Writing objectives that produce results – part 2

Edit: you can find a more up to date version of this article here.

Alright, let’s get straight into it.

What I want to do is revisit the “Provide good service to all customers” objective from part 1 of this article. This is the sort of objective that leads to what I call the dreaded annual appraisal. So I’m going to show you how to turn that problem producing, airy fairy, jumble of words into something that’ll make a real difference.

The first thing to recognize in “Provide good service to all customers” is that it’s an action, not an objective. Objectives should be outcomes or accomplishments, not the actions that lead to them. So what’s the outcome you’re really looking for when you say “provide good service to all customers”?

You would be looking to have satisfied customers. And ultimately you would be looking to retain customers. And the reason for this is that income generally comes from two sources; new customers and existing customers. And existing customers usually account for a greater proportion.

So how do we re-write it as a SMART objective. First look at the organisation’s goals. Imagine the organisation has a goal to retain 99% of customers. We want our objective closely aligned with that goal. And the easiest way to do that would be to make the objective…

Retain 99% of your customers

This sort of objective would work well in a lot of situations. But what about the person working on the front line handling enquiries. Their actions influence whether a customer is retained. But there are many other factors out of their control. So in that case what you want to do is use an objective like this…

Increase your Customer Service Satisfaction Rating to 4

I’m assuming a rating system for customer satisfaction from 1 to 5. I’ll talk about how to measure these in the next article. When you use an objective like that, make sure you let the person know it’s linked back to the organisation’s goal of retaining 99% of customers. So there’s more to their job than an uninspiring job description. They’re involved in the real mission.

So which objective do you think would get better results?

The old style Provide good service to all customers

or the SMART Retain 99% of your customers

OK, that should get you running through the office like a football player who’s just kicked a goal. Fist in the air, one finger pointed, holding your shirt out with the other hand.

Um hello! I can’t see myself running around in my office I hear you say. Yeah OK, but you will be kicking goals. And best of all, the goals will have a measurable affect on the bottom line.

In case anyone missed it – I just said B O T T O M L I N E.

I’ve had some feedback about the length of the articles, so I’m going to keep this short and talk about how to measure the objectives in part 3.

Are you wondering how you’ll manage to write performance goals when you’re so busy each day?

The answer is an online system.  Cognology has designed performance management software that saves time setting objectives and aligning a team to a strategic plan.

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About Jon Windust

Jon Windust is the CEO at Cognology – Talent management software for the future of work. Over 250 businesses use Cognology to power cutting-edge talent strategy. View all posts by Jon Windust

11 responses to “Writing objectives that produce results – part 2

  • David

    I fully agree with the principle of setting KPIs in terms of key business objectives rather than actions. The bottom line for business are the outcomes. Even the best intended or most extensive actions are worthless unless they result in a net positive outcome. However, for me it is a big leap from the example you gave to applying this method in a practical manner, particularly in a large organisation. Let me explain, based on your example, & finish with my question…..

    One other thing that normally makes existing customers important is that retaining existing customers generally costs considerably less than finding new customers (although there may be some existing customers that cost more to service than they are worth). However, business growth generally relies on expanding the customer base, so there needs to be a balance between retaining the existing customer base and growing it.

    I know you are trying to keep things simple here, but there are a couple of aspects that I think are important to add about setting good objectives, implied by my last two paragraphs.

    Keeping 99% of existing customers or getting a customer service rating of 4 out of 5 is only a good outcome if the cost of doing so is adequately lower than the revenue generated. Also, focusing only on existing customers usually limits business growth and leaves the business more exposed to changes in fortune than it would be with a larger customer base – losing one of three customers is much worse than losing one of one hundred.

    It might be better to to set an objective that focuses on expanding the revenue from custmers while also constraining sales costs. The right objective would result in growing a customer base that was relatively inexpensive to obtain and retain and provided healthy revenues, relative to their costs. The difficulty in setting such an objective at an individual or team level is that many other factors outside of their direct control, such as your example of the customer service staff, directly affect the bottom line and their personal objectives.

    Even ignoring these factors setting objectives as I described requires the business keep accurate records of sales costs and revenue on customer by customer basis or a salesperson by sales person basis – often very difficult to do in larger businesses where the channel to market and/or the supply chain is long and/or complex.

    For this approach to work best, it needs the full support from the top down and a business that maintains an adequate resolution of business metrics. Again, something I have found in the last 20 years to be a rare thing.

    How do I set SMART objectives that I can clearly link to the business bottom line without necessarily having the the clarity of business goals or resolution of metrics? If the answer is “I can’t”, then how do I convince the organisation from the top down, to make significant changes to their business systems so that I can set these objectives in a practical way (how do I prove an adequate return on investment)?

    I look forward to your future articles.

  • jon

    That is a great contribution David, thanks!

    You have raised some really good points. Getting people in a large organisation aligned with the business goals and balancing those goals are all things I’ll be going into in future articles.

    When you say “It might be better to to set an objective that focuses on expanding the revenue from custmers while also constraining sales costs” that’s quite insightful. At the right levels in the organisation you would be wanting to do that. At the lower levels you want to stay aligned with that goal, but also set objectives that are within a person’s control.

    It is possible to set SMART goals within your own unit without the clarity of business goals. But you really want support from the top down. So you’ll be pleased to know that there’s research showing that organisations using good performance management practices are more profitable.

    Heaps of great stuff to talk about … I can’t wait to get some of these articles out.

  • Sam

    OMG I just looked through the goals I have set my staff and most of them are actions!!! Thanks heaps for the writing about this. Only problem is, now I have some work to do.

  • jon

    Thanks Sam. Hope it goes well for you.

  • How do you set objectives when there’s little clarity of business goals? « The performance management evolution

    […] This is a good question and one that a reader David has asked in response to my post on Writing Objectives that Produce Results. […]

  • Management information

    Management information

    Cool, very good article, i like it.. plz wrte more…

  • Vijay Gangapersad

    This is good stuff. I am preparing for a training workshop in writing objectives and I find that this material is very useful. Any more useful information? Any way thanks.

  • Jaci Tusman

    Jon,
    Where is part three of this article located?? I can’t find it. I want to read it and share it.
    Thanks,
    Jaci

  • Yousef

    Greetings,
    One of our clients is currently working on a project for the Performance management, and we need an instructor to deliver practical awareness sessions on setting objectives and writing KPIs.
    If any well qualified instrucor is interested please send me your CV today yhalwani@projacs.com
    Best Regards.

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