Cascading objectives downwards rarely works in practice, so instead, align objectives upwards. Here’s how to do it…
For employees’ objectives to make a difference to the bottom-line performance of your organisation, they need to be aligned to the organisation’s overall strategic goals. Take the analogy of driving a car. Let’s say your objective is to drive your car for 100 miles without stopping in less than 3 hours. You complete the journey in a single stint in under 2 hours, so you have exceeded your objective target — great. But…you were not driving in the right direction. So whilst you technically achieved your objective, you didn’t actually get to where you needed to go.
Strategic alignment is about getting everyone moving in the right direction. An established way of achieving this is through goal cascading. The concept of cascading objectives has been around for decades. However, simply because a given performance management tool has been around for a while, this doesn’t mean that it is still the best way of doing things. Indeed, the Harvard Business Review recently stated that it is a technique to be avoided. As our understanding of psychology and human behaviour advances, new performance management trends emerge that are more in keeping with modern ways of working.
But what exactly is goal cascading, what are its innate flaws, and what would we replace it with?
What is goal cascading?
Goal cascading, or objective cascading, relates to the process of communicating and assigning goals downwards through the organisational hierarchy. The system starts with executives, who define strategic performance goals in relation to the organisation’s objectives. These goals are then cascaded down to the next level of management who set their objectives for their divisions against these. Goals continue being cascaded down level by level until employees’ individual objectives are finally set.
Why goal cascading appeals to so many people
If we look at the idea behind goal cascading, it is easy to see its appeal. The whole process is designed to provide a singular purpose and direction for the goals of all employees in the organisation. This idea of a clear line of sight is a very powerful and compelling concept. Unfortunately, goal cascading is fundamentally flawed and it typically results in problems.
Why goal cascading doesn’t work
- Lack of autonomy. This is the most important reason why goal cascading should be left in the past. These days, employees should be given the freedom to write their own goals (with support and input from their manager). When we assign our own goals, we are more driven to complete them and we tend to perform at our best.
- Cascading only goes one-way. This is a problem because when it is the responsibility of management to determine the goals of those at the bottom of the organisation, they are unlikely to understand, in the same way as the employee him or herself, what is required of the role. The employees at the ‘bottom rung’ of an organisation may be given goals that seem irrelevant to the everyday realities of the job. Of course, this problem gets worse as the company grows.
- Cascading doesn’t allow for adaptability and change as it’s typically only carried out once a year (because it is so time consuming). In modern organisations, goals need to be readdressed and reassessed on a regular basis. This is exactly the reason why continuous performance management has become so popular over recent years. When the focus of goals needs to be shifted, it is not good enough to wait an entire year for the objective cascading process to be completed again.
- Goal cascading is an administrative nightmare. It relies on everyone adhering to a strict timetable of objective cascading, working from the top downwards, in that order. This is almost impossible to achieve without a large amount of ‘policing’ by HR, so you frequently end up with frustrated employees not being able to finalise their objectives when they are ready to because someone more senior than them has not done their bit on time.
Rather than cascading SMART objectives downwards, align them upward
Studies have shown that when employees can see how their objectives contribute to achieving the goals of their organisation, they are more engaged and motivated. A better way to achieve this is to give employees responsibility for setting their own objectives, giving them the information they need to ensure that their objectives support the organisation’s strategic goals. This is the approach that leading management research organisation, CEB, recommends in its Employee Performance Paradox paper:
“The best companies give employees a one-page sheet of organizational priorities at the enterprise level, the relevant region or country level, and the business unit or functional level. This sheet is an easy reference point that employees and managers can use to document employee goals. By preemptively aligning — from the employee up — lower-level goals with higher goals, organizations can save managers time conducting lengthy top-down goal cascades”.
We like this approach for a number of reasons. Firstly it is simple to implement and does not require elaborate workflows and timetables. Secondly it gives employees ownership for setting their own objectives, meaning they are more likely to commit to achieving them. And thirdly, it helps employees to genuinely understand the strategic priorities of the organisation and forces them to think about how their role contributes towards achieving them.
You don’t need to go as far as setting and sharing business unit or functional level goals as the CEB suggests, just sharing the overall business goals can still be effective. For upwards aligning to work successfully, there are two key requirements:
- The goals of the organisation and / or division, must be shared with employees at objective-setting time, in a language they can understand and relate to. This may mean re-writing some of the goals, replacing ‘board-level’ terms such as “EBITDA” with vocabulary that is more widely understood (e.g. “profit”).
- Employees need to be educated on how to prepare their own SMART objectives, and align them to the higher level strategic goals. This does not necessarily mean running a training course on objective setting (although that would definitely be of value) — you could create a video or create a handout that explains how to do it. Either way, you should provide employees with some examples of well-aligned SMART objectives for your organisation to bring them the alignment process to life.
Technology can also help to encourage strategic alignment of objectives. For example, using our Clear Review performance management software you can choose to display the organisation’s overall goals or divisional goals at the point of objective setting. So when an employee creates a new objective, they are shown the organisational and/or divisional goals for the period and asked to select which one their objective will support.