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How to Set and Measure Goals That Actually Help Your Business Grow


How to Set and Measure Goals That Actually Help Your Business Grow

So, you want to accomplish something in your business. Not just sell five more widgets to five more customers so you can pay rent again, but to improve things, to get somewhere you’ve never been before. You know you ought to set a goal and measure something, but  how?

It’s like saying, “Let’s go to Europe!” without maps, plane tickets or even one minute of Googling to find out where you’d like to go or what you’d like to see (or whether you can speak the language). Even The Amazing Race gives you at least one clue.

It’s the same when it comes to your business. If you want to make a change, you need some route info to get you on your way. Sadly, there is no “Google Maps for Business Success,” so how do we get there from here?

Most business owners know that they’re supposed to set goals, but they struggle with not only setting them realistically but also with knowing whether they’re on track to achieve them.

And when the idea phase doesn’t move smoothly to the execution phase, you can quickly veer off course. Why? Because you know how to do both on a logical and logistical level (pick goals, check periodically to see whether you’re achieving them, make changes if you aren’t), so you tell yourself that you got this, you’re growing, and it’s all good.

The reality, though, is that you end up a business owner who runs really fast and sweats a lot but never gets out of the hamster wheel.

Business goals are actually right-brained
Setting goals starts with … your feelings? No, seriously. Even though a goal looks like it’s just cold, emotionless math, setting goals is often a surprisingly emotional process for business owners. It can bring up a whole range of feelings, from joy to sadness to straight-up anger.

Why the strong reactions? For some, it’s because they often don’t think to measure something until after they’ve had a particularly bad experience. After their largest client fires them, for example, they suddenly realize they should’ve been measuring client satisfaction. Or, after they lose an RFP, they realize they should’ve hired that UX developer as a resource months ago instead of ghosting them.

(There’s nothing like a dwindling bank account to bring on a case of the shoulda-coulda-wouldas.)

Measuring can also bring up icky feelings, like judgment, false comfort or unrealistic fear. And those feelings can be dangerous to more than the psyche, because they can cause people to take actions that are at odds with their core beliefs and desired outcomes. Here’s a personal example: For many years I tried measuring my life by dollars in the bank, until I came to see that that number has only a weak relationship with my life satisfaction.

When measurements are done correctly, they clearly show whether a business is moving closer to its goals or falling short. They take the blinders off the idea that “I’m exerting a lot of effort, so I’m progressing!” and replace it with “I sure am running hard on this hamster wheel!”

Correct measurements can also serve as guideposts for deciding whether to grow or shrink, to hire or fire, or to stay the course or whip a U-ie.

How to fail at measuring
Like trying to solve a Rubik’s Cube, there’s an infinite number of ways to measure in a way that will never get you to all the red squares on one side. Here’s a look at just a few:

Measurement fail #1: Using the goal as the thing to be measured.
Here’s an example: A CEO saw that company profitability was steadily decreasing each quarter. They know that more profit is good, and less is bad, so they set a companywide goal that seemed like a no-brainer: Increase profit each quarter!

Why it failed: If quarterly profit is set as a goal, managers can simply starve the company of money for research and development, training, payroll or anything else that doesn’t drive profit. And yes, this may lead to a measured outcome of higher quarterly profit, and yes, they may earn their bonuses for it, but the truth is they’re destroying the company from the inside out.

Another example: The small-business version of this error often happens when business owners first attempt to establish performance metrics. A manufacturer may request that employees produce a certain number of units per hour, only to find a month later that the return rate has doubled. Why? Because quickly produced units = lower quality. Or, a company that wants to increase sales may decide to give a bonus to the top-performing salesperson, only to find that that salesperson sold unrealistic promises to make their goals.

Measurement fail #2: Giving employees the chance to find loopholes that will help them achieve outcomes.
Here’s an example: This happened (and quite humorously) when Hilton tried to measure guest satisfaction via random phone surveys.

Why it failed: Hotel employees quickly learned that if they thought a guest might give a bad response, a little transposition of their phone digits would leave them unreachable. Unsurprisingly, those hotels got top scores, because only happy customers received the calls!

Another example: Remember that giant Wells Fargo scandal where bankers were opening and closing accounts for people without their permission? Their original reason for doing it was to meet their sales quotas. (The consequences weren’t so harmless in this instance, though.)

Measurement fail #3: Deciding on the measurement first, and then setting that to be the goal.
Business leaders often set goals based on measurements, when it should be the other way around. It’s a misguided tactic that helps them avoid tough questions like “How do I want my customers to feel about my company?” (goal) and redirects to “We will measure customer satisfaction!” (measurement)

Here’s an example: An HR manager noticed that employee turnover had gone up. A lot. They suspected it was because employees were unhappy with their jobs, so they decided to measure job satisfaction to be certain. Sure enough, they conducted a survey and discovered that satisfaction was in the tank. To remedy this, they set job satisfaction as a goal.

Why it failed: There are lots of easy ways to fix this (double their salaries, give them all 12 weeks of PTO, cut their workloads by 25% each) that will meet this goal… and shutter your company in the process. When someone decides that the thing they’re measuring IS the goal, they lose sight of the big picture, the why that got them there in the first place. When measurement and goal are one, no one ever figures out why their employees are unhappy. And without that answer, any solution is just an expensive, failed Band-Aid.

Another example: In many businesses, a similar error occurs when leaders use net profit as their guide. The logic is basic: High net profit = happy, low net profit = sad. But this type of oversimplification makes it easy to ignore long-term trends. Things are great now, but in the background, client satisfaction is starting to slip and employees are starting to grumble. If net profit is your only guiding light, it can blind you to other disasters that might be gaining speed.

So, how do you solve the Rubik’s Cube?
Establishing measurements is a learned skill, and everybody sucks at it in the beginning.

And while your goals may be lofty, your measurements won’t matter if they don’t accurately reflect real progress toward meeting them. That’s why one of the most important steps in this process is to set measurements based on goals. With this approach, what you measure will not only be directly related to the goal, but also triangulated and designed to avoid the likelihood of either false positives or false negatives.

Here’s an example: A company decides that it wants to improve on a mediocre customer service record. That’s a goal (and a solid one, at that). To achieve it, company leaders decide to use several measurement metrics, including quarterly customer surveys, the percent of revenue spent on discounts due to poor service, and the percentage of five-star reviews on Yelp.

Those measurements are not the goal, but they inform progress toward the goal. And if one, for whatever reason, trends to the extremely high or low, the others are there to help provide perspective. They aren’t just measuring numbers for the sake of having numbers.

It’s a bit of a complex idea, so let’s put it into practice. Open up a blank Word or Google doc file, or get a pencil and a piece of paper.

No, stop reading. You didn’t do it, I know you didn’t, I saw you. Don’t read past this point until you’re ready to do the work.


Okay, ready? Good. Here is how this is going to work and  how you can apply it directly to your business.

Step 1: Write down two to four goals you currently have, and then rewrite them as “feeling” statements. You might have a goal expressed as “I want 50 clients,” but your real goal is more like “I want to feel secure that losing one account can’t tank my business.” (If you find this transition clunky, ask yourself, Why do I want to bring on more clients?” How will I feel when I have them?)

Pro tip: Most business owners have some sort of growth goal: more locations, more sales, more customers, or maybe all of the above. That’s great, but those are all measurements. Figuring out why you want them is the critical goal. I once thought I wanted THE BIGGEST COMPANY EVER! and I got myself a 25-person company where I dreaded going to work. Now I have a 15-person company that I love to run. Why do you want the size?

Acquisition goals are also common. “I want a new car/new house/bigger apartment.” Consider, again, the underlying feeling. How will you feel when you have a new car or house? That’s your goal.

Step 2: Pick three ways to measure each goal. This is where we get to talk about numbers, because successful measurements must be increments that can be counted.

Pro tip: You can convert feelings to numbers by counting the feelings. For example, if your goal is “I want my staff to feel comfortable bringing me their problems,” one measurement of that is “Don’t yell at my staff.” Simply decide how many times yelling is acceptable, or how long between those incidents is acceptable. So perhaps the measurement is “Yell at staff less than once per month.” (For the record, your goal should always be to yell at your staff zero percent of the time. But you get the point.)

The key to success here is to pick things you can measure easily, because this part of running a business is hard enough without having to download a report, convert it to Excel, run it through a pivot table, upload it back to a data-analytics site and translate it to a foreign language. If I may get meta for a minute: Set a goal to work smarter, not harder, and a measurement of spending five minutes or less on any one measurement.

One final note: Your measurements don’t have to go only up or only down; they can be bounded on either side. For example, you may have a measurement of “Spend between 5% and 10% of revenue on marketing.”

Here’s another working example:

Goal (want statement): I want women to feel comfortable, safe and included when they work at my company.

Measurement 1: Turnover of female staff on an annual basis. Women should not have a turnover rate that’s more than that of their male co-workers.

How? Use payroll data to compare the turnover of males vs. females each year.

Measurement 2: Women contributing ideas during company meetings. Women should contribute, at a minimum, an equal amount of ideas as their male counterparts.

How? During company meetings, count how many contributions come from women relative to their population in the meeting.

Measurement 3: Quarterly employee surveys. Satisfaction scores from employees who identify as female should be either 4 or 5 out of 5.

How? Conduct an employee survey quarterly to measure job satisfaction and comfort.

Now it’s your turn
That exercise (Did you do it? If not, stop scrolling past the hard stuff and go do it!) probably took a while and felt pretty strange. The outcome, though, likely took you in a different direction than you expected when you started! By setting goals in this way, and then deciding what to measure, business owners and leaders can stop fooling themselves and start to see the truth of what they’re accomplishing — or not.

Business leaders often set goals based on measurements, when it should be the other way around.

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