Devlin Peck
Business goals serve as the driving force behind any performance improvement initiative. Without them, it becomes more difficult — or downright impossible — to evaluate your efforts' success.
That's why, before starting any performance improvement initiative, you should identify the business goal that you are aiming to achieve. This gives you a clear target and benchmark for measuring success and return on investment (ROI).
For example, it's not a good idea to give customer service training to your employees and just hope that the organization will benefit from it. However, if you have a customer satisfaction metric that you're aiming to improve, then it becomes much easier to measure the impact of your initiative.
Read on to learn about the components of a business goal, as well as how to identify them.
As summed up by Cathy Moore, the business goal consists of:
Let's consider the best practices for identifying each part of this goal.
First, you need to determine which business metric you're aiming to impact. It's best to use a metric that's already tracked reliably, so if your organization tracks key performance indicators (KPIs) that indicate organization-wide or job-group-specific success, then you should tie the performance improvement initiatives to one of those. (If you aren't tracking KPIs, we'll get to that shortly.)
For example, let's imagine that you are the director of a call center. You notice that the post-call surveys indicate a large number of complaints about the customer service representatives' professionalism.
Rather than institute a new measure to track how "professional" the representative seemed, it may be better to use the customer satisfaction rating (CSAT) that's already being measured. Since delivering a positive customer experience is business-critical, this would be an adequate measure to tie the ensuing efforts to.
It's also best practice to use a metric that's tied to your organization's values. Let's reconsider the call center example, but instead, we find that customer service representatives are spending too much time trying to help the customers. Our first instinct may be to use average handle time (AHT) as a metric, but we soon find that the issue resolution rates are also very low.
Since the customer experience will be most impacted by whether or not their issue got resolved, focusing on the issue resolution rate may be more in line with the call center's values.
You don't have to limit your attention to one metric, either. Your business goal will include one primary metric, but there are likely several supporting metrics that will also be important to the business. These will be monitored during the evaluation efforts, but for now, we will stay focused on the primary metric to tie our business goal to.
You may run into some issues while trying to identify the primary business metric. Let's look at a few of them in closer detail.
If you are having trouble identifying an appropriate metric, try asking these questions:
In the rare case that you cannot use a metric that's already being tracked, then your organization may decide to implement data-collection systems to begin measuring a new metric. This can get expensive, so it's best to evaluate all possible options before going down this route.
Also, if you find that there are no metrics to inform your success, you may reconsider whether or not you are in need of performance improvement initiatives. You can conduct a training needs assessment to make a more informed decision on this front.
Some metrics, such as an organization's revenue, are impacted by many groups. This makes it more difficult to measure the impact of the ensuing efforts because you will not be able to pinpoint the effect of your efforts.
Increasing revenue may be the end goal (and it likely is for most organizations), but if there is a more specific metric that you can use to gauge success, then you should use it.
Sometimes, sales numbers may be the best option available — for example, when planning an intervention for a sales team that isn't doing as well as it could be. However, let's take this back to the call center example. Let's imagine that the call center's goal is to provide high-quality support for a consumer product, and that when customers have a good experience with support, they are more likely to buy from the brand again.
Tying the efforts to the company's sales is too broad here. Sales can be affected by product quality, external market forces, marketing, and so much more. By focusing on CSAT, you can tie your initiatives to a metric that is not influenced by so many other factors. As CSAT increases, you can attempt to measure its impact on sales via an ROI evaluation at a later date.
If we're going to tie our efforts and evaluate our success based on a given metric, then we need to ensure that the metric is reliable. Faulty or inconsistent reporting can lead us to draw false conclusions, which has the potential to end in more harm than good.
It's best practice to understand the reporting mechanism and evaluate its accuracy. For example, if the system that's monitoring the company's sales frequently crashes or loses important data, then you need to be aware of that — presumably so that you can identify a metric that's more reliable.
Once you've identified the business metric that you're aiming to impact, it's time to estimate how much you expect to impact it by and the date by which you expect to do so. How much do you expect to impact the metric and by when? Once this question is answered, your business goal will look something like this:
Increase CSAT 5% by the end of Q4.
The desired impact may be predetermined. For example, your organization may have decided during its business planning cycle that you need to hit a certain mark for a given metric by the end of the following year.
However, assuming that the metrics and goals were not decided already during the business planning cycle, then you must estimate the intervention's potential impact.
One way to do this stems from the initial performance issue that you observed. Once you recognize the performance issue, then you can estimate how much the metric will improve once the issue is resolved. For example, if a sales team isn't asking probing questions to get to the root of the customer's need, then having them do so may result in a sale 10% more of the time.
To ensure that your estimates are accurate, you can look to the performance of star employees. If other employees were able to improve their output so that it's closer to that of the star employees, how would we expect the metric to change?
Another way to estimate impact is to compare your organization's performance to the industry standards. If the average CSAT for call centers in your niche is 85% but your company is operating at 70%, then a 15% increase by the following year seems feasible. However, if your company is operating at 83%, then a 15% increase will likely take a much longer, more sustained effort.
And remember, this is not an exact science. Estimates may be drawn from past performance data or the results from previous interventions, but the estimates are just that — estimates. The estimate should be feasible to achieve with the resources available, but the most important thing it does is serve as the desired finish line for the intervention.
The third part of the business goal highlights the job group and what they should be doing more, better, or differently. In many cases, this observation is what led your organization to recognize the need for performance improvement initiatives.
If you haven't already identified a job group that needs to behave differently, then you should consider which job groups have the biggest impact on the business metric. Since the primary goal is to improve the metric, you should target a job group who has the greatest potential to impact that metric.
Once the job group is identified, you need to identify the desired behavioral change. Since we are still working out the business goal, we likely do not have all the information necessary to outline every desired change (this would be accomplished during a needs assessment). However, we likely have an idea of what the job group needs to do differently.
Taking the business goal forward for our customer service example, we may end up with a goal that looks like this:
Increase CSAT 5% by the end of Q4 as customer service representatives follow the "empathy best practices".
Or, for our sales team, the business goal may be:
Increase business unit sales by 15% by the end of next year as sales representatives ask probing questions to identify the customer's need.
When you develop the business goal during this stage, you're using all of the information that you have available at the time to do so. We may find out during a needs assessment that the salesperson performance issue isn't due to them asking too few probing questions, but rather due to them accidentally insulting the customers and turning them away prematurely.
The business goal serves as a starting point for the initiative's future success, but it is malleable. As more information is uncovered during ensuing efforts, it may make sense to revise the business goal accordingly — this is because we want to ensure that achieving the business goal is feasible.
As we've discussed, there will likely be negative consequences if you proceed with performance improvement efforts before tying them to a clearly defined business goal. The business goal serves as the basis and justification for the ensuing efforts, and it defines the metric that will gauge the initiative's success.
Operating from a business goal also makes it easier to measure return on investment down the line. Since performance improvement initiatives should be tied to the business results that they're producing, identifying the business goal is a critical first step to making sure this happens.
As a final reminder, the business goal for performance improvement initiatives should take the following format:
The business metric will increase / decrease X% by Y date as people in a certain job group do Z.
This format is adapted from performance improvement expert Cathy Moore's flagship book, Map It.
Once you've identified the business goal, you can take the performance improvement initiative forward by conducting a training needs assessment. This will grant you much more information about the performance problem, as well as exactly how to resolve them.
Read more about the training needs assessment and why it's so important.
