Alignment, Goal Setting and Bonuses
Note: This is part 5 of a 5 part series, I highly recommend reading previous parts if you haven’t. You can read the first one here.
One of the highest impact activities at management levels is goal setting. Defining an appropriate process and standards can create the right environment for teams to prosper and give their best while achieving great results for users and the company.
On the other hand, if done poorly it can undermine the results the teams can provide.
Here are some of the specific challenges I phase:
OKRs setting
For the last few years, I have been using OKRs (Objective and Key Results) as a goal-setting tool. Like any method, they have their pros & cons, but it is a simple and powerful tool so I keep using them.
I still face many challenges that I have been trying to overcome with the tactics described in this article: 10 Challenges in Setting OKRs
Team autonomy and alignment
Besides these usual challenges of goal setting, when an organization grows to a certain number of teams collaborating with each other, new problems may arise.
I do like what Spotify promotes in their famous agile culture video: loosely coupled and highly aligned autonomous teams. But achieving it is not easy. I’ve found that teams and management struggle with:
- Loosely coupled team foundation
To have team independence (teams can achieve their goals without requiring major efforts from other teams) you need a solid architecture that enables that autonomy. For older companies with legacy software, this is usually not the case and it may require tons of hard-to-justify refactors that may consume several months to complete. Even for newer companies created with this mindset, it requires a constant effort to keep those dependencies low.
- Alignment
With loosely coupled teams the risk is that everyone starts working in different directions and you end up with multiple strategies spread to thin (the same as no strategy at all). This requires efforts from management in the dance of “top-down” vs “bottom-up” goals to create that multi-team alignment, transcending potential silos and translating corporate strategy into individual teams strategies and roadmaps that are aligned among each other. Again, easier said than done and I have no particular recipe for achieving it.
- Autonomy
Finally, it is quite easy for management to overdo alignment and end up dictating what teams must do and create a task-driven roadmap for them. To truly achieve autonomous teams with high degrees of accountability, goals should be set in a way that gives the right direction but allows teams to make their own decision on how to get there. Even further, you should foster that decision making at team levels, since team members are usually the most reliable people to make those decisions given their know-how and understanding of the context.
But it is extremely hard to achieve that balance between goal’s alignment and goal’s “room for decisions”.
Performance Bonuses and Goals
Another extremely painful challenge is setting bonuses. Bonuses have an immense power to focus attention, and at the same time are extremely dangerous since no bonus system will perfectly align with what needs to be achieved.
As an interesting pitfall is how to handle performance-related bonuses and OKRs. I have written about it here: How to handle bonuses in an OKR world
If you set a high-level company-result oriented goal you risk having people think is too far from their reach and just perceive it as a lottery. If you set concrete goals in the scope of that person’s area of influence, you risk giving the wrong incentive. Balancing both is hard.
How many goals should you have?
A minor challenge at this point, but still worth mentioning it is which is the right amount of goals to focus on, especially in bigger organizations.
Even when we know that we should focus on very few things at a time, you have many teams probably doing non-strategic work that needs to be done anyway.
Currently, I work with over 30 teams and if we want to reflect what everyone is doing we end up probably with over 60 goals.
Using OKRs you can set very high-level abstract goals so whatever a team is doing they can link it in some way to those. In truth those “few” high-level non-specific goals are as bad as having too many goals: they do not provide any focus or guidance on what teams should focus and prioritize.
The hard choice is to focus on a few strategic goals and be conscious that it may lead to some teams’ work not being reflected on the department or company goals. (This also raises the question if those teams should be working on those non-strategic areas).