Goalsharing Works
by Larry Comp and Terry Lauter Comp

Over the years, many of us have searched for the "magic bullet"- a simple process to increase an organization's productivity/profitability, while, at the same time engage employees, build trust, and improve teamwork. Along the way, we have encountered numerous approaches, but each one only addressed part of the puzzle - the company's financials OR the culture. Finding a complete solution had proven difficult.

Then our firm stumbled upon a methodology called Goalsharing that offered a great deal of promise.

What is Goalsharing?

Goalsharing is not the "Program of the Month." It is a proven process for helping organizations to not only survive but also to thrive in a rapidly changing, highly competitive environment. Goalsharing is a means of working smart that engages and rewards employees for continuous improvement. Over time, it transitions employees to "business partners."

Early Goalsharing pioneers recognized that employees: (1) have unique abilities; (2) prefer to understand/be involved in the business and (3) want to make a difference. They realized that for employees to make their contribution they need to understand the business and have appropriate "line of sight" – to actually see how their efforts impact organizational results. Their organizations address this challenge by finding simple ways to communicate the goals of the business. They then help staff members to see where they can make the most difference and teach them to craft simple goals that are specific, measurable and realistic, yet have a reasonable amount of "stretch." For some, these goals may be in the areas of revenue generation or cost containment. For others, their goals may center on improving operational effectiveness/ efficiency, or customer satisfaction.

To improve synergy and minimize the likelihood of organizational conflict, these organizations ensure that department goals are: (1) aligned with a simple set of financial and non-financial company goals and (2) compatible across the organization. And to improve vertical alignment and employee "line of sight" they encourage supervisors to share their goals with their employees. They also encourage supervisors to provide employees with the opportunity of proposing their own goals to improve motivation and mental ownership.

Participating employees are then eligible for Goalsharing Incentive Payments based upon individual and collective contributions against pre-determined organizational goals. Incentive payments should be fair; that is the Plan should be externally competitive, internally equitable and consistently administered. A compensation consultant with proven skills in performance metrics can be helpful here.

Impressive Long-Term Results

To our surprise, some of the most impressive long-term results have occurred in large unionized companies facing difficult obstacles, such as Corning, who created the concept in 1989. Their accomplishments are too numerous to elaborate, but below are some reported by the Telecommunications Product Division. 

• 24X decrease in product returns
• 10X improvement in On-Time Delivery.
• Awarded the coveted Malcolm Baldridge National Quality Award in 1995.  

Our Experience

During the last few years, we have had the opportunity to implement Goalsharing with many companies across industry. Our experience has taught us that our small to medium-sized clients could realize significant achievements quickly, as demonstrated in these instances:

• A $25M distribution company improved on-time delivery from 77% to 94% within two months.
• A $20M services company uncovered $300,000 in "hidden" cost savings in a two-month period.
• A small construction services company increased profit by more than 2X within 6 months. 

Tips for Getting the Most from Goalsharing

Goalsharing, when implemented appropriately, is the most potent tool we've experienced for improving financial results AND long-term cultural change. Results vary from incremental to incredible, based upon how well each organization executes the process. To get the most from your Goalsharing initiative, we offer the following tips: 

• Demonstrate support from the whole management team and hold each other accountable for proper execution.
• Make it easy for your employees to understand the key goals and drivers of your organization's success.
• Teach employees how to write simple and meaningful goals that are aligned with their supervisor's and organization's priorities
• Create a simple and equitable compensation/incentive plan; make sure your plan complies with relevant legislation concerning bonus payments for hourly employees.
• Provide a simple means of ongoing communication and feedback pertaining to individual, team and organizational goal achievement.
• Keep it simple (KISS).

Larry and Terry Comp are Principals with LTC Performance Strategies, Inc. (formerly Humanomics, Inc.), a prominent performance development and total compensation solutions practice located in Valencia, California. They can be reached respectively at: lcomp@ltcperformance.com and tcomp@ltcperformance.com. For more information, visit www.ltcperformance.com.