Elements of an Effective CEO Goals Management System

elements-of-an-effective-ceo-goals-management-system

As I’ve written about before on this blog, one of the five responsibilities of a CEO is to deliver performance. However, some CEOs focus solely on this, to the detriment of everyone in the organization. They approach performance like a football coach who just says, “Go win.” The problem with this is that good performance is a goal, not a behavior that can be taught. Great CEOs – like great coaches – break down the fundamentals that are necessary to performing well and train their employees to execute these fundamentals at the highest possible level. The best way for CEOs to do this is with an effective goals management system.

The right goals management system helps the CEO ensure that what individual employees and departments are doing aligns and contributes to the organization’s overall goals. It also warns the CEO if the goals are slipping in time to do something about it. Breaking down the business to the fundamental behaviors necessary for employees in each department enables the company to be successful in the market. I am not saying that the CEO has to personally teach everyone how to do his or her job.

What I am saying is that the CEO is often the only person in a position to fully understand the big picture strategy, while only the lower level employees have the expertise to complete the necessary individual tasks. The key for the CEO is to make sure that he or she is leveraging that expertise at the individual level and harnessing it for the bigger purpose of the organization. If not, the disconnect results in inefficiency, with each individual and/or department beginning to act in ways that they think are best but are totally detached from the direction the CEO is trying to set. How many times have you seen an employee do something that you know is bad for the company, but they don’t realize the harm they are doing?

To create alignment in all the companies that I run, we created a hierarchical goals system called Khorus. The purpose of Khorus is to clearly show each employee how what they do is tied to the goals of the organization, while letting the CEO ensure that each group is working on the right fundamentals. This type of system may sound familiar to you, but instead of typical corporate systems that only provide backwards-looking, tactical information from departmental silos, this system gives the CEO valuable foresight that can allow him or her to take action to solve issues before deliverables slip and goals are missed.

Here’s how it works: Each quarter the CEO enters a set of corporate goals for the company. Most of the businesses I have operated work best on a quarterly timeframe, but some businesses might be better suited to a monthly tempo.

These goals would be, for example, “Generate $20 million in revenue in the quarter,” “Launch new product Cosmo,” or “Complete headquarters move.”  Typically there are five to eight corporate goals each quarter including a couple of catch-all goals like “Improving operational efficiency” or “Driving continuous improvement.”

Once all of the corporate goals are in the system, then each of the CEO’s direct reports enter departmental goals that are typically tied to those corporate goals. Each lower level employee in the organization works with his or her manager to develop goals that support their manager’s goals. The system allows for each employee in the organization to see everyone else’s goals. This helps employees understand not only how their efforts contribute directly to the success of the company, but also what other groups are doing to contribute to the same corporate goals.

The final piece of the puzzle – and what is incredibly valuable for the CEO – is that each employee receives an email at the end of each week asking them to update the status of each of their goals. Instead of being some complex “TPS” reports, the employee only has to answer two questions about each of their goals.

The first question is: “On a scale of 1 to 5, how likely is it that you will complete this goal in the quarter?” The second question is: “On a scale of 1 to 5, how do you feel about the quality of the work you have completed toward this goal in the quarter?” In just a couple of minutes, the employee can update their status. When combined with everyone else’s updates, this gives the CEO valuable insight into what goals are in danger of not being completed.

Ensuring that every employee knows what business fundamentals they are responsible for and how they align with the corporate direction is a critical role for the CEO and the only way to deliver consistent performance. While the cascading goals approach is not unique, using the goals as a management system that helps a CEO look into the future is unique as far as I know.

In a future post, I’ll cover how to set the right goals. I’ll be talking more about Khorus in the future as well. Any CEOs who are interested in learning more can reach me directly.

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