-10 for each goal. By assigning a metric to each score, we’re able to easily track our progress throughout the quarter:
- 10: Stretch target, feels really difficult to achieve
- 7: What we hope to achieve, difficult but achievable
- 5: Almost what we hope to achieve, but not quite
- 3: What we know we can do with minimal effort
- 0: No progress
This way we can set aggressive goals that intentionally stretch the team without demoralizing everyone if we don’t get all the way to our stretch target (a 10).
Pitfall 3: Setting a “runaway” goal that’s too far in the future
Closely related to the previous pitfall, a runaway goal is one that’s too far in the future and quickly becomes unrealistic. This is also demotivating if early on in a project it becomes clear the goal is no longer achievable. A team may stop pursuing work that could achieve the goal if it’s too far away resulting in a loss of focus and work ethic that the goals should deliver.
We made this mistake by setting an MRR goal for the company a year away. We kept falling further and further behind until it would have required a miracle to hit it.
If you find yourself needing to reset the goal often, try using shorter time increments (monthly or quarterly) to avoid losing motivation and momentum. You’ll become more confident in goal setting the more you do it and the more you learn about your growing business.
Pitfall 4: Setting goals that can be gamed
Rarely does anyone set out to intentionally game a goal or generate an illusion of achieving the overall objective. It begins as a much more subtle, well-intentioned process.
For example, perhaps you set a goal for the Customer Success team to improve first response time aiming to improve the customer experience. To achieve this, the team send replies asking irrelevant questions of the customer to buy themselves time just so they hit the first response time goal. This actually results in a negative impact on the customer experience - the opposite intent of the goal.
Avoid this pitfall by identifying the change you actually want (your primary goal) and then set additional health metrics to support that change. If quality of service is important to you, then make sure any change you introduce doesn't adversely affect it. Adding a 'health metric' is a great way to do this - you're not actively working to improve that metric, but you're still keeping an eye its health.
For example, if your goal was to improve first response time with a hypothesis it would improve the customer's experience, try setting a health metric around Customer Satisfaction Rating to ensure the quality of responses stays above a healthy level.
Pitfall 5: Setting goals that can be impacted by others
Some metrics can be impacted by more than one team. That can be incredibly frustrating if the efforts of one team to achieve a goal are canceled out by the work of another.
For example, imagine the product team sets a goal of converting more trialists to paying customers. That goal might be negatively impacted by marketing attracting huge volumes of poorly qualified signups through their actions, thus making it impossible for the product team to achieve their goal.
A better way to set goals in this situation would be for the product team to work on improving the conversion rate of trialists who returned after the first week of their trial to become paying customers. This would be more effective because a) the product team has more direct impact on this metric and b) this metric reflects a group of highly qualified trialists so conversion rate couldn’t be negatively impacted by low-quality trialists. The main way this conversion rate will be improved is by improving the trial experience through work in the product.
Set clear goals that each team can individually impact and be responsible for achieving.
Pitfall 6: Pursuing lofty goals without a plan or resources
Lofty goals without a plan are wishful dreams at best. It’s great to have ambitious objectives, but without at least a hypothesis of how to achieve them, the team will quickly become cynical. Beware of starting with fundamentally bad assumptions (e.g. “we can double conversion rate!”) that lack a theory or possible path for achievement and set the team up for failure. This is especially true if a team doesn’t have the time, autonomy, or resources to achieve it. This sets the team up to lose interest or fail entirely.
Once you have the right metric to measure your lofty goal, do some quick back-of-the-envelope math to see what an ambitious-yet-achievable improvement would be.
Another important step in preventing a disillusioned and demotivated team is to democratize the goal setting process so each team member is involved and empowered to achieve the goal. Make sure everyone has bought into the objective before finalizing them.
- Identify leading indicators that will help you track daily or weekly progress toward your goal.
- Determine the right tension between too safe and too aggressive by setting goals that stretch your team without demoralizing them. A scoring method can help with this.
- Closely monitor progress toward your goals and try using shorter timeframes if you’re having to reset goals frequently.
- Use relevant health metrics to avoid gaming the goals you set.
- Set distinct team goals that they can have a direct impact on and be responsible for.
- Create a hypothesis (and perhaps do some quick math) for your goal to verify it’s ambitious yet achievable. Involve the whole team in the goal setting process so each person is involved and empowered to achieve the goals that are set.