Developing performance goals and objectives

Three frameworks dominate goal setting, and most arguments about them are wasted. SMART, KPIs and OKRs do different work, and the useful question is which to reach for rather than which is right.

SMART

The oldest and the most widely misused. A goal is Specific when it is described clearly enough that two people would agree on what it means. Measurable when you can say afterwards whether it happened. Achievable when it has been agreed between manager and employee rather than issued. Relevant when it connects to the company's strategy rather than only to a department's convenience. And Time Bound, with a date.

The common failure is writing something vague, attaching a number to it, and calling it SMART.

Key performance indicators

KPIs are specific to an organisation and should reflect what that organisation actually cares about, which is why borrowing someone else's set rarely works. They can be operational, as in achieve a particular outcome by a particular date, or they can track general progress against strategy.

The framework is less prescriptive than SMART, which is a strength and a trap. The objectives underneath a KPI still need to be specific, measurable and dated, so the two frameworks complement each other rather than compete.

Objectives and key results

OKRs exist to stretch people. A well written OKR should feel slightly uncomfortable, in the spirit of what Jim Collins called a Big Hairy Audacious Goal in Built to Last. They cascade, running from organisational strategy down through function and department to the individual, which is what keeps them aligned.

One rule matters more than the rest: never tie OKRs to appraisals or to pay. They are stretch goals by design, so consistently hitting 100% means they were set too low. Attaching compensation to a target you expect people to miss is unfair, and it guarantees that next quarter's objectives will be cautious. It also means OKRs do not satisfy the A in SMART, and that is deliberate rather than a flaw.

What the three have in common

Goals mean objectives, not aspirations. Something measurable and capable of being recognised when it is met, rather than a direction of travel.

They have to align with the business. An employee goal that does not connect to what the organisation is trying to achieve is work you are paying for twice.

Whether goals must be achievable is a decision, not a fact. It depends on the business model, the strategy and the culture, and it is the owner's or the manager's call whether people are expected to hit everything or to reach for things they may miss. What you cannot do is leave it ambiguous.

Timeframes are not optional. Every objective needs a date, and a goal achieved late is a partial success at best.

And the frameworks work better together than alone. SMART disciplines the writing, KPIs track the ongoing picture, and OKRs set the direction worth stretching for.

Where this is taught

Developing goals and objectives, OKRs included, is a module of the Certificate in Performance Management. There is a fuller comparison on OKRs versus KPIs, and the appraisal side is covered on the performance appraisal training page.