How to Set Effective Goals With Your Team

Team goals are the cornerstone of any successful team. With clear, focused, well-structured goals in place, teams can pull in the same direction, working together for a common purpose.

Setting team goals is one of the 12 key management capabilities identified in the Mindtools Key Management Capabilities framework. It's also an area in which managers tend to rate themselves poorly – in the Mindtools 2024 Building Better Managers Report, only 37 percent of managers said they believe they're good at setting goals for their team. [1]

In this article, you'll learn about the importance of aligning goals to your organization's mission, how to use some classic goal-setting models, and how to inspire and motivate your team with stretch goals. You'll also learn how to engage your team in the goal-setting process and avoid some common pitfalls along the way.

Let's hear about setting effective goals with you team from business coach, consultant and writer, Matt Saunders.

Align Goals to Organizational Mission

To be effective, team goals must support the broader mission of your organization. Before you get started on any kind of team goal-setting exercise, be sure that you know your organization's mission and vision.

Depending on your organization, this information might be available on your company intranet. You may hear your leadership team talk about the organization's mission and vision at "town hall" or all-hands meetings. It may also be outlined in your company’s annual report, if it publishes one.

If you're unsure of this information, your line manager should be able to point you in the right direction.

Classic Goal-Setting Models and Techniques

Over the years, leading management thinkers have devised a variety of approaches for setting goals effectively. Here are some of the most popular techniques in use today, and their pros and cons.

Drucker's Management by Objectives (MBO) Model

Management thought leader Peter Drucker developed the Management by Objectives (MBO) goal-setting model back in the 1950s. But it’s still popular today. The approach links individual effort with organizational mission to ensure that everyone knows what they’re working toward and that no effort is wasted.

Setting objectives using the MBO model involves a six-step process:

1. Set or review organizational objectives.
2. Cascade objectives down to employees.
3. Encourage participation in goal setting.
4. Monitor progress.
5. Evaluate and reward performance.
6. Repeat the cycle.

While the model's focus on organizational mission can help to ensure that different teams' goals are in alignment, it also creates a degree of inflexibility. At a team goal-setting level, MBO has been criticized for being too reliant on rigid directives from company leadership.

OGSM Frameworks

OGSM stands for objective, goals, strategies, and measures. It's a practical goal-setting framework that involves four key steps:

1. Setting out your objective (i.e., the final desired outcome).
2. Choosing goals that will help you achieve that objective.
3. Developing strategies that will help you achieve those goals.
4. Deciding how to track progress and measure success.

Over time, the OGSM approach to goal setting has been embraced by a range of Fortune 500 companies, including Procter & Gamble® and Coca-Cola®.

The framework can be used to set organizational, departmental, team, and even personal goals. However, it's not quite robust enough to support the creation of an overarching, top-level strategy.

You can learn more in our article on OGSM frameworks.

SMART Objectives

The "SMART" objective-setting framework is used widely in many organizations. SMART is an acronym that stands for:

• Specific
• Measurable
• Achievable (or “Agreed”)
• Realistic
• Time-bound

A goal to "increase sales" isn't SMART because it doesn't meet these criteria. It's vague and difficult to measure, with no clear indication of what success would look like.

A goal to “increase sales by 10 percent in the first quarter", however, is SMART. It's also clear, allowing a team to track progress and know when the goal has been achieved.

The SMART framework can be used to set all sorts of goals, including those at a team level. To learn more, watch our video on how to set SMART goals.

Objectives and Key Results (OKRs)

Based on Drucker's MBO model, the concept of Objectives and Key Results (more commonly known as OKRs) was developed by former Intel CEO Andy Grove in the 1970s.

Since then, the framework has been adopted by some of the world's biggest household names, including Google, Amazon and Deloitte.

At a team level, OKR setting involves:

1. Setting objectives. These should be SMART objectives that complement those of the organization.
2. Setting key results. Ideally, each objective should have 2 or 3 measurable key results.
3. Monitor progress. OKRs are typically completed per quarter. Be sure to have regular check-ins with your team to see how they’re getting on.
4. Repeat the cycle. Review how everyone did at the end of the quarter and then begin the process again.

You can find out more – including how to set OKRs with your team – in our article on using OKRs.

How to Set Stretch Goals for Your Team

While many techniques focus on setting realistic goals, there's also a time and place for making certain goals extremely ambitious. When used appropriately, these "stretch" goals can push people to new heights and inspire them to do amazing things.

There are three main types of stretch goals:

Vertical stretch goals build on current activities, organizational goals, or business processes to make them more ambitious. If an existing goal is to achieve 75 percent customer satisfaction in a month, for example, a vertical stretch goal would be to achieve 100 percent customer satisfaction.

A horizontal stretch goal inspires people to push outward – rather than upward – by taking on different responsibilities, creating new processes, or developing new products. Challenging your team to devise a framework for knowledge sharing could be an example of a horizontal stretch goal.

Often considered the "cousin" of traditional stretch goals, "Big Hairy Audacious Goals" or BHAGs (pronounced "bee-hags") are commonly used at leadership level. They're bold, long-term objectives that inspire people to take action on a big-picture plan. One of the most well-known BHAGs is Google's objective to "organize the world's information and make it universally accessible and useful."

Best Practice for Setting Stretch Goals

While they can be highly effective in the right circumstances, stretch goals are not appropriate in every situation.

They should only be used for non-critical projects and set alongside regular goals that are more achievable. Otherwise, stretch goals can be demotivating for teams.

Here are some additional top tips for using stretch goals with your team:

• Provide appropriate support. Make sure people have the resources, knowledge and time they need to pursue the goal.
• Focus on small wins. A stretch goal can often feel overwhelming for teams. Make a list of small wins along the way to make it seem more manageable.
• Don’t punish failure. The purpose of a stretch goal is to inspire and energize team members, not to undermine their confidence.

The Importance of Consensus for Effective Team Goals

Of course, setting goals with your team is about far more than simply providing direction. It's also about gaining consensus so that team objectives feel meaningful and engaging to them.

Here are three top tips for doing this:

• Ask for their input from the outset. By getting them involved from the start of the process, you're far more likely to gain their buy-in.
• Encourage them to identify challenges and opportunities. This will help to reinforce their sense of involvement and result in goals that are more robust, meaningful, and relevant.
• Take ownership of their part in delivering team goals. This will increase their buy-in even further and motivate them to play their part. Taking ownership might involve creating some personal objectives – perhaps using one of the classic goal-setting models, like OKRs, to do so – or reporting to you on their area of responsibility at regular intervals.

Common Goal-Setting Pitfalls and How to Address Them

As with any new skill, there are certain mistakes that managers tend to make when they start out with team goal setting. Here are some of the most common pitfalls and how to avoid them.

1. Choosing too many goals. This can be overwhelming for teams and can lead to confusion and a lack of focus. Choose a small number of goals, ensuring that everyone knows exactly what they are and how they're expected to contribute to them.
2. Focusing on short-term goals. Having too many short-term goals can feel uninspiring to teams as they won't see their work as part of a bigger picture. Ideally, you should set both short-term and long-term goals to keep team members focused and motivated.
3. Neglecting to track progress. Without tracking progress, neither you nor your team will know whether you're on course for success. This can have a negative impact on the team's motivation and your awareness of how you might need to move forward.
4. Failing to adapt when circumstances change. Sometimes a goal that made sense at the start of a quarter no longer makes sense. When this happens, it's vital to adapt – otherwise, resources can be wasted and motivation can be lost. If circumstances change, consider how best to adapt: you may need to pursue a new goal, revisit an old one, or pitch in to support an objective set by another team.

Let's Act

Use what you have learned from this article to identify a stretch goal for your team.

• What would a challenging but realistic target look like?
• What benefits would there be to the team or wider organization when the goal was achieved?
• How would you support your team to achieve the goal?

Once you have done this, book a meeting to discuss the goal with your team members and ask for their input and ideas, before finalizing and implementing the goal.