What are SMART Goals in Performance Management?

Creating an effective performance management framework is arguably one of the more challenging aspects of people management. The definition of success varies from role to role, progress can be difficult to measure, and managers need to be equipped to give useful, regular feedback. Not to mention, rating performance is an inherently subjective task, which requires your company to set rating standards and ensure they’re being used consistently and fairly.

This is where an important performance management tool comes in — SMART goals. SMART goals can be part of your performance management process as a way to:

• Create transparency
• Motivate employees
• Improve performance
• Measure progress
• Gauge overall performance

Let’s take a closer look at the SMART method of goal setting and how it can be used in performance management.

What is a SMART goal?

Think about the last time you set a goal outside of work. Maybe you decided it was time to complete an advanced degree or go on a dream vacation. After choosing your goal, you decided which university to attend or set a budget for your vacation. Then, you set a timeline for completing the degree or chose the dates for your trip.

Guess what? You just set a SMART goal: it’s specific, measurable, achievable, relevant, and timely. It is not vague, hard to measure, unrealistic, unnecessary, or lacking a timeline. The SMART method for goal-setting is effective both personally and professionally and can apply to both immediate and future goals.

When it comes to performance management, SMART goals can be used to measure progress, identify strengths and weaknesses, provide feedback, and gauge employee performance over time. They’re an excellent way to ensure employees are on track with both short-term projects and long-term professional goals.

SMART goals can serve as an employee engagement tool, too. Creating SMART goals collaboratively between managers and employees builds trust, clear objectives enable employees to be successful, and goal alignment shows employees how their work is part of business success. There’s even evidence to show that setting difficult goals inspires us to put in more effort to meet them. 

Goals also motivate employees, a key factor in employee engagement. We’re motivated to get through the difficult parts of reaching our goals — whether that’s studying, saving money, or the tedious parts of a project at work — because we know it will pay off in the end. 

Suffice to say, SMART goals have tons of uses and tried-and-true benefits. Let’s look at each term in the acronym with performance management — and one account manager’s SMART goal — in mind. 

Here’s the goal to remember: An account manager met with their department head and set a goal to retain 85% or more of their existing accounts and add 50 new accounts by their next annual performance review. 

Specific

SMART goals are specific and clear, reducing confusion for employees, managers, and even other colleagues and giving employees focus and direction. Specificity also helps managers evaluate their direct reports’ performance more objectively. With vague goals, it can be hard to say if the employee fell short or exceeded expectations, but with specific goals, it will be evident. 

For the account manager in our SMART performance goal example, there’s no question about what constitutes success. They knew exactly what was expected of them to both meet and exceed the goal. If the account manager retained 92% of their accounts and added 55 new accounts, it’s clear that they crushed their goal. 

A vague goal, like “retain most accounts and add new accounts,” could have resulted in lower client retention and acquisition since the account manager wouldn’t have had exact numbers to work toward. Or, it could have downplayed just how well the account manager performed that year and the company may have missed a chance to recognize their work.

Measurable

SMART goals are measurable and their progress can be tracked. Measurable goals have several uses in performance management: 

• Show if employees are on track, ahead, or behind in completing goals
• Similarly, show the margins by which employees exceeded or fell short of the goal
• Indicate strengths and potential areas of improvement 
• Compare past and peer performance

For the account manager in our example, measuring goal progress helped them stay on target and motivated them to push past their goal. It also provided opportunities for their manager to give helpful feedback when needed and recognition when they exceeded expectations.

Achievable

SMART goals are achievable while still challenging employees. Achievable goals are those that employees have the tools, support, time, and expertise to reach. Goals that are too hard to reach can end up making employees feel discouraged and hurt their performance. On the other hand, attainable goals can be motivating and inspire employees to continue working toward goals in the future. 

The account manager in our example set goals that were slightly higher than the previous years’ but not quite as high as the goals of their more experienced colleagues. They were able to retain and attract clients with a combination of resources that included personalized demos, marketing videos, and their teammates’ knowledge.

Relevant

SMART goals are relevant, aligning with professional development goals, role responsibilities, departmental duties, or business objectives. Relevant goals are important for several reasons:

• Keep employees focused and engaged
• Contribute to big-picture goals for the individual, department, or business
• Explain why the goal is important to achieve
• Help managers give useful, actionable performance feedback 

In our example, the account manager’s goal contributes to department and business goals for client retention and new business. Visibility into that goal alignment, plus the employee’s own knowledge that they can achieve and exceed their goals, helps them stay connected to and focused on the goal.

Timely

SMART goals are timely, or time-bound, with a start date and completion deadline. With a set timeline, there’s no confusion about when the goal needs to be met. Time-bound goals provide opportunities for managers to check in with their employees and help them stay on track. It’ll also be clear to managers during performance reviews if their report tends to complete goals early, on time, or behind schedule. 

The account manager in our example was given one year to reach their goal. At each annual review, they set new goals based on past performance so goals remain timely. Thanks to the SMART method, account managers can steadily work toward their goal instead of rushing to make their target at the end of the year.

Technology, Performance Management, and SMART Goals

You can easily manage SMART goals with the help of a performance management system. These software solutions give employees and managers easy-to-use digital tools to align and record goals, keep track of progress and past goals, provide updates and feedback, and recognize achievements. Plus, the added benefit of great software is a robust set of analytics that can reveal performance management trends, highlight high performers, and unlock insights so you can build the best possible performance management strategy.

ClearCompany’s Performance, Engagement, and Goals Suite has everything you need to implement SMART goal systems and use them during review cycles:

• Goal Planning and Alignment to set transparent SMART goals and provide updates
• Prebuilt and customizable performance review templates that incorporate the goals set in the platform
• Completion tracking and automatic notifications to help HR complete review cycles efficiently and perform fewer manual tasks

Practice setting goals and completing a performance review during a demo with the ClearCompany experts — sign up for your personalized demo today.