When Michael Phelps was 8 years old, he wrote down a set of goals. The long-term goal was to compete in the Olympics someday, and he included short-term goals for his upcoming races. The goal-setting habit stuck—for practices, meets, and aspects of his training—and when Phelps retired from swimming in 2016, he was the most decorated Olympic athlete of all time, with 28 medals, including 23 gold (more than many countries have ever won).
Setting small goals can lead to big outcomes in business as well. Goals clarify objectives and have a positive psychological effect, giving people a series of small wins on their way to achieving bigger aspirations. Indeed, our research shows that when employees set small goals regularly (daily or even hourly), not only are they more likely than other employees to hit company performance targets, but they report higher morale as well.
We studied more than 1.5 million goals as reported by 12,000 employees at companies in various industries. The data was self-reported; employees set goals and broader key performance indicator (KPI) targets, and then reported whether they achieved their goals. For example, a goal for a sales rep could have been to generate six potential leads that week. A goal for someone on a customer support team could have been to respond to 15 customer complaints that day. For a graphic designer, it could have been to develop three versions of an ad as part of a new campaign that week. Separately, the employees received periodic online flash polls to gauge their mood in real time.
We tracked the aggregate goal-setting data for more than a year and found that people who set at least four daily goals per week—and hence were thinking actively about what they wanted to achieve—were 34% more likely to hit their KPI targets than those who didn’t.
Critically, the data shows a causal relationship, not just a correlation, between setting goals and achieving results. When people set goals, their personal performance improved. Moreover, there’s a link to morale: when people achieved at least half of their goals, they also reported feeling better about their work. Across an entire team or workforce, those gains can have a meaningful impact on a company’s performance.
Making goal-setting a habit
Given the potential value at stake, the question then becomes how companies can make goal-setting a habit in their workforce. The answer is straightforward enough: help people see the benefits themselves, celebrate the small wins, use the right language, and don’t forget the prerequisites.
Help people understand—and experience—the benefits themselves. Although companies could simply mandate goal-setting, we find that employees are more likely to embrace the new behaviors if they believe in them. For companies that already use daily huddles to organize team-based work, the necessary motivation tends to come quickly. We’ve found that reviewing goals in a group setting helps teams clarify objectives in a way that benefits employees directly. Goal-setting becomes part of the overall huddle process, along with discussions of any barriers that are preventing people from achieving goals, and sharing best practices to overcome those barriers.Nonetheless, even when team huddles are used, managers may need to take more direct steps to promote goal-setting. For example, among workers at a large London council that provides social services to more than 270,000 people, one group was an early adopter of setting daily goals. When the council saw how this step was leading to improved performance, it invested time in motivating other teams to set goals diligently and consistently. Managers coached these teams and promoted daily goal-setting, which led to immediate gains in KPIs, including faster response times and more efficient services for citizens.
Similarly, at a software company we studied, leaders saw that actively setting goals increased performance and employee morale in a tech support team. The team faced a backlog of customer service tickets to clear, and employees began meeting each morning to discuss the day’s KPIs and to set goals. Team leaders encouraged employees to identify specific barriers that prevented them from achieving a goal, along with the solutions they could use to overcome those barriers.
We looked at 16 months of data and found that those who set regular goals cleared their tickets at a higher rate than those who didn’t, and we found that their performance improved over time. Employees who completed at least one goal a day reduced the time it took to clear tickets by 10% compared with colleagues who didn’t set a goal.
Celebrate the small wins. As the software company’s example suggests, mood matters. Our data shows that when teams fail to meet half or more of their daily goals, they score 26% lower on their mood scores (as indicated by online flash polls) than teams that do meet them. Our advice: leaders should work with their teams each day to identify the “must dos,” clearly define what success looks like, and acknowledge when teams hit their goals. Celebrating small wins boosts morale at an individual level (when employees log their successes) and at a team level (when the group recognizes the achievement)—which benefits workers and companies alike.
In a separate example, an enterprise software provider wanted to test which daily behaviors could improve sentiment at work among its UK workforce. We studied teams in the customer contact center, analyzing more than 12,000 goals and three different KPI metrics, along with employee mood. The result? Employees who completed goals were 28% more likely to record a positive mood. Those who posted publicly about their successes—or even a colleague’s success—were 59% more likely to record a positive mood, basking in the recognition from their coworkers and managers. Ultimately, these actions led to a meaningful increase in customer leads generated by the team.
Use the right language in setting goals. The enterprise software company learned that the language used in setting the goal also had an impact on performance. Goals that were highly specific and actionable led to even better results. For example, when goals mentioned terms such as sales or leads, teams generated 12% more customer leads overall.
That’s a key insight, given the new AI-powered tools coming onto the market. These solutions can help teams test, and hone, the language they use to express their goals. They can also monitor activity and make refinements over time. We’ve recently been experimenting with a bot that uses machine learning and generative AI to understand employees’ individual needs and preferences, and then provides them with personalized guidance and support in suggesting goals. The bot can even follow up with them regarding goals that may be overdue.
Don’t forget the prerequisites. To be sure, goal-setting alone won’t do much to improve the results from a low-performing team if certain basic prerequisites aren’t in place. First, the team needs the right kind of buy-in from the top. Leaders need to understand the importance of setting and reviewing goals. They also need to empower their teams to engage in the process and set their own goals, rather than waiting on guidance from above. In fact, our data shows that team leader behaviors are mirrored in their teams: those who embrace the concept and set goals for themselves are more likely to see their employees follow suit.
Second, leaders need to create the kind of psychological safety that encourages people to share goals and achievements without fear of personal judgment. In this kind of environment, employees are far more willing to be vulnerable, admit mistakes, and speak truth to power.
Setting daily goals may not seem significant, but our research shows that when it’s done consistently and built into the workday, the benefits are sizable. And when all employees on a team—or in an entire organization—do it, those benefits compound. As Michael Phelps would attest, this seemingly small habit can have a big impact on overall performance.
Source: PWC