“My goal was to walk 10 steps, that’s it” (C) freephoto.com.
I don’t believe in any compensation method based on goal-achievement. I mean, ANY! Call it SMART, call it BSC, call it Goal Breakdown, I don’t care – I simply never saw a goal-based-compensation scheme that a) led the company to achieve the highest results it could and b) didn’t got affected by agency costs, protectionism and lack of meritocracy perception!
(you know any company that achieved both? If so, pls share)
The reason I don’t trust this system:
- People waste loads of time trying to achieve a high level of prediction and sophistication that would make the best fortune-teller shiver
- You generally have to increase costs creating a whole structure to keep track of the goals to measure results in an over fragmented way
- People tend to try to “lower the bar” so can achieve higher bonuses easily
- Manager are not perfect so than can make mistakes when setting goals
- When someone reaches the “ceiling” of the goal-comp scheme, he/she relax and don’t go for the max
This put, I LOVE GOALS! I-DON’T-BELIEVE-AN-ORGANIZATION-OR-A-PROFESSIONAL-CAN-EXIST-WITHOUT-GOALS! fortunately, I’m not the only one in love with goals:
“What keeps me going is goals” – Muhammad Ali
“Obstacles are those frightful things you see when you take your eyes off your goal” – Henry Ford
“If you don’t know where you are going, you will probably end up somewhere else” – Lawrence J. Peter
Goals are necessary to keep us ALIVE! (and focused! And motivated!)
(but not for getting a better comp!)
I do like goals when they are not part of the comp scheme. And for me, McKinsey has written the best article on goals. It goes like this:
- You have to have 5 goals
- You have to spend 95% of your time following those goals
- You have to eliminate all the other noisy, unimportant stuff that is not related to your goal.
And why 5 goals and not 10, and why 95% of your time and not 80%?
Because with 5 goals and 95% of your time you have 19% of your time per goal. If you have 10 goals and 80% of time, that’s 8% per goal. Guess which is more effective?
Simple, right?
(simple is beautiful)
(if interested, drop me a msg that I send to you or take a look at McKinsey Quarterly mag)
A couple of days ago I shared my views on mission statements. I believe being the best is the best mission statement one could ever have. But that’s too broad – and to tackle that, a 5-goals-systems for departments works as a perfect mix! Put all this in a melting pot with meritocracy and BAM!, you have a killer formula (high qualified people, achieving to be the best, very focused on what is important – what could go wrong?!?!?)
I love goals. I hate goals.
For a higher impact HR!
