I am a Project Manager at Convergence in Vancouver, Canada, but I’m originally from Brazil. I’d like to discuss goal setting; but to do that, I first need to share an anecdote from my home country.

If you were a 24-year-old Brazilian at the time, you probably remember the famous Brazilian energy crisis. The year was 2001 and it affected most of the country: North, Northeast, and Southeastern Brazil struggled with the potentially imminent blackouts which haunted these regions – but they never came. Why? What was done in order to make Brazil overcome this moment of crisis in a controlled and predictable way?

The greatest goal-setting in the history of Brazil, and probably the world.

Every Brazilian knew exactly how much energy they could use that month; each of us had a “budget” to obey, and our parents were the best cost managers the world had ever seen. “Get out of this bath boy, you’ve been there for more than 5 minutes!” or “Are you by any chance a member of the electric company’s board of directors? Go turn off the light in your room!” were phrases that became commonplace in our daily lives and would transform our habits related to the consumption or waste of electricity.

So what is a goal? For many managers a goal is defined in 3 steps:

• Realization: I’m not selling enough!
• Solution: I need to sell more!
• Goal setting: Sales team, you now need to sell more; that’s the new goal.

Unfortunately, many managers have no idea what a goal really is. The first thing we must understand is that in order for a goal to be minimally comprehensible, its structure must be composed of three basic parts:

• Objective (what this goal is for)
• Value (the numerical value that we want to achieve)
• Deadline (the time in which the goal must be achieved)

Once we have the ingredients which make up a goal, we can understand how we should define it – and this is the most important part: how do we specify our goal? What is the value that will be defined as ideal? How do I know the goal is not too hard, or too easy?

The first step we must take is to identify our problem. How? We can start by making a historical analysis of the indicator on which we want to impose this goal. What was the best result we were able to achieve, and what is our current average value of said indicator?

By doing this, we will be using facts and data to make sure that we correctly identify a couple of things: how much are we actually selling, and what are the opportunities (our gap) between our best and average results? Later, we need to determine how much of that “gap” we want to capture – 20%, 25%, or 50% ?

By setting a “gap capture”, we have a great initial point to start negotiating with a sales team, for instance. A “gap capture” percentage must be negotiated between all parties responsible for achieving the expected results. This must happen because the ones responsible for achieving said goals must have a say on its attainability, and therefore should be included in the negotiation.

We must also be aware that the capture of this gap must be considerable since its value has already been reached once; nevertheless, we should not use a capture percentage of 100%, since that implies that we should always repeat the all-time best result, every time. Choosing a 100% capture is also unreasonable because the all-time best result may have been caused by reasons not under our control (outliers).

Once we have set our capture value, we move to the last step of a comprehensive definition for an attainable and challenging goal: the deadline. This deadline also has to be negotiated and defined by all those who will participate in the effort to achieve this goal, so that they can bring important points to the discussion and, in the end, agree on an acceptable deadline for everyone.

To summarize, in the same style that our Sales Manager did before, the ideal steps for goal setting are:

• Problem Identification: a complete analysis of the indicator, which may be made with historical analysis, market reference values or other data-driven analytical form.
• Gap Definition: what is the opportunity for improvement that we have when comparing our average result with benchmarks?
• Capture Value Negotiation: how much can we capture from this opportunity?
• Deadline Definition: how long will it take for us to get to where we want?

Following this sequence of steps our goals will be based on facts and data, which will take into account internal and external aspects, generate a much greater commitment from all those involved and follow a proven methodology that supports all the steps for its creation.

So the next time you hear the word “goal”, do not panic and do not interpret it as a bad thing created by management. Most of all, please do not make the same mistake of so many managers that use goals as “motivational” tools and set unreasonable values knowing that they will not be reached, in order to “force” teams to always do their best; this will actually do just the opposite and create a feeling of frustration among all involved.

Simply identify if the goal was created in the right way – and if it was not, correct it.