Sometimes the first hurdle to setting goals for the year can be deciding which goal structure or approach to even use. There are a plethora of different types of goal-setting approaches, which can seem to come in and out of management fashion on a regular basis. How do you know which one is best for your team or organization?
While it’s more important to just pick a structure and commit to it than risk not setting goals at all due to the overwhelm, there are some types of goal structures that are better for certain company cultures, industries, functions or stages of growth.
We’ve described some of the most common goal structures or formats used by organizations below. The structures mostly differ from each other in degree of stretch or aspiration, degree of specificity, and degree of upward input. All of them generally begin by setting goals at the organization or leadership level that are then cascaded to departments/unit and then individuals.
Many organizations will utilize some combination of these approaches or structures. While there are organizational benefits to all these types of goals, we can’t focus on all of them, or we really won’t have any time for the “real work.” (Remember prioritization is the whole point of setting goals in the first place!). So, it’s useful to know where you should focus.
Take our quick goal-setting quiz to determine which goal-setting structure or approach from the list below is most relevant and beneficial for your team or organization’s current situation or growth stage. You’ll receive a customized response with more direction about where your leadership team and organization should focus its time and energy.
Common Types of Goals Used by Organizations
Moonshot: Bold, ambitious goal that is a long shot but still has a chance. Accomplishing it would transform an industry, system, or society. It inspires and encourages out-of-the-box thinking. One example of a moonshot is the mission of the American Cancer Society to “End cancer as we know it, for everyone.”
BHAG: Acronym for “Big Hairy Audacious Goal” and a concept shared in the book, Built to Last, by Jim Collins. A BHAG is specific and easy for everyone to understand. It provides a clear, long-term achievement point or finish line for the team to run towards together. An example of a BHAG was Walmart’s plan to, “Become a $125 Billion company by the year 2000” or Stanford’s goal to, “Become the Harvard of the West.”
Quarterly Rocks: Popularized in accountability systems like EOS (Entrepreneurial Operating System), Rockefeller Habits, or Scaling Up by Verne Harnish, rocks are the specific, measurable priorities identified for a business to complete usually in a 90-day period. Completing the rocks will enable the business to reach its longer-term goals (vision) and continue to scale. They generally focus on what needs to be done to enable the organization to reach the next level. An example of a quarterly rock is, “Hire a new project manager by the end of Q1.”
OKR: Introduced by Intel’s third CEO, Andrew Grove, and popularized by companies like Google, OKRs (acronym for Objective Key Result) combine the rocks that need to be accomplished with a way to measure the impact of achieving it. OKRs are generally written in the form, “I will [accomplish this] as measured by [this].” An example of an OKR is “Improve our hiring process as measured by a reduction in time to hire.”
KPI: Key Performance Indicators are numerical, quantifiable metrics that indicate progress towards goals. As opposed to a specific finish line (although there can be a target), KPIs highlight positive or negative trends in metrics over time that may signal the need to bolster or reverse activity or behavior (e.g., Are our strategies working or not? Are we doing what we need to do to achieve our goals?). An example KPI for a sales and marketing team is average sales calls in a week or average customer acquisition cost. An example for an HR team is the average retention rate or employee engagement index.
MBO: Acronym for Management by Objectives and tool for measuring employee performance against targets or goals. MBOs were first popularized by management consultant Peter Drucker in the 1950s. MBOs tend to be more top down (i.e., describes what is expected from the employee), but team members can have input into the objectives depending on the process in place. MBOs are primarily a tool to assess the performance of individuals, and individual rewards are usually linked to their completion.
SMART Goal: Acronym that stands for specific, measurable, attainable, relevant, and time bound. In short, SMART Goals are actionable because they are clear and direct. Many types of goals encourage the SMART Goal format. An example of a SMART Goal is, “Conduct a product demo with five new prospects by the end of Q1.”
Stretch Goal: Difficult goals that might not be achieved, and that’s ok. The idea behind stretch goals is that people sometimes limit themselves by setting goals that are too easy and less risky. By setting stretch goals, it encourages bigger thinking and effort because there’s a safe “out” that enables you to still save face if you don’t succeed. Even if the stretch goal isn’t reached, there is still lots of value in the effort and work that was contributed towards the goal completion. An example of a stretch goal is, “Expand to two new markets by the end of the year.”
Commit Goal: These are non-negotiables. They are the baseline. They are the minimum requirements to complete. An example of a commit goal is, “Submit quarterly financial statements on time each quarter.”
Take our quick goal-setting quiz to determine which type of goal structure or approach is best for your team or organization.
Emma J. Browning is the Founder & Managing Director at Paradox Consulting Partners, a management consulting company and Certified B Corporation that aligns talent strategy with business strategy to create high-performing, great places for all to work. Over almost 20 years of consulting, she has advised hundreds of organizations including multiple Fortune 100 and 500 companies. She has her BA from Wake Forest University and MBA from Duke University’s Fuqua School of Business. Follow her at linkedin.com/in/emmabrowning
