High performing organizations around the world are striving to adapt to the ever-increasing pace of innovation and technological advancement. One of the most significant shifts resulting from this quickening pace has been from a focus on efficiency of individuals to a focus on the adaptability and impact of teams. Various studies (Locke & Latham, 2019) have shown that compared to individuals, teams typically innovate faster, identify problems earlier, and produce more effective solutions. As a result, companies are evolving the way they engage, enable, and reward their teams.
John Doerr, a highly-successful venture capitalist and business author, says, “There’s a new way of organizations and teams that are powerful. They are deeply transparent (and as a consequence, they’re very open), and they’re collaborative. Instead of being hierarchical and top-down, they’re networked in rich relationships with others that are trying to get their work done. So, whatever you can do to enhance those values, you’re going to have a higher-performance organization.”
One of the most powerful ways to do just that - enhance performance and drive success at the team level - is through the effective use and alignment of team goals. In this article, we’ll be taking you through the science behind team-level goals along with recommendations you can apply immediately.
What are goals?
Locke & Latham, two of the most prolific authors of goal-related research, define goals as “the object or aim of an action, for example, to attain a specific standard of proficiency, usually within a specified time limit.” Similarly, Merriam-Webster succinctly defines a goal as “the end toward which effort is directed.”
Why are goals important?
Decades of research show the positive impact goal setting has on performance at all levels: individual, team, and organizational. Schmidt (2013) demonstrated that, given an average salary of $50,000, the typical increase in employee productivity as a result of setting goals equates to $9,200. Of course, this productivity impact gets amplified at the team level when goals are implemented and aligned correctly. Further, employees who set specific, challenging goals not only produce more and get better performance ratings, they also express higher levels of satisfaction with performance appraisal processes (Brown & Latham, 2000).
At the team level, Kleingeld et al. (2011) confirmed that specific, difficult goals produce significantly higher team performance. Team goals enhance collaboration by providing clarity on expectations, ownership, and purpose. Further, in a 2014 Stanford University study, having goals and a collaborative sense of purpose were found to not only improve understanding of team success criteria but also enhance information flow and decision making quality.
At the organizational level, companies that implement and align goals benefit in several ways: operating margins and profitability improve, teams and leaders are quicker to execute on strategy, and employee turnover decreases (Workforce Intelligence Institute & SAP, 2006).
How team goals work: Mechanisms that drive performance
But first: How exactly do well-designed team goals lead to improved performance? There are actually several mechanisms at work (Locke & Latham, 2019), including:
- Collaboration: Researchers in the 2014 Stanford study found that collaboration within teams has a direct impact on productivity, motivation, and resilience in overcoming challenges.
- Clarity & focus: Goals help focus attention and effort toward high-priority activities and away from those that are irrelevant. They also clarify what success looks like and create transparency on how performance will be measured.
- Motivation: Goals act as an “energizing function”. Studies consistently demonstrate that more challenging goals lead to higher levels of effort than easy goals.
- Persistence: Goals have been shown to prolong the effort people are willing to make (LaPorte & Nath, 1976), and they enhance willingness to work intensely if timelines are tight (Bryan & Locke, 1967).
- Knowledge & skill optimization: Goals act as a trigger to implement task-relevant knowledge along with strategies and planning for how to achieve them. When a person or team doesn’t have the requisite skills to achieve an outcome, goals act as a forcing function to acquire that skill (Seijts & Latham, 2001) or identify strategies to work around that gap.
Five factors that influence goal achievement
There are several factors that influence whether or not a team or individual will achieve their goals, and it’s important for managers and leaders to understand them to help ensure success.
- Commitment: Challenging goals produce the best results (Klein, et al., 1999), yet they require high levels of focus and effort, thus driving a need for higher commitment. Commitment is critical, so we'll expand on how to maximize it after this section.
- Frequency of setting & reviewing goals: Writing clear, effective goals takes practice, and not surprisingly, collaboration helps drive quality of goals. The more frequently individuals and teams reviewing goals, the better they get at creating them in the future. Some companies set quarterly goals and evaluate progress every two weeks, other organizations set 6-month or annual goals with a monthly or quarterly evaluation cycle.
- Feedback on progress: Closely related to frequency of setting & reviewing goals, individuals and teams need feedback on progress and action strategy (i.e., how they’re working to achieve their goals). Feedback from leaders and colleagues is an opportunity for recognition and, when necessary, course correction. If a team doesn’t understand how well they’re tracking on their goals, it’s impossible to adjust the level or direction of effort to accomplish the goal. Keep in mind: The level at which you provide feedback is a shortcut for employees to figure out what is important to your organization. If team-level performance is important, it’s critical to evaluate progress and provide feedback at the team level.
- Satisfaction & goal difficulty: People rarely derive satisfaction from achieving something that was easy. Elevating the difficulty of attaining a goal (within reason) not only improves performance but drives greater satisfaction when the team succeeds. We don’t cherish what we don’t work hard for.
- Recognition & rewards: Goals and the key milestones along the way act as a tangible reflection point for recognition and, when appropriate, rewards. Recognition and rewards act as motivators for sustaining effort and focus when things get challenging. Rewards don’t always have to be monetary in nature; they can include incentives like team-level recognition, time off, celebratory offsites, fun team-building opportunities, or better yet: something that the team chooses. Ever heard of the “high performance cycle”? It’s a term referring to the upward cycle where high goals lead to high performance which in turn leads to rewards… which then results in higher satisfaction and confidence… which in turn leads to setting even higher goals on future challenges (Latham, Locke, & Fassina, 2002). This is the kind of cycle nobody complains about getting stuck in.
Five factors that influence commitment
Because it's so important, let's dive deeper into commitment. How exactly can leaders elevate commitment to goal outcomes in their teams?
Here are five science-based tips:
- Alignment & importance: Leaders should not only set a good example by sharing their own goals, they also need to set an inspiring vision and communicate how important each team’s goals are in helping achieve that vision. Alignment of team goals to company-wide goals is critical to establishing how each team’s efforts contributes to the organization’s success. Teams with goals that are not organizationally-aligned often suffer from lack of sense of purpose and impact in the long-term. Likewise, alignment of employee-level goals with their team’s goals is equally important: when individuals’ goals are aligned with their group’s goals, team performance improves (Seijts & Latham, 2000).
- Transparency and visibility of goals to others: Sharing goals publicly enhances commitment by establishing a virtual social contract and making action and follow-through a matter of integrity in the eyes of the team members and others (Hollenbeck, et al., 1989). Therefore, leaders should ensure that their team’s goals are visible and have been communicated to relevant parts of the organization.
- Participation in setting goals: Employees who are involved in the goal setting process set higher goals and have higher performance than those whose goals were assigned by their manager. Though it’s easy to assume these performance outcomes are strictly a result of improved motivation, much of the performance increase actually comes from the cognitive impact of the information exchange that happens while collaboratively establishing goals (Locke, Alavi, & Wagner, 1991). Participative development of goals not only results in greater clarity around expectations but also produces more effective strategies for how to achieve them.
- Ownership & accountability: Each team must take full accountability for their goals (and participation in goal setting helps), yet it’s still critical that a single individual takes ownership of the process & outcomes to keep the team on track.
- Documenting the goals: It may sound old-fashioned, but there’s research to prove it: detailing your goals in writing or in some reviewable, visible way increases commitment to achieving goals (Travers, 2013; Morisano, Hirsh, Peterson, Pihl, and Shore, 2010)
Now that you're an expert on the mechanisms behind team goals and performance, check out our science-based guidelines for applying them to your team here: Setting & Tracking Team Goals: Let's Get SMARTER.