Impact of Employee Goal-Setting Exercises
There are two categories of employee goals that are used to measure the performance of an individual: learning goals and performance goals. Key players from the United States in this industry are ClearCompany, iSolved HCM, Sage Group plc, PerformYard, BambooHR, Automatic Data Processing, Inc., Namely, Ascentis, and Ultimate Software. North American Performance and Goal Management market size was $787.6 million in 2019.
HR-Based Employee Goal-Setting
- Employee goal-setting helps to improve employee performance and also helps strengthen the business and improve the employer's reputation who becomes recognized "as an employer of choice."
- Some benefits related to setting goals at work include alignment of employee's work "with the company's broader short-term and future goals," creation of guidelines and criteria that would help employees improve their performance or increase employees' engagement.
- Employee goal-setting is used to measure the performance of an individual. There are two categories of employee goals: learning and performance goals. While learning goals include "development opportunities related to new processes or roles that an employee might not have engaged in before," performance goals show "the way an employee does their job."
- Managers use employee goal-setting to create "a work environment that enables both employees and companies to thrive." Namely, performance managers are "focused on the development of employees" and strive to align individual employee as well as team goals with the company goals.
- Organizations often combine performance management and incentive management to define roles and set goals. The aim is to keep employees engaged, retain talent, and develop leaders.
- There are two different approaches to employee goal-setting, which include SMART goals and HEART goals.
- The SMART approach is a commonly used method to develop goals. It includes the following steps: Specific, Measurable, Actionable, Relevant, Time-bound. It ensures setting clear and objective goals.
- The HEART approach of goal settings includes the following steps: Habit-forming, Emotional, Actionable, Realistic, Time-bound. It focuses "on the personal interests of the individual pursuing the goal."
Impact on a Company's Bottom Line
- Performance goals are focused on the expectations from each employee. They are "the short-term and long-term objectives employees need to meet." There are also employee performance review goals, which offer various benefits such as improvement of the company's bottom line, boost employees' morale, and boost employee engagement, etc.
- Performance goals could be productivity (example "calling 150 leads in one week"), visibility (generating 10,000 impressions), product quality (increasing share of a certain component in the product while keeping the price at the same level), punctuality, professional development, personal standards, etc. These goals are set by managers and business owners; however, everyone has to make their own goals to stay motivated "and make a positive difference in the company's bottom line."
- Employee goal-setting can impact a company's bottom line through employee engagement. One of the steps that need to be taken, so the employee engagement would increase productivity, is setting clear goals (clear expectations) with employees. Other steps are flexible schedules, providing necessary tools to increase passion, showing empathy.
- Employees who know clear goals and have the necessary tools show up at work every day and bring passion and energy. Such employees can ensure maximum productivity and thus greater profit.
- If the goals are given at the beginning of the year, the engagement of the employees is important for goals to be reached at the end of the year. According to the study conducted by Growth Divide, 94% of employees prefer their managers to give them feedback in real-time, while 81% prefer quarterly check-ins. The study showed that with regular check-ins companies can solve problems and adjust goals when necessary, and that "companies, where employees meet to review goals quarterly or more frequently, are almost 50% more likely to have above-average financial performance."
- Experts and companies that analyze the market, in recent years talk about learning goals as a mandatory strategy for the progress of the company. However, in the U.S. in 2018, training expenditures declined 6.4%. Companies spend on average $986 in training per employee.
- Companies often lose employees because of the lack of developmental opportunities, and according to Strategic Business Consulting Group (SBCG), losing only two employees small or medium business can cost more than $50,000.
- According to SBCG, "by investing just $1,000 in training for each employee per year ($50,000) and cutting the turnover average to three people per year, the company is saving $50,000 in non-production costs and converting the money into high levels of training which directly correlates to higher levels of productivity, efficiency, and production."
Successful Implementation of Employee-Goal Setting and Performance Management
- Google, Facebook, Cargill, Adobe, and Accenture are examples of companies that have successfully implemented employee-goal setting and performance management.
- Google launched a project that led to thorough training and development of the process that prepared managers and employees for success. They use a system of setting goals and their Objectives and Key Results (OKRs) system to "reframe the goal-setting process with great results."
- Facebook is primarily focused on peer-to-peer feedback which they use to understand how well their teams collaborate, and to help "employees solve issues before they become problems."
- Cargill created the Everyday Performance Management system that was "centered around a positive employee-manager relationship." This system had a positive impact on performance including, the employees were satisfied since received feedback was good for their personal development.
- Adobe started using a performance management system by training managers to perform "frequent check-ins and offer actionable guidance." They often conduct pulse surveys, and one of many positive results was "a 30% cut involuntary turnover."
- After including performance management, Accenture cut 90% of the previous process. They are focused on "immediate employee development" and an internal application for communication.
Employee Goal-Setting Software Market
- This market is highly fragmented and has many players, but no players stand out by their market share. Some of the key players from the United States are ClearCompany, iSolved HCM, Sage Group plc, PerformYard, BambooHR, Automatic Data Processing, Inc., Namely, Ascentis, and Ultimate Software.
- While there are no numeric figures for Employee Goal-Setting Software Market, the Performance and Goal Management segment of HCM Software Market closely resembles Employee Goal-Setting Software, which is why it was used as a proxy to provide relevant insights:
- The global market size for performance and goal management software was $1,790 million in 2019, and it is expected to reach $1,887 million by 2024 with a CAGR of 1.1%.
- North America (Canada and The United States) has the largeest share of the market, about 44%.
- North American Performance and Goal Management market size was $787.6 million in 2019, and it is expected to reach $830.3 million by 2024.
In this research, we uncovered several reports on the Employee Goal-Setting Software market, but they all keep market-size and segmentation information behind a paywall. Since we couldn't find the numeric values on the US Employee Goal-Setting Software Market Size, we searched the information on other, related or wider-range markets, for data that would allow the triangulation.
We were able to find HCM Software Market report that outlines the market size and growth of the Performance and Goal Management segment. Based on the description of this market segment (key features: "Assessment of individual career objectives and organizational skills gaps that impede performance and job advancement. Continuous reviews and establishing milestones. 360-degree evaluation and real-time feedback. Performance appraisal automation. Goal setting and tracking. Employee surveys. Alignment of human assets to corporate objectives. Fast tracks for top performers."), we can conclude that this segment is closely related to the Employee Goal-Setting Software market, and can be used as a proxy for further analysis of the market.
Since the market value is for the global market, we continued our search for information on the US share. This also didn't yield any numeric values. The only information on the geographic segmentation is a pie-chart in the infographic (without numeric values) that shows the ratio of revenues for different regions. To extract the information from this chart, we uploaded the picture into GeoGebra, carefully placed three points (C, D, and E), and measured the angle they form (which is 159.65° or approximately 160°).
Using the infographic (pie-chart "Geographic Revenue"), we estimated the market share of North America (Canada and The United States):