Great Employee Goals: Setting & Creating Target Agreements

Employee goals consist of the tangible ways that employees want to improve, and the qualitative and quantitative metrics that prove them accomplished or not. For the most part, employee goals are determined, set, and reviewed by an employee and their direct supervisor/manager — but that's hardly the end of the story.

Let’s break down employee goals a bit more. First, we should think of both short-term and long-term goals, which are goals that take place in a quarter or half (short-term), or a year or longer (long-term). Timelines for goals, especially goal completion, are important to set from the very beginning.

Then, let’s think about how we might organise goals. Typically, goals fall into three ‘buckets’:

Keeping these goals in mind, the next step is to make them a bit more concrete. This is typically the point where you may want to translate employee goals into what is known as a target agreement.

Target agreements are a management tool based on the "management by objectives" principle established by Peter F. Drucker (1955). At least two parties, usually the employee and their manager, discuss the objectives the employees will be working toward over a defined period of time. At the end of that period, both reflect on whether the employee has achieved the objectives, and to what extent.

Earlier, we outlined three kinds of employee goals, but let’s talk about employee objectives (it’ll feel familiar, but slightly different):

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Target agreements are aimed at motivating employees and supporting them in planning out their careers. This process is overseen by HR, which implements a performance management process to ensure that all players within a company define goals systematically, always with an eye to developing employees and promoting employee loyalty.

Target agreements are aimed at motivating employees and giving them guidance for their work (above all in terms of prioritizing). They also make it easier for managers to appraise an employee’s work. But, target agreements also come with their own set of disadvantages, too.

The first is to determine the nature of the goal itself, which often comes down to qualitative and quantitative. Simply put, it is easier to measure quantitative goals, but qualitative goals often come with more of a ‘story’ of progress.

That is why target agreements, as a function of employee goals and in coordination with managers and HR, should comprise a mixture of both. This way, goals and targets alike are set objectively (rather than arbitrarily).

Encouraging and measuring employee performance is one of the most important tasks managers, leads, and department heads perform. So, how can an HR or People Team help in the process?

Some of the most common ways include:

• Implementing an HR software to help streamline processes.

• Offering a secure and reliable place to document feedback.

• Preparing a method for documenting and measuring employee goals.

• Linking those goals to bonus payments or other rewards.

• Automating performance cycles so reviews happen on time, all the time.

While these steps don’t need to happen sequentially, it helps to have all of them included in one place. In this sense, HR becomes a strategic enabler for managers to not only focus on employee goals but to help see them through.

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Taking a step back, HR and managers alike may see even greater returns if they focus not only on the nature of goals but on the tactical side of them, too. This is known as the SMART principle, which stands for:

• Specific

• Measurable

• Achievable

• Realistic

• Timely

The SMART principle puts precise targets into a nutshell: Measurable goals ensure comparability, while realistic goals motivate employees and encourage them to perform at their best.

It is essential that employee goals are actionable and, most of all, clear to employees. After all, they need to know what is expected of them and what they should do, which is why the SMART principle here is critical.

Let’s start with a bad goal example: “Attract younger consumer groups for a new instant organic soup”

SMART wording: “Increase awareness of a new brand of instant organic soup among men and women between the ages of 20 and 35 30% by the end of the calendar year.”

Other potential SMART goal examples here could include:

• Generate X customer contacts within Y months

• Increase the number of website visitors by X% within Y months

• Increase the website conversion rate by X% within Y months

• Generate X (positive) interactions on social media channel Y within Z months

• Publish X articles in defined publications over the next Y months

• Increase the market share by X% in the next business year

Poor wording: “Strengthen the employer brand”

SMART wording: “Improve ratings on kununu and Glassdoor by at least 1star within a quarter”

Other potential employee goals include:

• Reduce employee turnover by X% within Y months

• Generate X applications per advertised position in the next quarter

• Reduce the time to hire per candidate from X to Y days over the next business year

• Reduce sick days from X to Y days over the next business year

• Shorten the time to the 1st interview per applicant from X to Y days in the next quarter

• Reduce the cost per hire from X to Y € in the next quarter

• Increase the offer acceptance rate by X% in the next quarter

• Decrease resignations during the probation period by X% over the next business year

Download Our Target Agreement Template

Before we begin the next section, we’d highly recommend downloading our target agreements template. This way, you can make the main considerations while putting one together for a potential employee. Download it now.

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Here are some helpful things to keep in mind when it comes to target agreements:

The first step in helping employees hit their goals is ensuring that managers and leaders have the tools they need to lead those conversations. That is where an HR software comes into play.

Using Personio, you can automate your performance cycles across your entire organization, schedule review meetings between leaders and employees, and even have a place to document feedback and set goals.

All of this offers an unbeatable foundation to put employee performance into focus. This helps foster a ‘goal-setting’ culture that is organised, attuned to employees, and clear for everyone to understand. Ultimately, your business benefits.