Employee Goals

The usual failure is a goal sheet full of things the person will do, which cannot be assessed at the end except by asking whether they seemed busy.

The test is simple: could two people looking at the same evidence at the end of the period agree on whether it was achieved. If the answer requires the manager's judgement of effort, the goal will be argued about, and the argument will happen in the same conversation as the increment.

Not everything can be reduced to a number, and forcing it produces measures that get gamed. Where the outcome is qualitative, state in advance what evidence will be looked at, which serves the same purpose as a metric without pretending to a precision that is not there.

• Between four and six substantive goals per person per period. A sheet with fourteen entries is a task list, and by the third quarter nobody is looking at it.
• Written by the employee, edited by the manager. An employee who drafts their own goals understands them; one who receives a completed sheet has been informed rather than committed.
• Aligned to something above them. If a goal does not connect to a team or function objective, either the connection is unstated or the work is not needed.
• Weighted if they feed a rating or a payout, and weighted before the period rather than at the end when the outcomes are known.
• Shared goals need one accountable owner and contributors named as such, since a goal owned by four people is owned by none of them.
• Dated. A goal with no completion point is assessed against whatever the manager remembers of the year, which favours whatever happened most recently.

Annual goals set against a plan that changes is the normal condition, not the exception. What matters is whether the change is recorded.

• Revise formally, in the system, with the date and the reason. A goal quietly abandoned in June and marked not achieved in March is how appraisal disputes start.
• Where a person is moved to a different project, close the old goals with an assessment of what was done rather than leaving them open to fail by default.
• Where a goal is blocked by something outside the person's control, record that at the time. Contemporaneous notes are believed; explanations at appraisal are heard as excuses.
• On a change of manager, transfer the goals with the person and have the new manager confirm them. A new manager assessing goals they never agreed is the most common cause of a rating no one can explain.
• On a long absence, whether maternity, medical or otherwise, prorate rather than assess the full-year goal against a partial year. Rating someone down for a period of protected leave is the kind of decision that gets looked at closely.

Once variable pay is tied to goal achievement, the goal sheet stops being a management document and starts being part of the terms on which the employee is paid.

• Set the goals, the weights and the payout scale before the period starts. A scale published after the results are visible is not a scale.
• Say what happens to the payout on resignation, on termination, on a mid-period joining and on a transfer, in the policy rather than case by case.
• Retain the assessment record. Where a payout is disputed, the contemporaneous goal document and the assessment against it are the evidence.
• Check how the variable component interacts with statutory definitions. Whether a payment counts as wages affects contribution and gratuity computations, and the answer follows the nature of the payment rather than the name given to it.
• Be careful with goals that are effectively unattainable. A payout structure nobody has ever reached is a retention problem being created deliberately.

Verify how a performance-linked payment is treated under the definition of wages in the Code on Wages, 2019 and how it affects contributions and gratuity under the Code on Social Security, 2020 before designing a variable pay structure around goals.