Set SMART goals and get a head start

This SMART goals page contains tips, study material, a SMART handbook, and many examples. How can you set SMART goals and achieve them with your team? Vague, unspecific goals lead nowhere and confuse people. That’s why goals have to be made Specific, Measurable, Acceptable, Realistic, and Time-bound: SMART. Keep the organization agile and stay ahead of the competition.

The SMART method: what is SMART?

To explain the SMART concept, we’ll take the subject of innovation. We’ll explain every letter of the initialism so that you can answer the question “What is SMART”?

  • Specific: describe what you want to achieve concretely and without ambiguity. Usually, this involves using a verb and a noun. For example: increase the speed of innovation, meaning to introduce new products and services more frequently.
  • Measurable: how much do you want to achieve, and how can you make the results visible using clear KPIs? For example: once every six months, you can add an innovative service to the product offering.
  • Acceptable: it’s important to make sure that there is a base of support for the goals within the organization. Employees have to be able to accept the goal. Only then can they apply themselves. For example: employees realize these days that continuously improving is the standard, and this standard makes it easier to innovate.
  • Realistic: the goal has to be challenging, but realistic. An unrealistic goal doesn’t motivate people. It’s important to make sure the knowledge, capacities, and means to achieve the goal are present. In our example: we expand the design department by one employee.
  • Time-bound: indicate when the goal has been reached. This is trickier for long-term goals, like strategic goals, than short-term goals. In our example: starting next fiscal year.

From this perspective, the SMART concept is relatively simple. But how can you apply this in practice? What’s involved? We can help you clarify how to achieve your SMART goals, by giving you practical, pragmatic tips to implement goals and work with KPIs on all levels of the organization.

Why is making goals SMART so challenging?

The five letters in SMART explain why it’s not easy to set SMART targets:

  1. To be specific you need details, and those aren’t always available. That will take time and energy.
  2. To make something measurable you need KPIs, and they’re usually hard to find. Every organization essentially only has a few. Don’t keep looking for a needle in a haystack, order our SMART KPI Toolbox.
  3. To make something acceptable you need to have open discussions with colleagues or partners. Only by having tough conversations can you advance.
  4. To be realistic you need common sense as well as deep inside knowledge. You have to know your organization from top to bottom.
  5. To make something time-bound you need norms and realism (see also 4). Setting SMART targets makes it realistic.

1. Making goals specific & detailed

A hospital in the South of the country wants to become a top clinic specialized in skin conditions. In order to achieve this, the strategy is to attract surgeons with a good track record. But what does that mean? What is the profile of the top surgeon? These kinds of details are what it’s about. After many discussions, a specific profile is created: the doctor must have completed at least 10 complex operations per year successfully.

On top of that, they must have at least 2 publications a year in top medical magazines. That’s how you make a goal clear and SMART.

2. Make it measurable using KPIs

Finding and defining KPIs isn’t easy. Not every KPI is a genuine performance indicator. Before you know it, you can end up with way too many indicators. Or you might end up steering based on KPIs with undesirable side effects or that reward bad behavior. The SMART KPI Toolbox helps you define clear KPIs. This frequently-used management tool helps you define SMART KPIs using 6 logical steps and three simple methods: strategy-driven, process-driven, and data-driven.

3. Healthy discussions with colleagues and partners

In an intelligent, SMART organization, people work together to achieve goals. That’s why a goal never entirely stands alone. You need a base of support and discussion to achieve goals. People will work together and put their backs into it, but only if they accept the goal. In practice, this isn’t always the case. The goal could be too ambitious, or misguided, which makes people uncomfortable with the goal.

4. Inside knowledge & SMART goals

The recruiter of the hospital throws a wrench in the works. She indicates that in her experience and based on her knowledge of the industry, it’s going to be very difficult to attract this kind of talent, unless there’s a very attractive, but inordinately expensive, benefits package attached.

5. Norms and realism

Making airplanes land and take off on time 100% of the time is unrealistic. The weather alone makes sure of that. These days, many factors have to be considered: public disturbances (drones), threats, or IT outages. Striving for 100% accuracy would be too costly, on top of that. Here, again, inside knowledge is key.

Small steps towards your SMART goal

If your goals are SMART, you’ve already made a big step in the right direction. But do you know how you’re going to achieve those goals? You need a clear strategy for that. You have to map the road to the goal, too, so that everyone understands what to do in which situation and can explain it to others. So even SMART goals need a strategy, because you’re going to run into obstacles on the road to the goal. It’s better to think about this beforehand so you’re not caught off-guard.

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Excel at something: a SMART example

  • Excelling: a SMART manager first determines what the organization wants to excel at. This gives the goals meaning and your people purpose and passion for the cause. They not only understand what SMART means, but also the deeper meaning of the goal.
  • Move: determine what move towards the next goal can be made. This is where you or your organization announces its ambition.
  • Measure: make progress towards the goal measurable using KPIs. Monitor progress continuously based on dr. Deming’s Plan Do Check Act (PDCA) cycle.
  • Norms: determine which norms have to be reflected by KPIs. Adjust norms where necessary. For example, sickness leave can’t be higher than 4%.
  • Realize: which actions do you take to realize the SMART goal together?

So, the condition when formulating clear SMART goals is to always tie it in with the higher goals of a project or organization.

Reward & evaluate your employees on SMART goals

An important part of professional, sincere, and driven management is the way in which the rewards and evaluation systems are designed. In successful, intelligent organizations, people come first in the execution and management of the business strategy.

When it comes to the best way to have meaningful employee evaluations, HRM experts tend to agree: without clear, SMART goals, it’s not going to be effective. But how do you set those SMART goals? That’s the million-dollar question.

In practice, formulating goals in itself can already prove to be a big roadblock, let alone SMART goals. The decision-makers can get mired in discussions about definitions, procedures, priorities, wage scales, and bonuses.

That’s why more and more people are in favor of ditching the entire performance evaluation system. Even scientists agree with this notion. But what about the arguments? Several long-running research projects can provide the answers.

Frustrations steer discussions

Evaluations lead to nothing but frustration, according to managers as well as employees. This was revealed by a seven-year research project by the professor of Human Resource Management at the Free University of Amsterdam, Kilian Wawoe. The annual performance reviews by managers are demotivating and don’t have any positive effect on performance. The researcher advocates for abolishing this system and replacing it with on-going coaching. This coaching doesn’t focus on the past, but the question of how employees can get better at their work, and more quickly achieve their SMART goals.

Don’t turn an evaluation into a judgement

Wawoe’s seven-year researched involved hundreds of employees and managers. It proved that they think performance reviews are a waste of time and money. Employees mostly feel that the evaluations don’t reflect the truth. It turns out that the scores employees get are only partially based on their performance.

According to the university researcher, other factors that have nothing to do with performance management or the SMART method also play a role. Men tend to get better scores than women. Not because they’re better at their jobs, but because they’re more outspoken and managers don’t want to deal with conflicts. Evaluations are sometimes called judgements for this reason.

The Netherlands wastes a billion euros annually

There are 8.6 million people working in the Netherlands (Source: CBS). If they waste four hours a year on performance reviews, this costs about 70 million hours a year. Personnel departments also have to implement and guide this entire process. IT systems also have to be designed for it. In total, the Netherlands spends over a billion euros a year on this process. But what is the return on that investment? American research already revealed that most managers don’t believe that performance reviews lead to better performance and employee satisfaction. That’s likely no different in the Netherlands.

On-going coaching: a good alternative

That caused Wawoe to look at companies that do things differently. He noticed that top-performance teams all work with on-going coaching and forms of Lean management. Team members hear how they’re doing and what they can improve all year round. That doesn’t only improve employee performance, but also their satisfaction. And it substantially reduces the odds of stress and burn-out.

Outdated goals

Businesses and organizations are clinging to the current system of evaluation and judgement because it’s transparent and offers certainty. Oftentimes goals are set in January, and in December the manager or employee can judge whether or not the goals were met. The problem is that these goals often don’t take into account the complexity of the work. On top of that, the goals could be outdated by February. In short: it’s not a SMART goal. What remains, according to Wawoe, is a conversation about outdated goals, and not about what someone has been doing all year. The result: disappointed employees who have no faith in getting a fair evaluation, no matter how SMART the formulated goals were. Let’s return to the roots.

Five basic principles of formulating SMART goals

In 2002, two well-known American scientists, Edwin A. Locke and Gary P. Latham, published a controversial article about setting goals in American Psychologist. In the article in question the two professors summarize their findings based on 35 years of scientific research. This resulted in five basic principles that may sound obvious, but are still valid to this day.

  1. Setting specific, hard-to-attain goals leads to consistently higher performance than simply asking people to do their best.
  2. Ambitious goals lead to greater efforts by employees than low goals. The most difficult to achieve goals lead to people to try their utmost, and lead to the best performance possible.
  3. Tight deadlines lead to faster work than more flexible, loose deadlines.
  4. Openly stating your commitment to certain goals increases the personal efforts to reach said goal.
  5. When it comes to reaching goals, it makes little difference if the goals were determined by an agreement between an employee and a manager or by an order from above, given by the boss.

Tight deadlines

On paper, the process of setting strategic goals seems simple: set specific, hard-to-attain goals with tight deadlines. Don’t worry too much about how those goals were arrived at: through negotiation, or from a list of goals and end dates given by the boss. At the same time, publicly state which goals were determined, ideally according to the SMART method. Hard workers with a lot of perseverance will “automatically” lead to the desired, predicted high performance.

Act consistently

But reality isn’t so simple. The American management consultant Dick Grote stated in an article in Harvard Business Review that most companies managers either ignore or don’t consistently apply the five basic principles of Locke and Latham: SMART goals, a cascading of goals, and assigning relative weighting factors to goals.

Bad goals, formulated SMARTly

These days, entire generations of employees in businesses and organizations grew up with the SMART principle. Goals must be Specific, Measurable, Acceptable, Realistic, and Time-bound: this was drilled into everyone. There are some variations here and there. For example, instead of Acceptable, they can say Ambitious (does the goal bring about an actual change?), Action-oriented (do we actually have to do something to achieve this?), or Applicable (which person strives for which goal?). Sometimes they also call it Achievable, but this also refers to the Realistic aspect. The essence, however, always remains the same. The SMART method offers a solid foundation for everyone who is first confronted with goals. The by-now cliche acronym can, however, be a big obstacle to the successful realization of goals.

The SMART principle as a kind of spell check

You could see the SMART method as a kind of spell check that only tells you about spelling and style mistakes, but doesn’t tell you much about the contents. Following this analogy, the SMART principle itself says nothing about whether or not a particular goal is a good idea. Worse, the SMART formula can promote setting unambitious goals. No one wants to set goals that seem unfeasible or unrealistic. Some will focus primarily on the A and R in the acronym (read: easily achievable targets). But as we now know, the demanding, ambitious goals lead to the greatest efforts and the highest performances.

Prevent a cascading of goals

Managers are often advised to set goals from above and let them land in the workplace. The president or CEO first determines their own goals within this “cascade”. Then follows the vice president, who sets their goals based on their boss’, so that they can achieve the organizational goals together. Next, the various regional directors, business unit managers, and supervisors formulate their SMART goals. Finally, the people in the workplace get their turn to set goals. They, of course, match their goals to those of their superiors. No one will want to undermine or sabotage the goals of their superiors in any way.

Everyone is waiting on each other

One downside of this rigid cascading of goals is that in practice, people often have to wait for others. As long as the managers haven’t formulated their goals, their subordinates can’t get to formulating their own SMART goals. This process can, theoretically, go on forever, while people point fingers. Colleagues blame others for slowing down the process needlessly. Another risk is the goals of someone with a unique function not being considered because there’s no direct relationship to the goals of the supervisor.

Negotiating and haggling

Of course some goals are more important than others, but assigning percentage-bound weighting factors to goals to indicate their importance is often counter-productive, according to Grote. It’s impossible to determine an exact percentage. Take a specific goal, for example granularity: in other words, the degree of detailed information. Deciding whether this goal should weigh for 20 or 25 percent is simply impossible. And which goal is given 5 fewer percent points of importance as a result? This process can quickly devolve into endless haggling and negotiating.

Be careful of the illusion of certainty

The use of percentages to indicate the importance of goals presents an even greater problem. If they evaluate people on a five-point scale and apply percentage-based weighting for separate goals to that score while working with averages, they might end up with score with two decimal points. That creates the illusion of certainty.

The SMART formula: avoid a mathematical approach

Perhaps the mathematical approach mentioned above is totally justified, but it’s basically just nonsensical. Performance reviews are not a mathematical exercise. An objective evaluation depends on the personal judgement of a professional manager. Unfortunately, there’s no technique that simplifies the SMART formula and leads to unambiguous evaluations. But, as Latham and Locke showed in their research: investing in goal-setting pays its dividends. The payoff can be substantial. But it’s important to be careful with the cascading of goals, such as with a balanced scorecard. The weighting factors have to be avoided. Don’t fixate exclusively on the SMART formula.

Three tips for formulating SMART goals

Grote closed out his article with three practical tips for anyone who wants to formulate SMART goals:

  1. Don’t use the SMART acronym to determine which goals are wise and worthy. Only use the method to check if you’re formulating your goals correctly.
  2. Let go of the rigid idea that all individual goals should be strongly related to the supervisor’s goals. The individual goals don’t have to involve those deemed important by the supervisor or the management team. Of course it’s important and logical to match the goals set by your direct superior. In modern companies, there’s also sufficient room for individual goals to be set. Consider the goals of your direct superior an important fact. But they shouldn’t completely rule out or overshadow the individual goals of the employee.
  3. Do not assign weighting to the goals. Use broader descriptions such as high, average, and low priority. Or order the goals based on importance (for example using a dashboard) to indicate that some individual goals are simply more important compared to others.

Break through the judgement ritual

Two partner of McKinsey & Company, Elizabeth Hioe and Sabrian Chowdhury, also shined a light on the returning problems associated with performance reviews and evaluations. Anyone who’s questioned the employees of their company will come to the conclusion that no one feels 100% comfortable with this annual ritual, according to the partners.

Don’t be too rigid when formulating SMART goals

Even excellent employees become demotivated when confronted with rigid or arbitrary goals, even if they’re formulated SMARTly. The two McKinsey partners discuss this sensitive topic in this article. According to them,  the trick is turning this annoying ritual into a positive experience dedicated to personal growth and learning. Setting goals has been a time-consuming, mathematical, and inefficient process for too long. It’s time for a sea change.

Adjust your SMART goals in real-time

When setting goals for employees, you’ll have to consider three important points:

  1. Involve your employees in the process from beginning to end. When it comes to improving performance, it only makes sense to involve the people in the entire process directly. This generates commitment, and employees will develop a sense of ownership when it comes to achieving goals. Achieving targets stimulates the continuous improvement process.
  2. Connect the individual goals with the organizational goals. Of the companies that implemented an effective performance management system, 91% say that the goals of employees are related to the organization’s priorities. The explanation is simple: people like being able to see how they’re contributing to the bigger picture.
  3. Adjust goals in real-time. Goals shouldn’t be static, but dynamic. They have to be able to evolve. A common pitfall is setting goals at the start of the year and then going back to business as usual. The goals aren’t discussed again until the next round of performance reviews. By then, the goals have been overtaken by reality. Of course goals shouldn’t be moving targets, but they do have to be adjusted if the situation demands. Goals also have to  be adjusted as soon as the assumptions underpinning them change suddenly.

Hundreds of examples of SMART goals per industry

An intelligent organization ensures that its senses are mainly focused on continuous improvement and innovation, without losing sight of potential risks. We’re talking about developing the right insights and key performance indicators (KPIs) in relation to the (strategic) SMART goals. See also: our SMART KPI Toolbox. This essential handbook for performance-driven managers and employees will help you establish crucial management information, KPIs, and contains many examples of SMART goals.

To illustrate, below you’ll find examples of SMART goals and KPIs per industry. These examples are only a small fraction of possible goals and KPIs.

Power and setting SMART goals

The power/electricity sector’s market dynamics are changing. New market forces are appearing, and citizens are becoming producers in addition to consumers (prosumers), savers, investors, and traders. New collectives and (online) platforms are appearing outside of existing structures. “The customer” no longer exists: people buy comfort and information instead of energy. Business models are changing. It’s becoming possible to anticipate market developments based on current, transparent information. The industry is accelerating towards CO₂-poor, reliable power production. In the power industry, we can set the following SMART goals:

  • Power outage (from the customer’s perspective)
  • Delivery in accordance with agreements
  • Delivery in accordance with purchasing
  • Generated or delivered units of sustainable power
  • Number of damage claims
  • Number of damage claims not honored
  • Percentage of claims noncollectable
  • Illegal tapping

See over 350 SMART goals

Mental healthcare: a SMART example

Within mental healthcare (Dutch GGZ) and addiction treatment there are institutions like care centers and psychiatric practices. According to the Rabobank, the GGZ is undergoing a transition from specialized to generalist (GP with practice support), and from clinical beds to intensive ambulant care, optionally in combination with online modules (blended care). Existing business models have to be adjusted to arrive at a more cost-efficient and effective GGZ. Within the mental healthcare industry, we often see the following SMART goals:

  • Waiting list in days (+average)
  • Planned versus achieved productivity
  • Productivity
  • No-show percentage
  • Percentage of billable hours not approved

See over 350 SMART goals

Smart goals in healthcare

The pressure on hospitals will increase, according to the Rabobank, given that the demand for healthcare will increase faster than the available resources. Hospitals will have to specialize in order to preserve quality while limiting costs. Digitization will have a disruptive effect on the offering and it offers opportunities when it comes to improving quality and reducing costs. In the healthcare sector, the following SMART goals often apply:

  • Waiting list in days (+average)
  • Vacancy rate of beds
  • Planned versus achieved productivity
  • Productivity
  • No-show percentage
  • Percentage of billable hours not approved

See over 350 SMART goals

SMART industry

Although most Dutch industrial companies are modest in size, they occupy a strong position, according to the ABN AMRO bank. They’re especially strong in niche markets. New services like maintenance at a distance and predictive maintenance and data science offer machine manufacturers new opportunities to provide their worldwide customer base with more services and increase their added value to the customer. The Rabobank views the rise of smart industry concepts and the increased focus on sustainable production processes, like cleantech, as important trends. In the industrial business, the following SMART goals can be defined:

  • Productivity
  • Usage rate of machines
  • Defect rate of products
  • Waste in the process
  • Conversion rate: contact to cash

See over 350 SMART goals

SMART goals in the cleaning business

Cleaning services are a part of facility services. Big data analytics, workplace sensors, internet of things, robotics, 3D printing, and artificial intelligence (AI) are playing an increasingly important role in facility services, according to FMN. Organizations who don’t capitalize on these technological changes risk missing the boat. Within the cleaning business, the following SMART goals are important:

  • Cleanliness of objects and surfaces
  • Cleaning at undesirable times
  • Number of cleaning services planned, but not executed
  • Number of damages per customer
  • Confirmed thefts
  • Number of times the cleaning service starts or runs late

See over 350 SMART goals

SMART goal examples at insurance agencies

The future of insurance companies will be determined by agile, digital organizations, according to PwC. InsurTech, disruptive innovation within the insurance sector, will play a key role, driven by their technological developments and digital technology. New ways of pricing, ongoing cost reduction and market consolidation are other topics that will make insurers more profitable. To stay competitive in a saturated market, cost reduction remains a strategic tipping point. Within the insurance business, the following SMART goals can be set:

  • Number of successful campaigns that cause customers to adjust their driving or living behavior
  • Number of damage claims versus number of damage claims not honored
  • Percentage of payments noncollectable
  • Number of conflicts with customers related to damages
  • Quality of policy conditions
  • Lead time of damage claim handling from filing to payment
  • Number of fraudulent cases

See over 350 SMART goals

Freight & logistics

Transport of goods over the road is part of the transport sector. Sustainability and innovation are important themes in this industry, according to the Rabobank. The CO2 emissions from the transport sector have to be reduced, while the demand increases. Also, local governments want to reduce freight transport within city limits. According to industry organization TLN, ICT is becoming increasingly important. Exchanging data offers opportunities, which is an increasingly common realization. In this industry, you can make these goals SMART:

  • Capacity used
  • Transport outage
  • Number of transports leaving late
  • Departure and arrival conform with planning
  • Fleet inoperational

See over 350 SMART goals

SMART cities

An increasingly large part of our lives and work happens through digital channels, including government services. Municipalities also have to deal with virtual reality and artificial intelligence, according to VNG. Digitization has a lot of positive effects on the functioning of society, and it can offer a great contribution to productivity, job opportunities, and society’s well-being. Resources can be used more efficiently, transactions are faster, and products and services better match what people want and need. In the local governments sector, the following SMART goals may apply:

  • Economic prosperity: establishment and growth of businesses
  • School drop-outs: number of drop-outs / total number of students
  • Job opportunities: number of opening versus total number of citizens
  • Labor participation: employed people versus total number of able citizens
  • Location: minutes delay per movement
  • Sports participation: number of members of sports clubs / total number of citizens
  • Traffic safety: number of bike or car accidents
  • Fire safety: number of fires (absolute or in percentage of residents)
  • Criminality: number of charges filed by and against citizens
  • Health: doctor and hospital visits
  • Quality of life: percentage of green in the city
  • Social cohesion and citizen participation: number of citizen initiatives

See over 350 SMART goals

Projects/consultancy/engineering agencies

Increasing welfare and urbanization stimulates the demand for engineering agency, in areas like smart housing and clean drinking water, for example. Digitization and new technologies present opportunities to engineers. Virtual reality simulations, 3D laser scanning using drones, and Build Information Modeling (BIM) can help engineers make better validations. Thanks to urbanization and climate change, the demand for sustainable solution is increasing. In this sector, these SMART goals are relevant:

  • Planned versus achieved productivity
  • Conversion rate: contact to cash
  • Percentage of inspections re-planned
  • Productivity loss
  • Achieving customer project conform with planning and budget
  • Invoiced hours versus declarable hours

See over 350 SMART goals

SMART goals in Leasing

Lease companies have developed into providers of all kinds of business mobility. The entire automotive sector is faced with the challenge of adapting to constantly changing circumstances. Car companies have to invest in knowledge and skills in order to maintain completely electric cars. Gas and service stations also have to keep up with the changing needs of drivers. The bank sees opportunities for businesses that capitalize on digitization, big data, and connectivity. Companies have to prepare staff, the workplace, and the business model for the transition to zero-emission cars, and to capitalize on the opportunities in growth markets such as private leasing. In the automotive & leasing sector, we’re seeing the following SMART goals:

  • Difference between the agreed upon and actual delivery time of the car
  • Number of leases ended early
  • Number of cars from lease not sold or redeployed
  • Number of damages per customer
  • Number of late payments
  • Following factory-prescribed maintenance cycles
  • Maintenance fraud

See over 350 SMART goals

IT consultancy & managed services

The digital transformation affects nearly all industries and is causing increased demand for, and supply of, ICT services. The competition is increasing because the number of suppliers is increasing faster than the demand. Challenges for this industry are mostly situated in the areas of attracting qualified staff, lowering energy consumption, and complying with rules and regulations re: cyber security and privacy. These SMART goals can be found in this sector:

  • Planned versus achieved productivity
  • Productivity loss
  • Conversion rate: contact to cash
  • Realization of advice project conform with agreed plan and budget
  • Invoiced hours versus declarable hours
  • Unavailability of offered services
  • Percentage Service Level Agreement (SLA) indicators achieved
  • Uptime of systems supporting the primary process
  • Number of successful versus failed ICT projects
  • Number of serious bugs or interruptions in systems

See over 350 SMART goals

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Daan van Beek, Managing director & expert SMART goals

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Managing director & expert SMART goals

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