SMART goals

What it means

SMART goals are objectives formulated against five criteria whose initials form the acronym SMART: Specific, Measurable, Achievable, Relevant and Time-bound. The method helps turn general wishes into manageable tasks.

Instead of a goal to improve collections, a SMART goal reads, for example: reduce average debtor days from 60 to 45 by the end of the year. It is clear what is measured, who is responsible and when the result will be assessed.

SMART goals are used in planning for the company, its departments and individuals. They are complemented by methods such as OKRs, which link an ambitious objective with measurable key results, and by KPIs that track progress continuously.

How it works in practice

When preparing a budget and plan with clients, we translate strategic intentions into SMART goals. For each we set an indicator, a data source in the accounts, a target value and a deadline, so that they can be pursued and monitored within controlling.

We also use SMART goals in bonus schemes. A measurable goal clearly defined in advance is the basis of a contractual bonus: the employee knows what to achieve, and the employer can show why the bonus was or was not paid.

We review goals regularly and adjust them if they turn out to be unrealistic or no longer relevant. The approach follows the PDCA cycle: plan, do, check and act on the findings.

What to watch out for

Measurability can tempt people to measure only what is easy to measure. A goal of sending a hundred proposals a month is SMART but says nothing about their quality. When formulating goals we therefore think about what actually drives results.

Too many goals at once scatter attention. For a team or company we recommend a few main goals per period rather than dozens that nobody can track or achieve.