SMART goals in project planning and performance management

>>>Work in progress<<<

Considering the obstacles an effective goal setting can encounter such as lacking organisational capabilities or resistance to change, e.g due to individual anxiety, creating and implementing appropriate goals seem to be challenging. However, in a dynamic company environment establishing effective goals followed by developed action plans is of great importance in any project management process. Initially created by George T. Doran in the Management Review, the SMART goals can be classified as an effective goal setting technique. The acronym SMART stands for: Specific, Measurable, Achievable, Relevant, Time bound.

Being in line with the purpose perspective of projects, this goal setting method is not only applicable in professional projects, but also in any project of private nature. Using this tool allows to generate success substantially related to its original efforts, which is of high value for any project manager. Due to the SMART goals' great scope in diverse industrial areas, a deep investigation of the SMART traits and simultaneously a critical reflection of its potential limitations will be conducted as follows.

Introduction to goal setting

Starting in the 1960's with the studies conducted in the area of organisational performance, Dr. Edwin Locke established 1968 the conclusion that setting goals results in great organisational performance. Followed by George T. Doran in the Management Review, the study extended to the recognition that unclear goal settings in companies hindered a continuous progress within the organisation.

As stated in the Standard for Project Management, goals are defined outcomes and benefits specifying the expected result of a project. They can be short term and long term, and serve as the translation from an established program's vision. Hence, goals are set after the scope of a project, program or portfolio has been developed and are further described in the planning phase, the 2nd stage of the project management process. Moreover, goals are used throughout the project management process to track achievements and to measure the performance, which are important in the Program Governance process. Next to the performance evaluation of the proposed goals, goals create a direction which allows to be followed throughout the phases of any project management process. As any managerial task such as a planning process is accompanied by uncertainties that can lead to ambiguity and fallacy, an effective way of setting achievable goals is absolutely essential to mitigate negative outcomes.

Next to the findings of Doran and the Standard for Project Management, further experimental research accomplished by Locke and Latham (2002) prove that setting goals increases both motivation of the affected, achievements and success rates in different areas. Lastly, it provides accountability for the completion of a project.

Big Idea SMART goals and benefits

Due to the importance of an effective goal setting technique in the organisational performance management, Doran proposed the SMART goals which acronym stands for:

Specific, Measurable, Achievable, Relevant, Time bound.

SMART goals

Using this acronym, several variations evolved other time such as:

• S for specific, significant, stretching

• M for measurable, meaningful, motivational

• A for achievable, attainable, agreed upon, acceptable, action-oriented

• R for relevant, realistic, reasonable, rewarding, results-oriented

• T for time bound, time based, timely, tangible, trackable

However, due to simplicity reasons just the first and most common variations are used in the following.

Studies show that using a tool such as the SMART goals technique is valuable due to its requirement for specificity. Having specific or clear goals, respectively, increases persistence and self efficacy, reduces the influence of anxiety of individuals and eventually allows an outperformance of a reference group without a specific goal setting. The time constraint of SMART goals is also facilitating a fast work pace compared to undefined deadlines.

Another reason for its success is the level of awareness of the technique, the great scope of appreciation among users it experiences and the easy applicability.

In the field of project management, SMART goals generate a sense of discipline, structure and focus in the planning phase. Moreover, a higher rate of accomplishment compared to a vague goal setting is ensured, hence, a roadmap to success can be developed. This tool allows to generate success substantially related to its original efforts, which is of high value for any project manager. As it reduces ambiguity, increases commitment in a managerial environment and can be applied to any part of a company whether the project management or the entire company - regardless of the size of the organisation - it stands out in the industry. It can be used to measure and to track project phases and results, and can be implemented in a great amount of methodologies such as Mind mapping, WBS, Gantt chart or Balanced scorecard. In terms of performance measurement, using SMART goals enables developing indicators to analyse the performance compared to its expected outcomes and thus enables feedback and learning. Lastly, an improvement of the team efficiency within a project team is another attitude.

Application: How to be SMART?

As mentioned before implementing smart goals takes place after the project scope has been defined. According to this, implementing it in the planning phase is the obvious choice. Because of its great scope of application possibilities, SMART goals can be utilised throughout the project management process. However, the main aspects of application in project managements are planning, performance management and monitoring. Lastly, it is a popular tool in the area of time management.

Before applying the tool on a specific case, certain things need to be considered:

• A clear linkage between set goals and the company's strategic goals or an alignment between goals, respectively, is necessary to ensure commitment and motivation of affected employees.

• Following a hierarchical and clear goal setting approach is essential, i.e. strategic goals have to be determined before any tactical or operational goal setting can happen. Though this might seem obvious, establishing goals on an operational level with clear defined strategic goals can promote higher performance as an understanding of task achievements in comparison to company goals takes place.

• Lastly, the ability to create measurable goals is unalterable as it is substantial for generating performance measuring indicators to evaluate the success of the goals within the project.

Guidance

A typical application environment can be a workshop, more commonly used are simple Microsoft Excel Spreadsheets.

The following guidance along the acronym of SMART shows how to implement the tool using an example of a shoe manufacturer by answering the questions of the subcategories below.

Specific:

What do I want?	Develop a more comfortable shoe
Why is it important?	To sustain on the market
Who is involved?	Marketing, R&D
Where is it located?	Northern Europe
Which resources?	Financial, human, patents

Be precise to avoid misinterpretation, but keep it simple.

Measurable:

How do I measure(quality of shoes)?

Test results of prototypes, customer experience measured quantitatively with qualitative aspects - additional aspect: cost and price consideration essential

It represents a crucial part of the goal setting as it strongly influences the project flow. Trends show a numerical illustration is supportive to compare goal results, if necessary translating qualitative statements into numeric values needs to be considered .

Achievable:

How can I attain the goal?	If necessary internal resources are available and market offers opportunity
How realistic, considering internal capabilities?	Are financial, R&D, manufacturing resources available?

This corresponds to capabilities, where the difficulty is to determine goals that challenge, but not overcharge available capabilities.

Relevant:

Is it worthwhile?

Is it the right moment?

Does it fit to my needs?

Are we the right company?

Does the current external circumstances allow it?

The above questions need be answered positively to ensure the relevance of the goal. Moreover, it ensures higher commitment to achieve the goal if a clear relevance is identifiable. In case that the relevance of set goals is not given, the overall engagement during the goal achievement process can abate.

Time bound:

When are the deadlines?	Is it a summer shoe? Do we meet the goal for the next season? Milestone development
What do I expect in the short run, long run?	First draft in 4 weeks, first prototype in 3 months, SOP(Start of production) in 1 year

Precise deadlines are important to avoid displacing the project process. The shorter the time frame - considering realistic capabilities - the better.

Case study: Budgeting

The purpose of briefly illustrating the case study is to show how significant the changes can be after implementing the SMART goals technique into project processes.

Both scenarios took place within an big, international corporation with a small corporate unit and flat hierarchy inside the organisation. One key aspect in the company was the annual budget and objective setting between corporate and business units. One unit applied SMART goals setting, another particular unit did not apply any effective goal setting approach. The outcomes of this case study are shortly described as illustrated.

Outcomes

Without SMART goals:

• complete focus on budget goal as only internal unit goal
• no involvement of internal stakeholders into budget planing
• compliance culture
• no efficient usage of resources
• manager in charge laid off after some time

With SMART goals:

• budgeting started by creating specific actions that would cause exceeding the proposed budget
• broad involvement of all functional managers
• great alignment among relevant managers
• continuous promotion of developed goals
• goal driven culture to ensure success by sharing goal sharing among employees
• goal performance meetings
• great effort for goal setting
• low turnover
• great commitment
• creating specific and measurable elements out of abstraction of budget plan
• reduce ambiquity

The case study shows that mainly the two project management processes come into play, namely, project planning and performance management. Calculating the budget represents a significant task in project planning and by measuring the performance of the set goals in the case study the expected outcomes have been checked.

Limitations

Limitations regarding the SMART goals method can be identified. Some exist due to human failure which are applicable to many methods throughout project management, some can be developed due to the method's natural characteristics.

Starting with the former category, the SMART goals setting depends - as similar methods do - on the user's input and perseverance to follow its instructions. Even if the tool was correctly used, choosing for instance a specific goal which is negatively influenced by someone's bias can turn good intentions into a unsuccessful story. Other traits of the method can be negatively influenced by the individual bias as well such as the trait relevant. If the goal's attached degree of relevance has been identified wrongly like an incorrect estimation of the demand on the market or the non-existing relevance for the overall company in case that the goal's directions are not aligned with the company's strategy, this false decision regarding the trait relevant caused by asymmetric information can hinder the goal realisation to prosper. Taking this example into consideration, asymmetric information represents one of the major reasons for uncertainty in any managerial task and thus, it is not only relevant considering SMART goals.

Another aspect that encounters the successful execution of the SMART goals setting technique is based on human resistance. The roots for this unpleasant reason of an fruitless implementation of the discussed tool can be both the human nature or the tool itself. The latter will be discussed as part of the tool specific limitations. Regarding the former, seemingly unrelated individual human anxiety about the outcome of the goal setting can hinder to achieve any positive result. This - in the context of change management - phrased phenomenon resistance to change can arise among others due to self-interest of the affected who has no desire to adapt to a new goal or due to the individual belief of missing capabilities after a goal has been established. The latter is closely related to the expectancy model of motivation.

Considering model specific attributes, SMART goals do not ensure appropriate goal setting, meaning that it critics emphasise its ability to phrase goals, but not to determine whether these are valuable. However, saying this Doran identified the general complexity in setting appropriate goals in a dynamic environment. Moreover, it is argued that it is not applicable to goals in the long run as wells as lacks flexibility. This argument is closely related to the fact of a dynamic business environment and that the tool does not offer natural capabilities to bypass this circumstance. Furthermore, it is claimed that the technique lacks the spirit of exigency and of creativity and rather supports lethargy. Setting low goals is another critique of the tool. Resulting from a strong insistence on a trait like achievable, higher and more optimistic goals potentially leading to greater performance are disregarded. Last but not least, the many variations of interpreting the acronym of SMART goals lead to a loss of effectiveness and to misunderstanding.

Alternative goal setting methods such as Cascading goals where the hierarchal Top-down approach is essential or Using Percentage Weights with a relative assignment of importance to organisational goals offer possibilities to bypass identified flaws of the SMART goals technique. Nevertheless, these options are also accompanied by negative aspects which do not allow a general applicability regardless of the company's size.

An extension of the SMART goal to SMARTER goals including traits like E (evaluated) and R (reviewed) is another way to mitigate potential flaws of the original tool.

Conclusion

As initially stated the SMART goals technique is supposed to be an effective way of achieving specific objectives. The question whether or not SMART goals lead to effectiveness cannot be answered so easily. For many other methods the dependence on external circumstances represents a crucial part if the applicability is successful or not, the same occurs for the SMART technique. However, its purpose and structure lead to proven success and popularity in the industry. In contrary to other methodologies such as Cascading goals, it depends less on organisational structures. This means on the other side its rather generalist applicability can lead to failure, however, by putting emphasise on its positive guiding and goal structuring attributes its overall success and continuous usage for more than 30 years seems comprehensible. Additionally, the expectance of one size fits all, i.e. one tool can be applied to any case, is unrealistic and in general, not applicable to many tools regardless of its purpose. Its structuring, clear and motivating traits are facilitating many goal setting processes. Despite abandoning the tool due to its limits, encountering these by inclusion of affected people in the development state, regularly updating initial goals in case of changes in the business environment occurred and precise evaluation of the goals' consequences to avoid a reduction of productivity is of great importance. In order to be successful, a deep understanding of the organisation is required due to its importance throughout the stages of project management. Especially, for the performance management a clear systematic and means of measurement for evaluating performance indicators is necessary. In conclusion, using SMART goals in a project management environment has proven to be a valuable tool for a great time. Considering its given limitations by encountering them with proper means can lead to a big achievement while planning a project and later on evaluating its performance.