How to Set Meaningful Performance Goals with Employees

Setting clear and meaningful performance goals is one of the most important things you can do as a leader to drive employee success and align their work with your company’s objectives. When goals are well-structured, they provide employees with direction, motivation, and a clear understanding of how their efforts contribute to the larger picture. But setting the right kind of goals isn’t always easy—especially when different roles within your organization may require different approaches.

This guide will walk you through two popular frameworks for goal setting: SMART (Specific, Measurable, Achievable, Relevant, Time-bound) and PACT (Purposeful, Actionable, Continuous, Trackable). We’ll explore when and how to use each one based on the role, industry, and business needs. Whether your team members need clear, short-term goals or long-term, continuous objectives, these frameworks will help ensure their goals are aligned with overall business success.

Without clear goals, employees can feel directionless and disengaged, unsure of how their work fits into the larger goals of the company. On the other hand, well-defined performance goals not only give employees a target to aim for but also create a sense of ownership over their work. This connection between individual effort and company success drives motivation, focus, and productivity.

Here’s why meaningful goals are crucial for both employees and the business:

• Clarity and Focus: Goals provide clear direction, helping employees understand what’s expected of them and what they should prioritize.
• Accountability: Well-defined goals give employees ownership over their tasks and create accountability for their results.
• Engagement and Motivation: When employees see how their goals align with company objectives, they feel more connected to the organization’s success.
• Measurable Success: Goals allow managers to track progress and measure employee success more effectively, making performance evaluations more straightforward and fair.

The challenge is finding the right framework for each employee and role, which is why we’re focusing on two proven goal-setting methods: SMART and PACT.

The SMART framework is one of the most widely used methods for setting performance goals. It works especially well when employees need specific, short-term targets that are easy to measure. SMART goals are ideal for situations where you want to set clear expectations and ensure accountability within a defined period.

1. Specific: The goal should be clear and specific, leaving no room for ambiguity. Everyone involved should know exactly what the goal is and what success looks like.
   • Example: For a sales team member, a specific goal might be, “Increase sales of product X by 15% over the next quarter.”
2. Measurable: The goal must be measurable, meaning you can track progress and know when the goal has been achieved.
   • Example: A marketing manager’s goal might be, “Increase the company’s website traffic by 20% over the next three months.”
3. Achievable: The goal should be realistic and attainable, given the employee’s skills, resources, and time. It should stretch the employee’s abilities but not be so far-fetched that it’s impossible to reach.
   • Example: For a customer service representative, an achievable goal could be, “Reduce average response time to customer inquiries by 10% over the next month.”
4. Relevant: The goal should align with the company’s broader business objectives, making it meaningful to both the employee and the organization.
   • Example: A relevant goal for a product development team could be, “Launch two new product features that improve customer satisfaction by addressing their top pain points.”
5. Time-bound: Every SMART goal needs a deadline. Without a timeframe, the goal lacks urgency and can drift indefinitely.
   • Example: A goal for an HR manager could be, “Hire five new team members by the end of the quarter to support our expansion.”

Let’s say you’re managing a sales team at a small e-commerce company, and you want to increase revenue from a particular product line. You might set a SMART goal for one of your salespeople like this:

• Specific: “Increase sales of Product X by 15%.”
• Measurable: “Track monthly sales growth in our CRM system.”
• Achievable: “Use current sales strategies and add two new marketing channels.”
• Relevant: “This goal supports the company’s overall strategy to expand Product X’s market share.”
• Time-bound: “Achieve this by the end of Q2.”

This SMART goal gives the employee clear direction, a measurable target, and a timeframe to work within. It’s easy to track, and success is clearly defined.

While SMART goals work well for short-term, clearly defined targets, they aren’t always the best fit for roles that require ongoing development or continuous improvement. This is where the PACT framework comes in. PACT goals focus on long-term, purpose-driven objectives that evolve over time and can be adjusted as circumstances change.

1. Purposeful: The goal should be aligned with a larger purpose—both for the employee and the business. Purposeful goals help employees see how their work contributes to broader company objectives and provides personal meaning.
   • Example: For a software engineer, a purposeful goal could be, “Develop new features that enhance user experience and reduce customer churn.”
2. Actionable: The goal must lead to concrete actions that the employee can take to move toward achievement. It should break down into steps or initiatives that are within the employee’s control.
   • Example: A product manager might have an actionable goal like, “Collaborate with the design and development teams to release two feature updates this quarter.”
3. Continuous: Unlike SMART goals, which often have clear endpoints, PACT goals are ongoing. They allow for regular check-ins and adjustments to keep the employee moving forward.
   • Example: A continuous goal for a content marketing specialist could be, “Continuously improve the company blog’s SEO performance by implementing best practices, reviewing analytics, and adjusting content strategies.”
4. Trackable: Even though PACT goals are continuous, they still need to be trackable. This means setting milestones or key performance indicators (KPIs) that allow progress to be measured over time.
   • Example: A trackable goal for a customer success manager might be, “Track customer satisfaction scores after implementing new onboarding procedures and aim for a 10% increase in the next six months.”

Consider a project manager at a tech startup working on long-term, complex projects. You could set a PACT goal for them like this:

• Purposeful: “Ensure all projects are completed on time, within budget, and meet the client’s expectations to strengthen customer relationships.”
• Actionable: “Work with cross-functional teams to identify bottlenecks and implement process improvements.”
• Continuous: “Continuously refine project management processes based on feedback and results, adjusting goals every quarter.”
• Trackable: “Track project timelines, budget compliance, and client satisfaction, adjusting milestones as needed.”

This PACT goal focuses on the ongoing improvement and adaptability required for complex projects, while still allowing the employee to track their progress.

Both SMART and PACT goals have their place in performance management, but they work best in different contexts. Here’s a quick overview of when to use each framework:

• You need clear, measurable results within a specific timeframe.
• The goal is tied to short-term tasks or projects that have a defined endpoint.
• The role requires meeting specific metrics, like sales numbers, deadlines, or productivity targets.
• Example: A SMART goal is perfect for a sales representative who needs to hit specific monthly or quarterly revenue targets.

• The goal is more long-term and ongoing, focused on continuous improvement rather than a single endpoint.
• The role involves creative, strategic, or developmental work that evolves over time.
• You want to encourage employees to take ownership of their growth and development while aligning their efforts with the company’s overall mission.
• Example: PACT goals are ideal for a product manager who needs to continually refine and enhance products over multiple development cycles.

No matter which framework you use, the key to setting meaningful performance goals is to ensure that they align with your business’s overall objectives. This helps employees see the bigger picture and understand how their work directly impacts the success of the company.

1. Connect Goals to Company Strategy: Start by understanding the company’s strategic goals. Whether it’s expanding into new markets, improving customer satisfaction, or increasing revenue, every employee’s goals should contribute to these broader objectives.
   • Example: If your company’s goal is to improve customer satisfaction, an HR manager might set a goal to implement training programs that boost employees’ customer service skills.
2. Involve Employees in Goal Setting: Employees are more motivated when they have a say in setting their own goals. During one-on-one meetings, discuss the company’s objectives and work together to set goals that align with both the employee’s aspirations and the business’s needs.
   • Example: In a growing startup, you might sit down with your lead developer to discuss how their personal goal of learning a new programming language can also help the company expand into new product offerings.
3. Track and Adjust: Goals shouldn’t be static. Regularly review progress with employees and adjust goals as needed. This keeps them relevant as business priorities shift or as employees achieve milestones.
   • Example: A marketing manager may start the year with a goal to increase social media engagement by 15%. Halfway through the year, if that goal is met, they might adjust it to focus on lead generation or paid advertising efforts.

Whether you’re managing a small team or a fast-growing company, setting meaningful performance goals is essential for both employee development and business success. By using frameworks like SMART for short-term, measurable objectives and PACT for long-term, continuous improvement, you can tailor goals to fit the needs of each employee and role.

The most important thing is to ensure that every goal aligns with the company’s broader mission and objectives, so that employees understand how their work contributes to the business’s success. Regularly reviewing and adjusting goals keeps them relevant and helps maintain motivation and accountability over the long term.

Start setting meaningful performance goals today, and watch your team’s productivity, engagement, and alignment with business objectives grow.

Ready to align your team’s goals with business success? Start using SMART and PACT frameworks to set effective performance goals today!