Chapter 3
Step 1: Build in Accountability and Set Clear, Compelling Goals
You've got to think about “big things” while you're doing small things, so that all the small things go in the right direction.
Strong accountability and clear, compelling goals are critical elements for any organization that wants to get good performance from its people. Clear goals provide direction that guides action. And although managers pay lip service to the importance of accountability and clear priorities, actual results and most employees' experiences contradict this lip service.
To illustrate this point more clearly, consider this reality gap: Most managers would argue that if employees feel like they have too much to do, the answer is for them to work harder, not waste time, or bring in help. But the reality is that most workers who feel overwhelmed and aren't sure where to start are victims of unclear priorities and confusion about what matters most—or how it relates to larger business imperatives. This lack of clear priorities makes it difficult to distinguish between what matters and what's filler or nice but not essential.
Develop Real, Engaging Goals—Not a Laundry List
It is important to distinguish between a random “to-do” list or a bunch of delegated actions and true direction that points to the overall priority for your organization and reflects its core values. Jobs that require decisions and initiative need more than assignments or tasks for the day. Any time work involves some degree of discretion or employee initiative, priorities become critical because they provide guidance for making these decisions. And these priorities can't be adequately provided by a manager indicating which item on the to-do list is most important. They can only be conveyed by organizational goals that provide direction and enable staff to see how their work aligns with the organization's direction. And then when, inevitably, an issue or problem arises that managers didn't foresee, the employee can discern what decision to make without having to look for a manager to ask what to do.
We often spend so much time coping with problems along our path that we forget why we are on that path in the first place. The result is that we only have a dim, or even inaccurate, view of what's really important to us.
The people in an organization can't perform effectively unless they have clear targets or goals—because they seek these goals, and when the goals don't provide true priorities, they won't be able to see in what direction they should move. It's not enough to have a strategic plan or a list of to-do items. For something to really be a goal, it needs to have a degree of importance that will spur employees to share some level of perceived value in striving for it.
There are plenty of examples of loyal employees working to hit some set of numbers or reach a particular outcome simply because management told them to do so. But organizations perform well partly because their targets and even basic purposes not only guide employees but also motivate them. This does not mean that all goals need to be lofty ones that inspire to some higher good. Sometimes a goal can be motivating because it challenges people professionally to see if they can get better or exceed their previous performance—do it faster, make it more cheaply, perform better, have fewer mistakes, or otherwise improve the quality of their work.
A goal can also be a source of motivation because there is a personal return to the performers (bonuses, stock value, or other rewards). It would be easy (and typical) for an executive to fasten on one of these options and decide that the key to better performance is to offer stock options or higher bonuses or to couch the strategic plan in altruistic language about making the world a better place. But these would all be examples of focusing on the gimmick and missing the principle that makes it true.
The primary reason that true organizational goals motivate is buy-in: When employees buy in to the goal (for whatever reason), then it becomes motivating. Thus, effective business goals engage employees and create interest and involvement. This doesn't mean all goals require support and buy-in. But it does mean that unless a goal is engaging to the employees, it's likely to have little impact as a priority-setting device and motivational tool.
Your goals are the roadmaps that guide you.
In their landmark book Built to Last, Jim Collins and Jerry Porras (1994) identified the concept of “Big Hairy Audacious Goals” (BHAGs)—objectives that grab the attention of a work team and engage them. Typically, a BHAG is ambitious—the classic example is probably President John F. Kennedy's objective to “land a man on the moon and bring him back safely by the end of the decade.” But it's not enough to have a stretch goal—audacious targets mean little if they don't motivate the people in the organization. For a big goal to really be successful and to qualify as a BHAG, it needs to be clear so that it compels everyone to become committed. Perhaps the critical point about the impact of BHAGs is how they can propel organizational results and generate performance by providing direction and purpose.
When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.
Seven Guidelines for Setting Goals
Without a standard, there is no logical basis for making a decision or taking action.
Accomplishments, goals, ends, strategic imperatives, objectives—there are many synonyms for performance targets. Goals provide not only a focus but also a means of tracking progress and assessing performance. In developing effective goals, the key is to be deliberate and ground your process in the realities of your organization. Here are seven guidelines for setting goals:
1. Measure and test the goal.
2. Make sure the goal is legitimate.
3. Set realistic performance targets.
4. Use goals as continuous priority-setting tools.
5. Plan for a realistic return on the goal—not perfection.
6. Share priorities throughout the organization.
7. Ensure accountability.
Let's consider each of these guidelines.
Measure and Test the Goal
You get what you measure. Measure the wrong thing and you get the wrong behaviors.
It's not enough for an organizational goal to exist. Part of the goal's value is as a stake in the ground against which progress can be measured and that employees can use as a target. If the goals cannot be used this way, execution will suffer, because measures of performance will be much more subjective. So organizational targets need to have dates and deadlines to measure progress, and they also need to have an objective value or metric. Thus, an effective goal is both time bound and measurable.
In addition, a goal should consist of something that is desirable or valuable to the organization by itself. This sounds obvious, except that too many organizations have strategic objectives that are really programs masquerading as goals (Kauffman 1998). The test of a goal is whether the organization would be happy if that objective were reached and nothing else happened. Take as an example the goal of improving morale. Many organizations do climate audits and morale surveys. When those numbers dip, it generally produces alarm among senior managers, and an objective is set to raise scores on the annual employee morale assessment.
The problem with this scenario is that if the executives were honest, they'd probably admit that if morale went up but nothing else changed (no increase in retention, no improved performance, no shorter cycle time in production), then they would likely be unhappy. To put this another way, the stated goal of improving morale masks an unstated or implied goal of improving retention or raising productivity, and the assumption is that if people are happier or more satisfied with their work, then retention will improve or productivity will increase.
There is one quality more important than “know-how,” and we cannot accuse the United States of any undue amount of it. This is “know-what,” by which we determine not only how to accomplish our purposes but what our purposes are to be.
Often, what managers claim is the purpose or a goal is actually a program or solution in search of a goal. For instance, managers may decide to make it a priority to improve morale, improve leadership skills, increase the quality of work life, or become a learning organization. You will need to test these goals to be sure that they're legitimate objectives—and not a method in search of an outcome. Managers may really want to improve retention—and believe that enhancing morale will result in better retention. The most direct way to test these claims is to ask one or more of these questions:
• If we accomplished what you asked and nothing else changed, how would that work for you?
• If we improved morale, and there was no increase in productivity or decrease in turnover, would you be fine with that?
• If we increased the work life quality here and didn't see any change in attention to detail or improved service standards, would you consider that a success?
This distinction between goals and programs matters—for a couple of reasons. First, if the ultimate value to the organization is higher retention or improved productivity, then this should be the stated goal. Organizational targets should consist of what the business honestly cares about. For instance, managers could easily meet the goal of improving morale by enhancing their staff's happiness and mood in ways that would cut productivity, such as having daily parties or reducing work schedules.
Many executives are often guilty of seeing something as a goal when it's actually a perceived means to achieving something else. Such examples might include:
• finishing first or second in a particular market
• reducing employee stress
• improving teamwork or team cohesion
• most types of skill building, such as communication ability and decision making.
For instance, an organization often sets the goal of improving knowledge management as if that alone were sufficient, when in reality the organization wants to decrease mistakes or shorten cycle time—and knowledge sharing was the intended means to achieve this.
The second reason this distinction between goals and programs matters is that there isn't a clear relationship between morale and retention and productivity. There are many examples of employees with low morale who also worked hard or didn't leave for other firms (and many more examples of situations where morale was high and productivity and retention were low). This is not an argument for the value of an unhappy workforce. All other things being equal, why not have happy workers? But the point is that happiness or high morale does not automatically translate into better performance. Instead, the impact of morale on other factors is situational. The mistake of many organizations is to treat something like morale as a goal when in reality the actual target is unstated or unclear.
Make Sure the Goal Is Legitimate
Unfortunately, too many organizations get their goals wrong. Besides the issues mentioned above, many organizations make several critical mistakes when it comes to setting their targets. For instance, they may focus on things like assessing the average number of hours of training per employee or closing rates for sales representatives because they're easy to measure. But tracking training hours per employee doesn't assess what the training contributes—other than a lot of class time. And measuring the sales force's closing rates can discourage reps from expanding their client base, because their performance is being evaluated by the closing rate and not sales volume.
Thus, the organization's internal objectives may not actually be meaningful for its essential purpose—to make a profit or efficiently provide a service or good. Then it may be necessary to challenge what the organization has set as a goal or to question whether workers are being measured with metrics that reflect legitimate priorities.
Set Realistic Performance Targets
When organizations set performance targets that employees can't achieve, it is destructive for future along with current performance. Not only are today's targets unreachable, but workers will also be more skeptical about other efforts to come. The assumption tends to be that “if management will give us unrealistic goals here, then it'll probably be true for other cases as well,” and thus it helps justify a defeatist approach to other work.
The argument here is not against stretch goals. But some goals are set arbitrarily, or there is not enough analysis of the capability of both employees and the system to intelligently set a realistic stretch goal. Instead, too many managers operate with the assumption that whatever workers have achieved, they can always work harder and achieve more. This is a naive analysis, because it assumes that the primary factor in effective performance is how hard people work. If this were true, then all hardworking firms would be successful and those that put in less effort would obviously be the ones that went bankrupt—yet clearly this is not the case.
Use Goals as Continuous Priority-Setting Tools
Most organizations do some strategic planning. Many firms insist that they are goal driven or focused tightly on their priorities. Unfortunately, almost no firms truly use their goals as continuous priority-setting tools. More specifically, when most organizations encounter a problem, they tend to try to fix it. (But this is not true for all organizations—because some respond by doing nothing.) Consider these examples:
• A work team that bickers needs some corrective action—possibly team building or a new leader.
• Printers that are several years out of date need to be upgraded.
• The support staff for Sales complain about not getting enough training compared with their peers in Marketing and Operations.
• Senior managers complain that the field staff can't write effectively and needs more work on technical writing skills.
The problem with trying to fix all these problems (assuming that the performance information you have is correct) is that, in most organizations, it would be a case of a knee-jerk response to a problem. To phrase this another way, the key for any organization should be to go after the performance that is critical to its priorities. In all organizations, many things aren't done well. The temptation is to believe that if the organization fixes everything, performance will improve.
But giving in to this temptation would reflect an inaccurate perception of what produces good performance. It assumes that all tasks are equal, when instead some aspects have more influence on whether the organization can get the results it wants. Let's call these critical tasks performance drivers, in that they entail performance that drives progress toward a particular goal. A business may need to do two hundred things correctly to achieve a goal, but not all two hundred are of equal importance. Instead, probably only about three to five elements will be performance drivers.
It's natural for any manager or executive to see something as broken in the organization and assume it needs to be fixed. If nothing else, this is consistent with a philosophy of paying attention to detail and sweating the small stuff. But this approach of diverting resources and energy to fix anything that's broken has at least two main effects.
First, it means there is a focus on items that may or may not have any impact on the organization's priorities. Go back to the first example in the “Use Goals as Continuous Priority-Setting Tools” section above—the team that bickers and whose members don't work well together. Most large organizations have some kind of team-building resources available (either internally or externally), so it usually isn't that difficult to arrange some kind of team building for those individuals. But what isn't known at this point is whether this work group really even needs to work as a team to be effective. What if their work can be done effectively if each member functions individually and they gain no advantage by being more collaborative? Even if the team building improves their ability as a team, what if this team has little or no impact on any of the performance drivers or critical goals?
The argument here is not that managers should ignore individuals, teams, or units with problems that aren't involved in the firm's most important missions. Organizations typically have many functions, and plenty of support functions are needed to maintain the business. But practically no function in any unit of any business operates perfectly or is without problems. An organization needs to make its first priority those employees whose performance has the most impact on its goals—not whatever problem has come up today.
When an organization focuses on any problem that arises, not only are important resources possibly being diverted from more important issues, but an example is also being set for the rest of the business that the so-called priorities aren't really priorities—that other things are being allowed to come first. This can lead to a transactional mentality, like what you find at a deli counter—first come, first serve—rather than an approach that focuses on what matters most or will have the biggest impact.
A second effect of this approach of diverting resources and energy to fix anything that's broken is that without truly identifying performance drivers, it's possible to focus on a problem and actually make things worse organizationally. Executives make assumptions about what drives performance but don't test them. Jeff Pfeffer and Robert Sutton provide an example of this from a consulting project they did for the Southland Corporation:
We worked with Larry Ford, then Southland's director of field research, to do researching (including a randomized experiment with 15 stores) to discover if courteous clerks fueled sales. Unfortunately, executives hadn't bothered to try and pilot studies or experiments before spending all that money on courtesy programs, although Ford urged them to do so. We ultimately found little if any evidence that courtesy increased store sales. Yes, it was possible to increase courtesy. We used training and coaching during our 10-week field experiment to increase the percentage of customers who received greetings from 33 to 58 percent and smiles from 32 to 49 percent. But the main finding, including results from large-scale studies by Ford's group was that clerks in stores with more sales were actually less courteous. Apparently, the crowding and long lines in busy stores made clerks and customers grouchy. This research ultimately helped convince executives to scale back courtesy programs and realize that, for most 7–11 customers, good service meant getting out of the store fast, not fake smiles and insincere social amenities. Southland could have saved millions by doing some pilot studies first. (Pfeffer and Sutton 2006, 39)
This was not just an instance of wasted resources but also one of failing to accurately identify what drove business results. Thus, the organization actually made things worse.
Plan for a Realistic Return on the Goal—Not Perfection
With the increasing popularity of Six Sigma, this issue is a growing one for how organizations misuse their priorities. Six Sigma—a popular management strategy, probably developed by Motorola, that seeks to remove defects in business processes with rigorous quality-measurement tools—can be used a number of ways organizationally. However, when Six Sigma is used as a goal, this basically means that the organization is making a commitment to be perfect—for instance, one defect out of a million transactions or million products.
For organizations without a Six Sigma standard, the variation would be to try to eliminate a problem or to excel at something. On its face, this can be a seductive goal. After all, many voices in the business world argue for excellence and perfection over mediocrity or accepting mistakes and errors. Why shouldn't a business try to be as good as it can? The idea of being good rather than great has often been attacked as being tolerant of mediocrity. Just think of phrases you heard from your parents like “the good is the enemy of the best.”
Though attractive philosophically, the idea of trying to be perfect (or as good as possible) is naive and narrowly focused from an organizational standpoint. Some goals, while technically feasible, would be financially ruinous to a business if the effort were made to achieve them by completely solving the problems that caused them.
Take the example of an insurance company dealing with the problem of fraud. The firm's employees work hard to spot false claims so as to avoid excessive payouts and financial abuse. But if the firm resolved to eliminate payments on all fraudulent claims—in other words, it would not make any payments on false claims—it could probably achieve this goal but would also then probably be run out of business, because it would likely need to err on the side of caution and deny any claim that could be potentially fraudulent. The firm would need to invest thousands of dollars investigating potentially fraudulent claims that might involve only hundreds of dollars. Instead of eliminating payments on all possibly fraudulent claims, a much wiser goal would be to reduce existing payments by 80 percent.
The desire to be perfect, the lure of eliminating a problem—these are very seductive traps. Sometimes top managers of organizations convince themselves that only perfection will do. It's also hard to get excited about solving 65 percent of a problem when you could eliminate it—but eliminating it would not be worth the cost.
For instance, the U.S. Transportation Security Administration (TSA) may have a goal imposed on it of catching 100 percent of all dangerous items through the baggage-screening process. But the costs that the TSA would have to impose to succeed 100 percent with screening alone would be prohibitive and probably make air travel at current levels impossible. So the TSA instead relies on a series of measures—armored and locked cockpit doors, random individual screening, identity checks, and other measures in addition to formal screening—to reach the 100 percent level.
Therefore, as a smart organization develops strategic priorities, it needs to be willing to accept not maximizing the result. To put this another way, sometimes the best return-on-investment comes from pursuing a less lofty goal. At a time when focusing on one agenda likely means having fewer resources for another, it is critical for an organization to assess whether the ultimate return will be higher from investing in just being better or in being the best.
Share Priorities throughout the Organization
In large organizations, the dilution of information as it passes up and down the hierarchy, and horizontally across departments, can undermine the effort to focus on common goals.
An effective goal can harness an organization's energy by providing focus for everyone and by creating common ground where different employees and teams can see complementary roles. Unfortunately, however, many overall organizational priorities often aren't shared by many employees. For these excluded employees, though there may be a target, it's not motivating and it's not something they feel they own.
One example of this exclusion is an objective that is owned primarily by one function but leaves little or no role for others. Another example is a goal that is generated either through an exclusionary planning process or a senior management team that has little interaction with others in the organization. There may even be instances where the executives' priorities, due to ignorance, aren't perceived or shared by middle managers or others in the organization.
The argument here is not that all goals need to be discussed throughout the organization. Neither do all business priorities require the buy-in and support of the entire staff. There will be some urgent situations where leaders feel that specific targets need to be imposed regardless of the level of buy-in. But an organizational priority's motivational power partly depends on employees seeing it as their own—either as something that involves them directly or as a target they helped to shape. When neither of those two circumstances is true, employees are more likely to see dictates handed down from management as being arbitrary or just another set of hoops to jump through. When this happens, part of the power and value of the goal as a motivator and unifying force for performance is lost.
Ensure Accountability
Accountability breeds responsibility.
The question of accountability deals with the issue of who is answerable or responsible. Again, this is an issue that many organizations badly mishandle. Unfortunately, this has been interpreted in many workplaces as figuring out who to blame when things go wrong. There is a great saying that helps explain some of the difference between discerning accountability and scapegoating: Some organizations fix the blame while others fix the problem. There is a critical distinction here:
• Real accountability is about taking responsibility to make things happen.
• What passes for accountability in many firms is primarily about fixing the blame only after performance has been poor.
Organizations that focus on fixing the blame really aren't pursuing accountability. Instead, their activity here reflects a negative mindset or a culture where people worry more about job security and less about performance and generating results. One school of thought—you might call this the “executing a few people will motivate performance” school—argues that firing people for failing is a good way to generate results.
Of course, there should be consequences for poor performance. But the tendency of some managers to use the threat of firing reveals a very naive view of performance, which assumes
• that the employees in question have the ability to completely control their destiny at work
• that the organization is not a complex system
• that other factors don't also shape execution beyond the staff's effort and talent.
This view would be wrong. Yes, employees should be responsible for their performance. But evidence from a wide variety of examples repeatedly shows that employees rarely have total control over their circumstances.
As soon as we find someone to blame, we act as if we've solved the problem.
So if accountability isn't about figuring out who to fire when things go wrong, what is it? From a performance perspective, accountability has several elements. It involves identifying a clear champion or owner for a particular process so that before the process is implemented, people can understand who to go to and who is taking responsibility. Thus, a goal might have an overall owner, but the tasks, processes, and performance drivers that support this goal each will its own champion or owner.
Accountability also requires clear expectations and measures. Anyone expected to execute a particular task or achieve a specific goal needs to know what resources can be expected, what limitations exist, and what standards are being used to evaluate success.
Accountability is also results oriented. This does not mean the only focus is on the result, because how the result is achieved may also be a big part of what the process owner is accountable for. But it does mean that it isn't acceptable for the owner to respond with an “I tried” or “I worked hard,” because the role of the owner is to produce or identify why it didn't happen and how to correct it with the resources that are available.
Finally, accountability is proactive. If accountability only enters the picture when there is a performance failure, it has become all about blame and recrimination. Real accountability involves upfront discussions about these kinds of questions:
• How much authority do I have?
• What can I expect from you in terms of support?
• What information do you need from me to track the status or stay in the loop?
Thus, real accountability involves forming partnerships—that is, forming formal or informal agreements—within the organization. And, as mentioned above, it also involves clear measures of success—typically, metrics for time and outcome. The owner of the task, process, or goal typically must feel that he or she has the necessary resources to succeed and that the performance expectations are realistic—even if they involve a stretch from past results.
Summing Up: Aim for Real Solutions
Given how critical goals and accountability are to performance, what do the managers and staff of an organization need to keep in mind to avoid many of the traps covered in this chapter? First, they need to have clear criteria for goals or objectives to enhance the likelihood of getting results. The objectives most likely to provide direction and accountability are realistic, time bound, and measurable. These goals typically have the buy-in of those who must be involved to make them a reality, and they are perceived as realistic targets.
Second, managers need to use these goals to set priorities and make resource decisions. An organization's priorities need to determine its focus. As simple as this sounds, it means that identifying performance that drives work toward the goals is critical and that leaders must avoid treating all problems as equal, when in reality some actions have much more leverage for getting things accomplished.
Third, the organization can't put on blinders when it comes to pursuing goals. Return-on-investment analysis can be a useful tool for assessing the degree to which any problem needs to be solved. The quest for perfection is sometimes a mistake. Organizations that are good at producing results know when to draw the line—when an initiative has been pushed far enough before returns begin to diminish.
Fourth and finally, the organization needs to have realistic and accurate accountability measures. For the performance-oriented organization, accountability becomes a proactive approach to partnering and identifying expectations, not a proactive process of avoiding responsibility and fixing the blame.
Performance Solutions Notebook
To drive home the points covered above, let's look at an example of accountability. The failure to make health-care-acquired infections (HAIs) an organizational priority has been a perpetual issue for health care organizations. In 7, an obstetrician from Vienna named Ignac Semmelweis identified doctors' hygiene as a primary factor in childbed fever or puerperal fever, yet he was scorned by his peers, who refused to make hand washing a priority or even accept his findings.
Since then, “Semmelweis' story has come down to us as Exhibit A in the case for the obstinacy and blindness of physicians” (Gawande 2007, 6). Even as hospitals have placed more importance on dealing with infections, the focus on HAIs has been too late in coming. For instance, only recently have many states begun to measure HAI rates, and “public reporting of HAI frequency is a relatively new phenomenon” (Guadagnino 2006, 2).
Although many health care organizations have started programs to deal with HAIs, either they have not made these programs a serious priority or it has not been made clear to hospital staff that cutting the rate of HAIs is a very important goal (Gawande 2007). For instance, despite the knowledge that hand washing and sanitation are critical tools for dealing with HAIs, staff performance in using these tools is usually uneven, because these tools aren't seen as critical or other objectives are seen as mattering more.
However, some organizations have found successful ways to deal with HAIs by intelligently using priorities, data metrics, and accountability. For example, the Pittsburgh Regional Healthcare Initiative (RHI) reduced MRSA (methicillin-resistant staphylococcus aureus) rates by more than 85 percent (Guadagnino 2006). The PRHI's organizational priorities and accountability techniques were critical for this achievement: “A goal of zero infections is needed to spur an institution to react to each infection, [Ken] Segel [former PRHI director] believes, and leadership is needed to make it clear that infection control is the duty of every health care professional” (Guadagnino 2006, 0).
In cutting HAI rates, accountability that focuses on both individuals and the system is important (Goldman 2006). And metrics need to involve usable information focused on solving problems, not fixing liability: “A problem with traditional surveillance work by infection control experts says [Peter] Perreiah former RHI managing director is that data are not collated and analyzed for trends in a timely manner—often quarterly—and follow-up is typically a look in the rearview mirror' long disconnected from the occurrence of an HAI and often after the patient has already been discharged” (Guadagnino 2006, 9).
Hitting the Mark
This chapter has several obvious lessons that can enable organizations to improve results through goals and accountability:
• Goals are critical for good performance. It's important to target issues that matter to the organization. Not all performance problems are created equal—some will have more of an impact on the organization than others, so it's critical to start by focusing on the organization's highest priorities. Goals that promote results are time bound, specific, and measurable. And the people who must produce these results should either have a say in developing these goals or some degree of buy-in.
• For most organizations, what passes for accountability is too often really scapegoating—finding out who to blame. What most managers call accountability is nothing of the sort. Employees can't truly be held accountable unless they're first given the resources, support, and direction to succeed. Real accountability is about providing performers with clear roles and the resources necessary to achieve results. Organizations produce accountability when employees have a say in their work, when they have clarity about who's responsible for exactly what, when they understand the expected outcomes, and when they have the tools they need to succeed.
This chapter has looked at how an organization's clear, carefully developed, and realistic priorities can provide a focus for effective action and thus serve as the performance compass for its employees. Without a strong sense of these priorities, good performance isn't possible and improving deficient work is nearly impossible. The next chapter looks at the metrics necessary to determine performance gaps.