By Luiz Gustavo Santos, partner at FALCONI
In a scenario of rapid change and high competition, which involves Brazilian retailing nowadays, it is vital that the whole organization is mobilized around common goals and that each employee is clear about what their contribution should be for the company to achieve them. In this context, it is necessary to set good goals that stimulate leadership and lead the team in the right direction. But how do you set challenging and achievable goals that encourage staff to learn? Three important steps can contribute to this:
– Goals should be based on gaps;
– Goals must involve all levels of the organization and must be connected;
– Goals should be prioritized.
Goals should be based on gaps
The goals should be established on the performance indicators of the companies. These indicators start at a strategic level such as Ebitda, cash generation, net margin, going up to operational metrics, such as sales per store, breakage, rupture, etc. The values to be set as a goal for these indicators should be based on gaps.
The gaps correspond to the difference between the current value of an indicator and the best possible result for it. It is in this range that the goals must be inserted, that is, capturing part of the gap as a goal. Following this recommendation, we ensure that the defined goal is feasible, since it is based on a result that has already been achieved by the company itself in the past (internal gap) or by another that is comparable (external gap).
How much of the gap to capture as a goal will determine the level of the teams learning effort to get there? Sometimes we identify managers who are afraid to set goals without knowing everything that is necessary to achieve them. This feeling is understandable, because if the company does not reach a certain result for an indicator, that means there is a lack of organizational knowledge to achieve it, in other words, they really do not know how to do it. Thus, we ensure that the targets are challenging but feasible (and do not discourage teams from the start because they do not believe in the goal). The process of reaching the goal will make managers and staff learn what it takes to get there.
It is also worth mentioning that goals must have a deadline to be met, so that annually organizations can establish a part or a fraction of the gap to be captured as a goal during the period. These goals should be included in the annual budgets.
Goals must involve all levels of the organization and must be connected
Strategic goals should be the starting point for setting goals for the whole organization. From the President’s goals for each managerially level below him, the goals should be deployed and be connected, that is, having a cause and effect relationship, as shown in the figure for the commercial management of a retail company.
By doing this each manager will be clear about their contribution needed for achieving the company’s goal, a factor that is very important for the motivation of the whole team. In addition, we ensure that the president’s goals will be met if all the other managers’ goals are met. If this procedure is not followed, as already verified in some companies, the managers hit their targets (and receive bonuses) and the president does not.
Goals should be prioritized
Another important point to be considered in establishing goals is the number of goals proposed for each manager. In this sense, each management level should be clear about its priorities, which should preferably take into account strategic and financial impact criteria. Who has many priorities, in fact, does not. Experience indicates that each manager should have between three and five priority goals annually. Thus, they will have adequate time to do their routine activities and work on the improvement goals that will bring new knowledge to organizations.
The establishment of feasible and challenging goals is the starting point for the mobilization of leadership and the promotion of learning by the teams. Each year, organizations should encourage managers to identify and capture gaps that contribute to the achievement of strategic and priority goals of the companies. This is undoubtedly an essential step in the quest for excellence in results.
Text featured in the january/17 edition of the magazine Super Varejo.