How to Set Annual Employee Goals?

Which of these common techniques is most effective for setting annual employee goals?

1. Manager asks the employee to write his/her own goals and rubber stamps them.

2. Manager writes the goals and hands them to the employee

3. Employee writes a draft list of goals and reviews them with the manager. Manager decides which ones to keep, refine, and adds one to two of his/her own.

4. Manager writes a draft list of goals and reviews them with the employee.

Employee gives input and the manager refines them based on employee input.

5. Manager and employee each write a draft set of goals, they get together and compare, and the manager decides which ones to keep.

Which is the correct answer? None of the above is correct because they are ALL inherently flawed. Here’s why:

Manager Asks the Employee to Write His/Her Own Goals and Rubber Stamps Them

This one is obvious, but it happens all the time. It’s often the result of a manager complying with an HR mandated performance management or goal setting process. It’s lazy management. First of all, the employee is writing their own goals in a strategic vacuum without having the benefit of the manager’s insight into company and department strategy and goals. While writing your own goals is good for buy-in and commitment, a complete lack of involvement from the manager tells the employee that the goals really don’t matter – that it’s just a creative writing exercise that will have little to do with what really matters.

Manager Writes the Goals and Hands Them to the Employee

This technique goes too far in the other direction – high strategic context and manager involvement, but zero employee involvement and low commitment. It’s just human nature to want to have a say in your work – in fact, it’s the most important factor in what motivates us. Also, employees will often have the best ideas on how to improve things because they are the ones closest to the actual work.

Employee Writes a Draft List of Goals and Reviews Them with the Manager

Manager decides which ones to keep, refine, and adds one to two of his/her own. This is better, as it’s a discussion and collaboration. It still relies on the employee coming up with goals with no direction or bigger picture context. It’s more work and re-work for the employee, without enough involvement from the manager.

Manager Writes a Draft List of Goals and Reviews Them with the Employee

Employee gives input and the manager refines them based on employee input. Again, this method is better, since there could be discussion and collaboration. In most cases, there isn’t a conversation – most employees won’t speak up and will just accept the manager’s goals, with little thinking or buy-in.

Manager and Employee Each Write a Draft Set of Goals, They Get Together and Compare, and the Manager Decides Which Ones to Keep

What I don’t like about this technique is that it can be subconsciously competitive – i.e., who can write the best goals. And again, the manager has an “unfair advantage” of having access to higher level strategy and goals.

While no goal setting process is perfect, here’s one that I would recommend that seems to address most of the flaws of the others:

1. Manager reviews company and department strategy.

2. Manager establishes his/her own goals with their manager.

3. Manager has a meeting with all employees to review company and department strategy and his/her own goals. Allow plenty of time for discussion. Manager might refine his/her goals based on input.

4. Manager asks the employee to prepare a draft set of goals. Given that the employee has a full understanding of higher level strategy and context, and he/she knows his/her own job better than anyone, it should be easy to come up with a pretty good set of goals.

5. Manager and employee meet to discuss. Manager asks a lot of open-ended coaching questions to help the employee clarify his/her goals. The manager does a lot of listening, and only adds his/her own ideas if absolutely necessary. The fact is, according to Marshall Goldsmith, most managers just can’t resist “adding too much value.” They are just compelled to say something like: “Yes, that’s a great idea, and if you did this, it would even be better!” While adding that little enhancement may seem better to the manager, it takes away from the employee’s ownership and commitment to the plan. It’s important that the manager always thinks before speaking and asks, “Is adding my idea really worth it?” In most cases, it’s not.

6. Manager and employee agree on the final set of goals.

7. A regular schedule of meetings is established to review progress on goals. Manager acts as a coach in these meetings, helping the employee overcome barriers and maintain their confidence. If the employee is not making sufficient progress on their goals despite multiple coaching meetings, then the manager takes a more directive approach, which could eventually turn into a performance improvement discussion, or even progressive disciplinary action.

Sure, there’s always going to be exceptions to any management process. No two employees are alike. In most cases, when this goal setting technique is used, employees are more likely to establish strategically aligned, relevant goals that they buy into and are committed to achieving.

Getting Maximum Benefit From Employee Ideas

All the gurus and management writers agree. Encourage employees to make useful suggestions for business improvement. Have employees use their background and experience for your business benefit. It boils down to this. Be guided by three little words: “Ask, Don’t Tell.”

The Temptation

An employee approaches you and says, “Boss, I’ve got an idea I’d like to talk to you about.”  You reply, “Tell me about it.” The employee does just that and then asks, “What do you think of that?”

You can’t resist the temptation. You tell the employee what you think of the idea. You shouldn’t! You should ask questions first.

The Questions

These questions will ensure that your employee thinks through the business implications of their idea.

• Precisely what are we trying to achieve?
• How will we know we’ve achieved that?
• How will doing that help your colleagues improve their contribution to the business?
• How will your idea help customers and prospects?
• How will your idea help other employees, apart from immediate colleagues, work more effectively with you?
• What are the possible problems your idea may create?
• Could your idea hurt or damage the business?
• What are the consequences for the business if your idea simply doesn’t work?

Why Ask Questions?

As a manager, a major concern is to keep employees focused on improving job performance.  And you also need to ensure that business improvement is uppermost in their mind.

It’s also important that employees realize that changes in systems, policy and similar matters affect the work of both immediate colleagues and employees throughout the business.

They also need to understand the old adage of my mate, Bix Berry, “The business you’re in is the business that customers perceive you to be in”.

A new idea may seem most appealing to the employees who propose it. But they need to consider how it will be perceived by customers and prospects.

Benefits To You

These questions offer major benefits to you as manager. They enable you to conduct useful discussions based on the answers given by employees.

They’ll also mean that you’ll create business related, relevant information to help you assess the value of the employee suggestion.

They’ll also reveal whether employees have “thought through” their ideas in business improvement terms.

And, over time, employees will learn that they should consider these implications before bringing their suggestions to you.

As you discuss the answers it’s also possible to create collaborative responses that reflect both management and employee concerns.


Suggestions for business improvement must still occur within the overall framework of your marketing focus and your target market. And it’s absolutely essential that they create measurable results on job performance improvement. You want these issues to underpin any suggestions for business improvement by employees. “Is this consistent with our marketing focus and target market?” is always a valuable question.

Author’s Bio:

Diane H. Wong is a search engine optimization specialist and business coach. Besides, she is a research paper writer at domywriting.comOpens in a new tab. so she prefers to spend her spare time working out marketing strategies. In this case, she has an opportunity to share her experience with others and keep up with advancing technologies.

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