CHAPTER 10
SETTING GOALS AND MANAGING PERFORMANCE
“The reason most people never reach their goals is that they don’t define them, or ever seriously consider them as believable or achievable. Winners can tell you where they are going, what they plan to do along the way, and who will be sharing the adventure with them.”
—Denis Waitley
When owners or employees express concern with their compensation systems, many people argue it is a result of a flawed compensation system. We argue that in addition to the possibility of a faulty system, one of two things is likely happening: either individuals do not understand the compensation system, or firm leaders do not manage performance. Employees need a goal-setting process that creates a “line of sight”—they need to be able to draw a line of sight between the firm’s vision and strategic objectives and what they do on a daily basis, and they need to understand how what they do on a daily basis translates to compensation. They also need frequent, accurate, and specific feedback to let them know how they are performing. Firms often have these systems—but all too often these are the systems that are flawed, either in their design or their execution.
This chapter covers the basics of goal setting and a process you can use to set and monitor progress toward goal achievement. We realize there is more than one way to set and monitor goals. The process itself is not as important as the consistency with which it is followed—for both goal setting and goal monitoring. Again, it is the consistent application of the process that counts.
“LINE OF SIGHT” OR CASCADING PERFORMANCE GOALS
A performance goal (often referred to as a performance target) is an explicit statement of what a firm or individual will accomplish during the current year or performance cycle. Individual goals are based on the firm’s overall goals, departmental goals, and team goals. Goals generally depend on the employee’s level and role in the firm. It is best to set and monitor individual performance goals based on firm-wide goals that are cascaded throughout the organization. These are merely high-level goals that are set by the firm, and every employee participates in achieving them. This is where the concept of “line of sight” comes into play.
Individual performance goals should be based, or closely aligned to, the goals of those above them in the firm. For example, a manager’s goals should support the goals of one or more owner’s goals. The owner’s goals should support the goals of the department in which he or she works which, in turn, should support the goals of the firm. In many firms, the rainmaker is highly compensated, but the business that he or she brings into the firm may not be tied to the firm’s strategic vision. If so, rewarding such performance is probably counterproductive.
To help employees increase “line of sight,” you may want to flowchart how their activities support the goals of their superiors and how their superiors’ goals support the goals above them.
The Ritz-Carlton often serves as one of the best examples of how corporate goals are cascaded throughout an organization. See Exhibit 10–1, “The Ritz-Carlton’s Gold Standards,” at the end of the chapter.
Cascading goals for a typical accounting firm are illustrated in the following figure.
SET CASCADING PERFORMANCE GOALS
“In most cases, goals that do exist are vastly undercommunicated,” says Stephen R. Covey. “Just because the formal leaders are clear on what they want to achieve doesn’t necessarily mean that those on the front line, where the action actually happens, know what the goals are.”1
At the beginning of each fiscal year, each employee, together with his or her manager or owner, should develop agreed-upon individual performance goals that align with the firm’s strategic goals—using some type of goal-setting form or template. Not only are goals defined at the beginning of the year, but measures and targets for success for each goal are also defined. At the end of the year, these measures are used to determine the degree to which the employee or owner has achieved each goal.
Some firms use a numerical rating which is applied to each goal category based on how well the employee has achieved the goals in that category. One example of such a rating scale is:
1 = Far exceeds expectations
2 = Exceeds expectations
3 = Meets expectations
4 = Below expectations
5 = Far below expectations
Leader Responsibilities in Setting Cascading Performance Goals
Leaders have the following responsibilities for helping employees set performance goals. Leaders should:
▮ Provide appropriate employees with a copy of the firm’s strategic performance goals, his or her departmental performance goals, and the leader’s individual goals.
▮ Meet with employees to discuss how they can help the firm achieve its strategic goals (that is, create a “line of sight”). This meeting should occur before employees begin the process of writing their goals.
▮ Provide assistance, as necessary, to ensure the goals employees create follow the SMART (specific, measurable, achievable, relevant, and time-bound) format and align with firm goals.
▮ Review and approve, as appropriate, the goals each employee writes— ensuring the goals are a win for both the employee and the firm.
▮ Ensure each employee develops and implements a professional development plan that supports goal achievement.
▮ Hold employees accountable for achieving their goals.
▮ Offer resources, feedback, coaching, and support employees’ needs to achieve their goals.
▮ Meet regularly (at least quarterly) with employees to discuss progress toward goal achievement and revise them as appropriate.
▮ Conduct a formal assessment of each employee’s progress toward goal achievement at midyear.
▮ Conduct a formal assessment of each employee’s goal achievement at year-end.
Employee Responsibilities Setting Cascading Performance Goals
Employees have the following responsibilities for goal setting. Employees should:
▮ Review the firm’s strategic performance goals, their departmental performance goals, and their leader’s individual goals.
▮ Ask their leaders how they can help the firm achieve its strategic goals (that is, create a “line of sight”).
▮ Write a first draft of their goals and ensure the performance goals follow the SMART (specific, measurable, achievable, relevant, and time-bound) format.
▮ Meet with their leaders to discuss and refine the performance goals to ensure they align with the firm’s goals.
▮ Develop and implement a professional development plan that supports goal achievement.
▮ Work hard to accomplish their performance goals and be accountable for achieving them.
▮ Seek the resources, feedback, coaching, and support they need to achieve their goals.
▮ Meet regularly (at least quarterly) with their leaders to discuss progress toward goal achievement and revise them as appropriate.
▮ Document progress toward achievement of their performance goals so they can discuss progress as well as needed adjustments with their leaders during a formal, midyear assessment.
▮ Document progress toward achievement of their performance goals so they can discuss goal accomplishment (or lack thereof) with their leaders during a formal, year-end assessment.
A caveat: As one managing owner told us, “I wholeheartedly agree and support all of this—and we do it and it works—however, it takes a lot of time and effort and few firms will sacrifice the billable time it takes (away from the firm) to get this done.” While it does take time, we believe the rewards for both individuals and the firm are well worth the effort.
PREPARE TO WRITE CASCADING PERFORMANCE GOALS
“U.S. workers have so many goals to work on, they can’t stay focused on and execute their organization’s top three goals,” says Stephen R. Covey in The 8th Habit. “They need clear direction from senior level management, as well as their direct supervisors, in distinguishing the difference between goals which are merely important and those which are wildly important—those which must be reached or nothing else matters.”2
We shared previously that leaders are responsible for providing employees with copies of the leaders’ goals, the department’s goals, and the firm’s strategic goals and objectives. Employees should review their leaders’ goals to understand how the goals have cascaded from the top of the organization to their leaders.
Employees and their leaders should discuss how employees can help accomplish the firm’s strategic goals and objectives as well as the leader’s goals. Employees may be asked to be responsible entirely for accomplishing one or more of the goals, or they may be asked to be accountable for only certain tasks within specific goals. When meeting, everyone should:
▮ Understand desired outcomes.
▮ Consider other factors (for example, culture, firm policies, possible barriers, and so on).
▮ Remain aware of the resources (people, financial, technological, training, and so on) available to help accomplish the performance goals.
▮ Agree about how progress (that is, accountability) will be monitored.
▮ Understand the consequences of accomplishing (or not accomplishing) the goal(s).
You may also need to talk with key internal customers or stakeholders. Their needs help you define your goals. Before creating goals, take the following three steps:
Be sure you know specifically what you are trying to accomplish.
Focus on outcomes, not activities.
Write clear and explicit statements of what you will achieve.
WRITE CASCADING PERFORMANCE GOALS
As it is written, so it shall happen. In What They Don’t Teach You at Harvard Business School, author Mark McCormack found that only 3 percent of the 1979 Harvard Business School class had written down their goals and plans. Ten years after graduation, that 3 percent earned an average of 10 times more money than the rest of their classmates. What is the moral of the story? Write your goals! At the same time, we recommend you limit the number of written performance goals. According to FranklinCovey’s execution process, The 4 Disciplines of Execution™ (a work session that helps managers and teams identify their highest priorities), the traditional thinking suggested that workers can effectively accomplish six, eight, or even ten important goals at once. The new thinking suggests that workers who narrow their focus on a few key goals have a greater chance of achieving their goals with excellence. Too many goals, conflicting or not, lead to confusion, burnout, decline in quality, and loss of focus. Goals must be specific and clear, explicitly linked to corporate strategy, broken down into bite-size chunks, measurable, and deadline-driven.
As goals are completed throughout the year, new goals may be added. If you have a large number of goals (more than five), it is likely that what you are calling goals are actually tasks or parts of larger goals. Remember, a goal should be based on a major area of responsibility.
Many people use the SMART acronym as a reminder about how to write effective performance goals (targets). Again, a SMART goal is specific, measurable, achievable, relevant, and time-bound. A SMART goal states the expected outcomes as simply and concretely as possible. It answers questions such as: “By how much?”, “For whom?”, and “For what?”
Here is an exercise to help you write goals that are focused on outcomes rather than activities. It helps you increase clarity and specificity about the important outcomes. For each goal, ask yourself the question, “How will I or anyone else recognize success?” Write down your answer. Then modify the question based on your previous answer. Repeat the process until you have a specific outcome-based goal. If, for example, your goal is to increase service to tax clients, you may ask the following:
| Q: | How will I and others recognize success in service to tax clients? |
| A: | By returning work to them prior to an agreed-upon deadline. |
| Q: | How will I and others recognize that work was returned prior to an agreed-upon deadline? |
| A: | By tracking when the work was sent vs. when the work was promised to be sent. |
| Q: | How will I and others recognize success in sent vs. promised work? |
| A: | By improving my “sent prior to the deadline” rate from 72% to 95%. |
To commit ourselves to our goals, we must first identify with them. We want to achieve them, we need to achieve them. Most people want goals that increase their learning and challenge them to go beyond former achievements. When you write your goals, think about how you can make an impact. Think about how to tackle new problems or address familiar issues in creative ways. If you write challenging (but achievable) goals, your work will be more interesting and fulfilling, and your contribution to the firm will be larger.
In some performance management goal forms there can be a space for you to indicate the primary beneficiary or the upper-level goal your goal supports. For example, an administrative assistant might have an internal client goal to “provide efficient administrative support to the Audit Department.” The primary beneficiaries would be the members of the department. An audit manager’s client goal might read, “Help reduce staff turnover from 10 percent to 5 percent by December 31 of next year.” In this case, primary beneficiaries may include both clients and other staff members.
Almost everyone needs to work cooperatively with others in the firm to achieve their goals. To create further “line of sight,” document the names of the people or groups with whom you will work to accomplish your goals. These individuals or groups may be internal or external clients, colleagues, managers, or owners.
DEFINE MEASURES OF SUCCESS FOR CASCADING PERFORMANCE GOALS
In FranklinCovey’s 4 Disciplines of Execution™, we are reminded that traditional thinking suggests that once the goal has been communicated, workers will know the organization is serious about it. In reality, workers are not really serious about a goal until they start keeping score.
A measure of success is a verifiable indicator of results. It is the target. It is how the achievement of your goals will be measured. “Verifiable” here means that other people would agree, on the basis of the measure you specify, that the desired results were achieved or not achieved. For each goal, write one to three measures of success. Year-end goal ratings will be based upon these measures of success. The measures must focus on observable results, that is, your leader and others must be able to verify that you have accomplished your goal.
We learn in The 4 Disciplines of Execution™ that creating measures and a compelling scoreboard that is accessible, visual, engaging, attainable, and concise ensures workers have the same understanding of goals and can see when they are winning or when course correction must be made.
CATEGORIES OF CASCADING GOAL MEASURES
While goal categories (and their weighting) vary from firm to firm, we believe each firm should have, at a minimum, the following basic goal categories (which tie to the categories in the Balanced Scorecard):
Financial goals
Client goals
Internal systems/business process goals
Employee growth and learning goals
Business development goals
How these categories are weighted for the computation of year-end performance ratings varies from firm to firm and often varies from person to person within a particular firm. Each is discussed in the following sections.
Financial Measures3
The proof, as they say, is in the pudding. The financial perspective tells a firm if its strategies are working. If the firm is hitting or exceeding its growth and profitability goals, then it is effectively implementing its strategic plan. If financial measures are not being accomplished, the firm is compelled to examine underperforming areas and make needed changes to get better results. While most firms are good at setting financial objectives, neglecting what is behind the numbers often gets them into trouble. The most common measures in the financial area include:
▮ Staff cost as a percent of net revenue
▮ Revenue from new services introduced
▮ Revenue growth
▮ Net income per partner/owner (NIPP)
▮ Return on investment (ROI)
▮ Return on marketing investment (ROMI)
▮ Operating margin
▮ Market share
▮ Return on equity (ROE: earnings available to shareholders/shareholders’ equity)
▮ Profits per professional
▮ Profits per full-time equivalent (FTE)
▮ Revenue by service mix
▮ Cash flow from operations
▮ Receivables as a percent of working capital
▮ Days outstanding in accounts receivable (A/R) and work in process (WIP)
Client Measures
Client objectives tell you how well you are servicing the market segments in which you have chosen to compete. To determine how well they are achieving the firm’s client objectives, firms often select one or more measures from the following list:
▮ Number of personal interviews with clients
▮ Client service guarantees implemented
▮ Profitability by client
▮ Number of clients inside the target market segment
▮ Number of profitable clients
▮ Share of client’s wallet
▮ Accounts receivable (A/R) adjustments
▮ Work in process (WIP) adjustments
▮ Client retention rates
▮ Satisfaction scores in problem areas
▮ Service attributes
▮ Percent of clients that rate the firm as 4 or 5 (on a scale from 1 to 5) in client service
▮ Retention rates or percentage of clients who are repeat
▮ Number of client complaints
▮ Number of re-dos in work products (error rate)
▮ Number of clients exercising service guarantee
▮ Number of new services sold to existing clients
▮ Service quality
▮ Turnaround time
▮ Percent of delivery deadlines met
▮ Percentage of total revenue that comes from repeat clients
▮ Percentage of lost clients
▮ Net clients gained
▮ Percent of clients providing referrals
Internal Systems/Business Process Measures
Many business leaders believe a great strategy is the key to getting desired business results. One statement that has had a profound impact on us as consultants is this: “A Grade C strategy with Grade A execution is far better than a Grade A strategy with Grade C execution.” As we saw in the Organizational Effectiveness Cycle in Chapter 3, “systems and process” are what follow closely on the heels of strategy. It is the systems and processes that cause or motivate people to engage (or not to engage) in the behaviors that are needed to accomplish the goals.
While some accounting firms, and many consulting firms, provide process reengineering for their clients, few do so within their own firms. Simply stated, a process is a series of steps that change input into output. There are many processes in a firm, but the most important ones are those that have an impact on the client’s experience with the firm and on the firm’s financial results. The ultimate objective in every business process is to help the firm achieve its goals. Most firms have a goal to provide excellent client service (effective and efficient service). If the work review (quality control) process is redundant and ineffective, however, it is more difficult for the firm to achieve the client service goal.
Process improvement requires a firm to identify, document, and ultimately refine the process so it furthers firm goals. It is an ongoing endeavor.
We encourage firms to assign individual stewardship for existing systems and process review and refinement. These stewardships should be documented as written performance goals for those to whom they are assigned. When assigning process review and refinement, you should outline desired results and allow the stewards to determine the approach and methodology for conducting the reviews and revisions.
When documenting existing systems and processes, we often suggest a flowchart of the tasks and activities that are included in the process as well as decision-points along the way—those steps that convert the input into an output. A flowchart can also demonstrate how the system is currently working. Since processes support many different functions, departments, niches, services, or strategies in a firm, you will want the flowchart to depict all the cross-functional responsibilities. Creating effective internal processes is also important because it reduces inefficiencies, thus allowing more time for professional staff members to work on challenging and motivating client work.
When setting process improvement objectives that impact clients, consider the following broad questions:
▮ How does the firm need to be structured to meet client needs?
▮ How does the firm ensure a quality product that eliminates re-dos?
▮ How does the firm ensure a timely turnaround?
▮ What does the firm need to do from a process perspective to achieve its client and financial objectives?
▮ What processes does the firm need to develop or improve in the service innovation, operations, and post-sale stages?
Here are examples of key internal systems and business processes you may want to examine:
▮ Marketing and sales
▮ Client acquisition
▮ Service delivery
▮ New service development (R&D)
▮ Post-sales follow-up
▮ Client service (handling complaints, billing issues)
▮ Pricing
▮ Client billing and collection
▮ Improving utilization
▮ Turnaround time for projects
▮ Rework time
▮ Number of tax returns completed per day
▮ Number of new services developed
▮ Time to bring new services to market
Employee Growth and Learning Measures
The employee perspective in a professional services firm is perhaps the most important category of measures because the key differentiating factor for professional services firms is their people—the resources who actually develop and maintain client relationships and provide product or service delivery. The professional services firm succeeds or fails in the other categories (client service, financial, internal systems and business processes, and business development) based on the experience and expertise of its employees.
Employee measures help the firm determine how well it is recruiting and retaining the “right” people and enhancing the competencies of employees and owners. Here are examples of specific measures that determine how well you are achieving employee-related objectives.
▮ Number of professionals who are trained in more than one service area
▮ Number of professionals trained in new technologies
▮ Firm’s investment in technology as a percent of net revenue
▮ Employee satisfaction
▮ Number of staff suggestions made
▮ Number of staff suggestions implemented
▮ Employee turnover ratio
▮ Average length of service for professionals
▮ Number of employees participating in retirement and profit-sharing plans
▮ Revenue generated per employee
▮ Percentage of professionals with CPA or other professional designation
▮ Number of professional, niche, and community organizations in which the individual actively participates
Business Development Measures
It should be recognized while an entire firm can sometimes—but not often—be marketed as a firm (for example, “The Firm of Smith and Dale Does Nice Work”), the most effective professional services marketing and business development is performed for the parts of a firm. The performance goals and measures of every niche, practice group, or service team should support the firm’s overall strategies.
There are several ways to measure whether your marketing and business development efforts support your firm’s growth and financial objectives. For example, you can measure:
▮ Number of new products or niches developed during the last year
▮ Number of new geographic markets entered
▮ Number of cross-selling opportunities created
▮ Amount of cross-sold revenue
▮ Cost of new client acquisition
▮ Number of personal interviews with clients
▮ Results of client satisfaction surveys
▮ Number of client service guarantees implemented
▮ Client profitability
▮ Number of clients inside the target market segment
▮ Share of client’s wallet
▮ Client retention rates
▮ Total marketing cost as a percentage of total revenue
▮ Number of seminars presented
▮ Number of ads placed
▮ Number of interviews conducted
▮ Number of articles placed
▮ Number of press releases placed
▮ Number of times firm members are quoted or mentioned in publications
▮ Number of presentations made
▮ Ratio of proposals won/total proposals
▮ Number of pending proposals
▮ Number of trade shows attended
▮ Number of trade shows exhibited at
▮ Market share
▮ Number of new clients
▮ Brand name awareness
▮ Average fees per existing client
▮ Average fees per new client
▮ Percent of sales from new services
▮ Revenue growth rate by service
SET TASKS AND ACTION STEPS
After you identify your performance goals (targets) and measures, you need to list the tasks you will complete to accomplish the goals. Most people consider tasks to be small. In this context, tasks should not be considered to be the elements of a detailed project plan but rather a list of major milestones. Each of the milestones can be broken down into several steps.
For example, you may establish a goal to “reduce the attrition of five- to seven-year professionals from 15 percent to 10 percent by December 31, 20XX.” This goal could be broken down as follows:
▮ Goal: Reduce the attrition of five- to seven-year professionals from 15 percent to 10 percent by 12/31/20XX.
▮ Task: Analyze the reasons for attrition.
—Action Step: Create “attrition task force.”
—Action Step: Assign leader of “attrition task force.”
—Action Step: Convene first meeting of “attrition task force.”
—Action Step: Create agenda for first meeting of “attrition task force.”
—Action Step: Plan the analysis methodology.
—Action Step: Conduct focus group interviews.
—Action Step: Perform employee satisfaction survey.
▮ Task: Create a pilot program to boost retention.
▮ Task: Develop and implement a long-term strategy to increase retention and tenure in position.
DETERMINE PERSONAL READINESS LEVEL
For each task, individuals must determine their readiness level for completing the task. This links back to our discussion about know-what, know-how, and know-why. Readiness level is based on an understanding of what to do, how to do it, and the motivation to do it. You may have a high level of readiness for one task and a low level of readiness for another task within the same goal. You will generally find yourself at one of the following four levels of readiness:
Level 1. You have not yet developed the competencies needed to complete the task, and you have limited self-confidence or motivation. This is called “low skill, low will.”
Level 2. You have not yet developed the competencies needed to complete the task, but you have self-confidence and motivation. This is called “low skill, high will.”
Level 3. You have the competencies needed to complete the task but you have limited self-confidence or motivation. This is called “high skill, low will.”
Level 4. You have both the competencies needed to complete the task and self-confidence and motivation. This is called “high skill, high will.”
It is important to determine readiness level because it helps determine the amount and type of support needed to complete the task. To determine the amount and type of leadership needed to complete your tasks based on readiness level, some firms use a “situational leadership” approach. Each of the four types of situational leadership (directing, guiding, supporting, and delegating) corresponds to one of the four categories of readiness.
For individuals at readiness level 1 (low skill, low will) leaders should use a directing leadership style. They should provide clear and specific direction, guidelines and rules, training as needed, and close supervision with frequent review meetings (including coaching and feedback).
For individuals at readiness level 2 (low skill, high will) for a task, leaders should use a guiding leadership style. They should provide clear but general direction, needed training, and frequent review meetings (including coaching and feedback). Leaders should involve the task steward in planning the work.
For individuals at readiness level 3 (high skill, low will), leaders should use a supporting leadership style. They should ask for and listen to concerns about performing the task and encourage the task steward to take action. Leaders should periodically check on progress and provide coaching and feedback.
Finally, for individuals at readiness level 4 (high skill, high will), leaders should use a delegating leadership style. This allows the task steward to take charge of the task and handle as much responsibility as possible. Leaders should take prudent risks in letting task stewards make decisions, but they should also check on progress periodically and provide coaching and feedback.
PREPARE FINAL CASCADING PERFORMANCE GOALS
After you prepare a final draft of your performance goals, meet with your leader to review them. (In the case of owners, they may meet with a managing partner or executive committee.) In addition to reviewing each goal, you and your leader should agree on your readiness level for the required tasks as well as any support you may need (for example, training to improve competencies). This should be documented and in your personal and professional development plan.
After meeting with your leader and agreeing on your performance goals for the year, you will document them on the goal form, and each of you should “sign off” on them. Each of you should keep a copy. A sample form is included in Exhibit 10–2, “Sample Form: Setting Performance Goals.”
MANAGE PERFORMANCE
Many leaders believe people will remain focused and committed to their performance goals if the goals are clear and compelling. Again, according to FranklinCovey’s 4 Disciplines of Execution™, frequent team engagement and accountability is necessary to maintain commitment to goals. Managing performance, therefore, is not something that is done only at year end. Workers must know they are being held accountable, and they must hold each other accountable for their performance.
Bruce Tulgan, author of FAST Feedback, suggests the difference between a low-performing team and a high-performing team lies in a coaching-style manager who knows how to keep individual performers focused and motivated day after day. In our work with clients, we often recommend the following agenda items for a team meeting:
▮ Celebrate successes
▮ Discuss what we learned since the last meeting and how it applies in our work with clients
▮ Review firm, department, niche, and team performance goals and progress toward goal achievement
▮ Review individual task stewardships since the last team meeting to determine if they have been completed
▮ Discuss upcoming individual task stewardships to determine barriers that need to be removed and resources or assistance that may be needed
In addition to regular team meetings, individual performance reviews (feedback sessions) should be conducted to track accountability and discuss progress toward individual performance goals. Tulgan believes employees should receive FAST feedback. Tulgan’s acronym, FAST, stands for frequent, accurate, specific, and timely—the four qualities that employees most often ascribe to feedback from “the best manager they ever had” and feedback they need but do not get from most managers. Employees should receive both positive and constructive feedback.
Frequent. We believe individual performance reviews (feedback sessions) should be conducted at least quarterly.
Accurate. Throughout the year, all employees and owners need to document task completion and goal accomplishment. As tasks are completed, they should be tracked on the goal sheet so progress can be tracked. In addition to your tracking, your leader may use his or her own documentation, feedback from others, and his or her observations to rate your performance. Tracking progress throughout the year about what has already happened alleviates the midyear and year-end scramble to pull it all together for the formal review. Progress is already neatly documented, requiring the addition of only a few notes prior to the formal review.
Specific. While accurate feedback focuses on what has already happened, specific feedback focuses on what needs to happen. Specific feedback helps employees determine the specific behaviors needed to achieve their “line of sight” or cascading performance goals. In some cases, goals may need to be updated. You may also determine that additional tasks are necessary to complete a certain goal or previously identified tasks are no longer necessary to complete a certain goal. Some goals may no longer be necessary in light of strategic changes at the departmental or firm level. Finally, some goals may have been completed, allowing for the addition of new goals. As goals are updated, we suggest you keep copies of the outdated goal sheets.
Timely. Tulgan and countless others believe the sooner feedback follows the performance in question, the more impact the feedback has on the employee, and the better the chances that any needed improvements will be made.
FINAL THOUGHTS
When changes are contemplated in a firm’s goal setting, performance management, and compensation systems, the first question most people ask is, “How will this affect me?” It must be more than merely completing forms, meeting with employees three or four times per year to track accomplishment, and paying for a job well done. We agree with Jim Collins that a performance management system tailored to your firm can attract and retain the “right” people. We like to think that a performance management system does not necessarily create a “survival of the fittest” environment, but rather a “survival of the right people” environment.
While managing performance is not always easy, it is vitally important for the long-term success of the firm. And without undying commitment by owners, performance management will be inconsistent, or, worse yet, nonexistent. We therefore often suggest that owners serve as the role model or example—that they agree to needed changes in their own goal setting, performance management, and compensation systems first— because the best way to influence positive change is to be the change we seek.
EXHIBIT 10–1 The Ritz-Carlton’s Gold Standards*
The Gold Standards (as posted on The Ritz-Carlton Web site, www.ritzcarlton.com) are the foundation of The Ritz-Carlton Hotel Company, L.L.C. They encompass the values and philosophy by which the hotel operates and include the following (with our bracketed comments in italic).
THE CREDO
The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience.
The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
THE MOTTO
At The Ritz-Carlton Hotel Company, L.L.C., “We are ladies and gentlemen serving ladies and gentlemen.” This motto exemplifies the anticipatory service provided by all staff members.
THE THREE STEPS OF SERVICE
A warm and sincere greeting. Use the guest’s name.
Anticipation and fulfillment of each guest’s needs.
Fond farewell. Give a warm good-bye and use the guest’s name.
[There is no confusion about how service should show up in behavior.]
SERVICE VALUES
*The Ritz-Carlton Gold Standards are posted on their Web site at www.ritzcarlton.com/corporate/about_us/gold_standards.asp.
I build strong relationships and create Ritz-Carlton guests for life.
I am always responsive to the expressed and unexpressed wishes and needs of our guests.
I am empowered to create unique, memorable and personal experiences for our guests.
I understand my role in achieving the Key Success Factors and creating The Ritz-Carlton Mystique.
I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
I own and immediately resolve guest problems.
I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
I have the opportunity to continuously learn and grow.
I am involved in the planning of the work that affects me.
I am proud of my professional appearance, language and behavior.
I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.
I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.
[These service values, no doubt, build pride in The Ritz-Carlton, and they would serve any accounting or consulting firm well. The lesson? Ask yourself if your firm has values that are clearly stated and easy to understand. Just as these service values provide guidance to Ritz-Carlton employees about how to treat hotel guests and one another, your values should do the same.]
THE EMPLOYEE PROMISE
At The Ritz-Carlton, our Ladies and Gentlemen are the most important resource in our service commitment to our guests.
By applying the principles of trust, honesty, respect, integrity and commitment, we nurture and maximize talent to the benefit of each individual and the company.
The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton Mystique is strengthened.
[The Employee Promise represents the mutual contract between employees and the hotel.]
EXHIBIT 10–2 Sample Form: Setting Performance Goals
Employee Name: _____________________
Title: ________________________________
Leader Name: ________________________
When it comes to performance goals for this year, what would you like to accomplish?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Please rewrite your goals to ensure they are performance targets (that is, SMART goals: specific, measurable, achievable, relevant, and time-bound).
SAMPLE—SMART goals should be supported by SMART tasks.
