Goals For Alignment, Not Bonuses

Goals are important. They can give us a sense of purpose and direction. They aid us in prioritizing where we spend our time. They can empower teams and individuals. They can align us to achieve our most ambitious dreams. Goals can also divide us, be divisive and see people incentivized with conflicting goals and self-serving with individuals fighting for their bonuses rather than collaborating for customer value.  They can turn a great organization into one of political warfare.

Even with the best of intent, goal setting done wrong does more to rip an organization apart than to bring it together. Here, my objective is to outline some thoughts on three big areas to ensure our goals bring us together: Organizational design, the cascade of goals, and the need to empower with goals.

Note: I’m going to generically refer to “goals” throughout this article. For you and your organization that could be Objectives & Key Results (OKRs), it could be Key Performance Indicators (KPIs), or a host of other frameworks. Regardless, they are goals.

Structuring Your Organization For Value, Not Hierarchy

One of the most prominent blockers to alignment within an organization is the organization itself. More specifically the organizations’ structure because how we design an organization is vital to ensuring its goals align us, rather than pull us apart.

When it comes to thinking about how an organization can be structured, there’s a key differentiation I believe needs to be made. That is the difference between how we are formally structured, and how we work. These two concepts overlap, but they are, in my experience not-so-subtly different.

How we are structured, to give us a shared language, can be named our organization structure. This is responsible for people, practices, and oftentimes reporting lines. Organization Structure is there for general people management, remembering that not every senior member of a team wants to manage people, organization structure handles this. It is also responsible for driving people’s growth and development, ensure excellence within practices and skillsets to see them add more value.

Legacy siloed thinking has seen org charts also be used to determine who does what. It’s a sort of “department as a service” silo mindset that more outcome-oriented and customer-centric businesses have moved away from.

How we work, again to give us a shared language, can be named our team structure which is responsible for alignment, and delivery of value. The team structure has to be closely aligned to how we work and is about bringing the right people, with the appropriate skills together around commonly-held goals. Team structure should empower you with the knowledge of who you work with, what you’re working on, and how your joint success is measured. As well as provide you with the teammates (and their skills) required to succeed.

In companies that use their organizational structure to derive their team structure. A symptom is that they often have project management to facilitate progress between the inherited silos of the organization (eg: “the marketing department”, or “the engineering team”). It is frankly not only inefficient but also enforces silos and politics we should be working hard to remove.

A key principle is to get your team structure as closely aligned to how you work, and make sure your organization structure doesn’t get in the way. We must think about how the organization grows, and what teams need to deliver maximum impact as two separate discussions.

The team structure has to demand that teams themselves are cross-functional and with minimal dependencies. For teams to be truly empowered and able to be measured by the goals they are aligned to, we need to advance past a definition where cross-functional equals product, design, and engineering to one where the people and skills the team needs is determined by the goal itself. If to achieve the goal they have been set the team requires folks from marketing and legal, as well as product, design, and engineering then that is the scope of the team – we minimize the dependencies, remove the departmental silos and empower teams to do their best work.

A Cascade Of Goals

If we’re to zoom out of any organization, they’ll typically have 3-4 levels of goals. Sometimes these goals are explicit and transparent, sometimes they’re opaque and unintentional. Regardless, they’ll almost always exist, and our objective should be to make them clearer, more intentional, and to use them to align us. What are the four common levels of goals?:

Every organization needs a vision and/or mission statement; this is the ultimate goal of an organization. The big daddy of goals. It’s the reason the company exists, and should clearly communicate the change you’re ultimately working to see in the world.

Every individual within an organization also has goals and these are often the most implicit. Individual Goals should articulate two elements: 1) how the individual will contribute to the team’s success and 2) how they’re looking to grow to add greater value. Having these two elements clearly articulated as part of your goal setting gives you a greater sense of belonging and contribution within the organization.

Some organizations leave it there, having this lofty vision and individuals goals. This is dangerous. The gap between a vision and an individual’s work is too great and the leap of faith required is too extreme. In this situation, your decision quality is based more on luck than anything else. Organizations that are optimizing for high-quality decisions, empowerment, and experimentation have a couple of extra levels.

They take that ambitious vision statement and break it down into top-level strategic goals. This is typically in the form of 3-5 ambitious outcomes that we’ll be working on for years to come.

And finally, we have these initiative-level goals, these are often goals that are broken down to be more tangible, and they’re driven and changed by the organizations’’ cadence. These are your quarterly OKRs or this year’s product goals for example. They’re somewhat time or mission bound.

All four of these levels are important and provide value. There’s an omnidirectional cascade that allows an individual to see where their day-to-day fits into the more strategic vision, and also shows us what we believe we need to do to achieve our vision.

Incentivising Teams, Not Individuals

I was the Head of Product for an organization, and we had recently closed off our quarterly goal-setting. A part of my role was to design and communicate clear goals to each product-team based on top-level goals, and our current initiative-level goals. Other “department heads” would be keen to ask me how the product teams will be prioritizing work that helps them achieve their departments’ goals. As an organization, we had all assumed that our goals would be similar, however, they were entirely different because the goals were based on department silos. This meant that other managers had little to no chance of achieving their goals unless they could figure out how to do it without product & engineering support – which we knew they couldn’t.

When you have a team structure that is truly cross-functional as I articulate above, you decentralize the organization. No longer do departments have goals, but teams do. Departmental goals do more to move us further apart than to bring us closer together.

During an ambitious transformation program for an industry leader, one of our objectives was to improve the quality of the software we put out into the market (in short, fewer bugs and greater reliability). Part of what we planned to do was build more collaboration between software engineers and the quality assurance (QAs) folks, however, the QAs didn’t want anything to do with it. It was baffling, but only later did we learn that each QA had a quota and KPI (of which their bonus depended on them reaching) to raise more bugs, our work was directly impacting their ability to make a living and they were uncooperative (understandably). Individual goals are time, and time again, divisive and counterproductive.

I have experimented with alternatives to how we incentivize because there’s tremendous value in having skin in the game. Even looking at linking incentives to top-level business goals, however, these are so high-level, it becomes too easy to coast and this breeds complacency which isn’t what we’re looking for either.

The magic is when we realize that an organization has goals, and individuals have their goals, and there’s this cascade. Individuals are assigned to teams, and teams are aligned to goals. We incentivize individuals based on the goals of the team they’re a part of. We bring together people’s individual efforts into one joint effort, rather than individuals fighting for their success, when the team wins the individual wins.

For leaders, their role changes to one which focuses on coaching (helping people solve tough problems and make better decisions), as well as creating alignment across teams. They set the goals of the teams, and if teams are achieving their goals, we can assume in good faith that the leaders are doing a great job as well. Occasionally teams defy all odds and succeed even with a terrible leader, but it’s more than likely you’ll see and hear this and can act appropriately rather than over-complicating the system.

Empower With Goals

Rarely can we successfully empower teams without pairing an organization and team structure that is designed to bring people together with incentivizing at the right level. However, in sharing these thoughts, one underlying assumption I’ve also made is that we are open to trusting our teams to do their best work. That our objective is to align AND empower our teams.

Pairing structure and incentives with empowerment is the secret sauce to having teams truly innovate and deliver value; to have them yearn for the vast and endless sea.

If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea. -Antoine de Saint-Exupéry

In this environment, a heuristic for measuring a leader’s success is whether their teams can make better decisions than they can. In theory, these teams have a strategic context that is the cascade of goals, they have all of the required skills thanks to their cross-functional nature, and if empowered, should be closer to the customer, research, data, and technology. They should have everything required to make high-quality decisions daily and we should not need to tell these people what to do, even if as an executive we wanted to, but to coach and support them to get it right.

Setting up these teams and incentivizing them falls short if they are not empowered, and to empower teams means to provide orders with minimum constraints. This, in practice, approximately translates to leaders providing direction (goals and measures) and coaching whilst letting those (the team) closest to the customers do the work.

Setting Great Goals For Alignment – A Summary

It’s true; we can use goals for alignment, structure organizations for alignment, and incentivize people for our joint success. There are a few key points worth highlighting here:

1. Structure your organization for value, not hierarchy. Have your organization structure get out of the way of your team structure. Bring people together around goals and outcomes, not departments or executives, and don’t let your organization impede adding value
2. Have a cascade of goals that allows you to connect an individual’s day-to-day work to your vision of the world. Without this, the leap of faith required is too large
3. Incentivizing teams, not individuals. Incentivizing can be a powerful tool from the perspective of performance and reward, but we need to incentivize the collective efforts of a team, rather than the savvy efforts of an individual
4. Empower your teams otherwise you cannot measure them via goals and outcomes, only outputs. Empowerment is the key to building great products and innovating. Without this, we’re telling teams how we’ll measure their success and also what to build – it’s a recipe for failure

The framework for which we implement goals within an organization isn’t as important as these four points. If we get these four points, pick the framework that you believe in more, or feel more comfortable with. But let me be clear, without the right structure, without a cascade of goals, without incentivizing at the right level, and without empowered teams – any and all frameworks will fail.

I’d love to hear your thoughts on some of these ideas, and how your organization is doing goal setting today!