Work on the theory of goal-setting suggests that it's an effective tool for making progress by ensuring that participants

in a group with a common goal are clearly aware of what is expected from them if an objective is to be achieved. On a personal level, setting goals is Goal setting involves establishing specific, measurable and time-targeted objectives. Goal setting features as a major component of personal development literature. Goals perceived as realistic are more effective in changing behavior. a process that allows people to specify then work towards their own objectives most commonly with financial or career-based goals]. "Goals provide a sense of direction and purpose"Goal setting capitalize on the human brain's amazing powers: Our brains are problem-solving, goal-achieving machines." Goals that are difficult to achieve and specific tend to increase performance more than goals that are not.A goal can become more specific through quantification or enumeration (should be measurable), such as by demanding "increasing productivity by 50%"; or by defining certain tasks that need completing. Setting goals affects outcomes in four ways: 1. Choice: goals narrow attention and direct efforts to goal-relevant activities, and away from perceived undesirable and goal-irrelevant actions. 2. Effort: goals can lead to more effort; for example, if one typically produces 4 widgets an hour, and has the goal of producing 6, one may work more intensely than one would otherwise in order to reach the goal. 3. Persistence: An individual becomes more prone to work through setbacks if pursuing a goal. 4. Cognition: goals can lead an individual to develop cognitive strategies to change their behavior. Goal setting in business In business, goal setting has the advantages of encouraging participants to put in substantial effort; and, because every member has defined expectations set upon him or her (high role perception), little room is left for inadequate effort going unnoticed. Managers cannot be constantly able to drive motivation and keep track of an employees work on a continuous basis. Goals are therefore an important tool for managers since goals have the ability to function as a self-regulatory mechanism that acquires an employee a certain amount of guidance Shalley, 1995[3] and Locke and Latham (2002)[4] have distilled four mechanisms through which goal setting is able to affect individual performance: 1. Goals focus attention towards goal-relevant activities and away from goalirrelevant activities.

2. Goals serve as an energizer; higher goals will induce greater effort while low goals induce lesser effort. 3. Goals affect persistence; constraints with regard to resources will affect work pace. 4. Goals activate cognitive knowledge and strategies which allows employees to cope with the situation at hand. Goalperformance relationship Locke et al. (1981) examined the behavioral effects of goal-setting, concluding that 90% of laboratory and field studies involving specific and challenging goals led to higher performance than did easy or no goals While some managers would believe it is sufficient to urge employees to do their best, Locke and Latham have a clear contradicting view on this. The authors state that people who are told to do their best will not do so. Doing your best has no external referent which implies that it is useless in eliciting specific behavior. To elicit some specific form of behavior from others, it is important that this person has a clear view of what is expected from him/her. A goal is thereby of vital importance because it facilitates an individual in focusing their efforts in a specified direction. In other words; goals canalize behavior However when goals are established at a management level and thereafter solely laid down, employee motivation with regard to achieving these goals is rather suppressed (Locke & Latham, ). In order to increase motivation the employees not only need to be allowed to participate in the goal setting process but the goals have to be challenging as well Through an understanding of the effect of goal setting on individual performance organizations are able to use goal setting to benefit organizational performance. Locke and Latham have therefore indicated three moderators which indicate the success of goal setting: Goal commitment People will perform better when they are committed to achieve certain goals. Goal commitment is dependent of: 1. The importance of the expected outcomes of goal attainment and; 2. Self-efficacy one's belief that they are able to achieve the goals; 3. Commitment to others promises or engagements to others can strongly improve commitment Feedback Keep track of performance to allow employees to see how effective they have been in attaining the goals. Without proper feedback channels it is impossible to adapt or adjust to the required behavior. Task complexity More difficult goals require more cognitive strategies and well developed skills. The more difficult the tasks ahead, a smaller group of people will possess the necessary skills and strategies. From an organizational perspective it is thereby

more difficult to successfully attain more difficult goals since resources become more scarce. Employee motivation The more employees are motivated, the more they are stimulated and interested in accepting goals. These success factors are not to be seen independently. For example the expected outcomes of goals are positively influenced when employees are involved in the goal setting process. Not only does participation increase commitment in attaining the goals that are set, participation influences self-efficacy as well. In addition to this feedback is necessary to monitor one's progress. When this is left aside, an employee might think he is not making enough progress. This can reduce self-efficacy and thereby harm the performance outcomes in the long run. goal-commitment, the most influential moderator becomes especially important when dealing with difficult or complex goals. If people lack commitment to goals, they will lack motivation to reach them. In order to become committed to a goal, one must believe in its importance or significance.

attainability: individuals must also believe that they can attain or at least partially reach a defined goal. If they think no chance exists of reaching a goal, they may not even try.

self-efficacy the higher someones self-efficacy regarding a certain task, the more likely they will set higher goals], and the more persistence they will show in achieving .

Feedback The enhancement of performance through goals requires feedback. Goal setting and feedback go hand in hand. Without feedback, goal setting is not likely to be effective. Providing feedback on short-term objectives, helps to sustain motivation and commitment to a goal. Besides, feedback should be provided on the strategies followed to achieve the goals and the final outcomes achieved as well. Feedback on strategies to obtain goal is very important, especially for complex work because challenging goals encourage focus on outcomes to be achieved rather than on the performance strategies and thus, impairs performance. Giving a proper feedback is also very essential, and following hints might help for providing a good feedback.

Moderators: Through an understanding of the effect of goal setting on individual performance organizations are able to use goal setting to benefit organizational performance. Locke and Latham have therefore indicated three moderators which indicate the success of goal setting: Goal commitment People will perform better when they are committed to achieve certain goals. Goal commitment is dependent of: 1. The importance of the expected outcomes of goal attainment and; 2. Self-efficacy one's belief that they are able to achieve the goals; 3. Commitment to others promises or engagements to others can strongly improve commitment Feedback Keep track of performance to allow employees to see how effective they have been in attaining the goals. Without proper feedback channels it is impossible to adapt or adjust to the required behavior. Task complexity More difficult goals require more cognitive strategies and well developed skills. The more difficult the tasks ahead, a smaller group of people will possess the necessary skills and strategies. From an organizational perspective it is thereby more difficult to successfully attain more difficult goals since resources become more scarce. Employee motivation The more employees are motivated, the more they are stimulated and interested in accepting goals. These success factors are not to be seen independently. For example the expected outcomes of goals are positively influenced when employees are involved in the goal setting process. Not only does participation increase commitment in attaining the goals that are set, participation influences self-efficacy as well. In addition to this feedback is necessary to monitor one's progress. When this is left aside, an employee might think he is not making enough progress. This can reduce self-efficacy and thereby harm the performance outcomes in the long run. goal-commitment, the most influential moderator becomes especially important when dealing with difficult or complex goals. If people lack commitment to goals, they will lack motivation to reach them. In order to become committed to a goal, one must believe in its importance or significance.

attainability: individuals must also believe that they can attain or at least partially reach a defined goal. If they think no chance exists of reaching a goal, they may not even try.

self-efficacy the higher someones self-efficacy regarding a certain task, the more likely they will set higher goal and the more persistence they will show in achieving them.

Feedback The enhancement of perf

ormance through goals requires feedback. Goal setting and feedback go hand in hand. Without feedback, goal setting is not likely to be effective. Providing feedback on short-term objectives, helps to sustain motivation and commitment to a goal. Besides, feedback should be provided on the strategies followed to achieve the goals and the final outcomes achieved as well. Feedback on strategies to obtain goal is very important, especially for complex work because challenging goals encourage focus on outcomes to be achieved rather than on the performance strategies and thus, impairs performance. Giving a proper feedback is also very essential, and following hints might help for providing a good feedback:

Create a positive context for feedback Use constructive and positive language Focus on behaviours and strategies Tailor feedback to the needs of the individual worker Make feedback a two-way communication process

Goal-setting may have little effect if individuals cannot check where the state of their performance is in relation to their goal. Note the importance of people knowing where they stand in relation to achieving their goals, so they can determine the desirability of working harder or of changing their methods. Advances in technology can make for giving feedback more effectively. Systems analysts have designed computer programs to track goals for numerous members of an organization. Such computer systems may maintain every employees goals, as well as their deadlines for achieving them. Separate methods may check the employees progress on a regular basis, and other systems may require perceived slackers to explain themselves, and/or account for how they intend to improve the perception. Limitations Goal-setting theory has its limitations. In an organization, a goal may not align with the goals of the organization as a whole. In such cases, the

goals of an individual may come into direct conflict with the employing organization. Without aligning goals between the organization and the individual, performance may suffer. Moreover, for complex tasks, goalsetting may actual impair performance. In these situations, an individual may become preoccupied with meeting the goals, rather than performing tasks. Some people feel that one possible drawback of goal setting is that implicit learning may be inhibited. This is because goal setting may encourage simple focus on an outcome without openness to exploration, understanding or growth. History The first empirical studies were performed by Cecil Alec Mace in 1935. Edwin A. Locke began to examine goal setting in the mid-1960s and continued researching goal setting for thirty years. Locke derived the idea for goal-setting from Aristotles form of final causality. Aristotle speculated that purpose can cause action; thus, Locke began researching the impact goals have on individual activity of its time performance.

Setting goals is a powerful way of motivating yourself or a group of people you are working with. The powerful effect and value of goal setting is well recognized. There are books, web sites, and seminars that focus on nothing else. Goal setting theory is widely recognized as one of the best motivational theories in self help, Research has shown that the difficulty of the goal and how clear it is will affect how how hard people will work towards that goal. Clear, precise, and challenging goals produce better results than vague and easy goals. What does this mean to you? Well, if you say "I'll try" or "I'll do my best" to do "XYZ" your success rate won't be as high as if you say something like "I'll improve my sales by 50%" or "I'll burn off 30lbs of fat by Christmas". Easy goals are easy to ignore. They don't motivate or inspire. Challenging goals are more motivating because it is much more of an accomplishment to attain a difficult goal. Goal Setting Theory Principles For SMART goals to be motivating they need a little help. They need to be:

Engaging Error Correcting Forgiving

Lets look at each of these... Engaging. Your level of engagement will be directly related to the level of success in goal setting. Some people are highly motivated by achievement. They will rate a goal's value based on how important the results of the goal are. When you know that the goal is very important motivation will be high. When a goal's value is high it will be engaging. The personal reward increases for more difficult goals. When you set your goal make sure it 'strikes a chord' in you. If it is easy or unimportant you will likely let it slide. Don't over do it make it engaging but remember that it has to be attainable. Error Correcting As soon as a missile is launched it is off target. The on board electronics calculate and adjust to bring the missile back on track. In milliseconds the missile is off track again... once again the electronic gizmos do their thing to bring the missile back on target... This process is repeated until the missile hits. We are the same way. We start out with good intentions with our S.M.A.R.T. goals all lined up and before long we're off track... We need feed back to help get us back on track. A missile without the electronics to guide it may or may not hit it's target -- its a crap shoot. Life is too short and time is too precious to waste on a crap shoot. Just because your SMART goal is 'measurable' doesn't mean that you automatically use the data from it's measurability. Take the time to assess where you are on your journey to your goal and make adjustments as necessary. Seeing your progress is highly motivating. Forgiving Complex and technically challenging goals can lead you to push yourself too hard. If your goal is complex build in checks and balances to protect yourself from burnout or frustrations... Give yourself time. Time to learn, time to practice, and time to achieve your goal.

Goal Setting Theory Summary The whole point of goal setting theory is to help people attain success. You want to make sure that your goals don't end up frustrating or depressing you development, and personal growth. The motivation concepts were mainly developed around 1950s. Three main theories were made during this period. These three classical theories are Maslows hierarchy of needs theory Herzbergs Two factor theory Theory X and Theory Y These theories are building blocks of the contemporary theories developed later. The working mangers and learned professionals till date use these classical theories to explain the concept of employee motivation. Motivation is the word derived from the word motive which means needs, desires, wants or drives within the individuals. It is the process of stimulating people to actions to accomplish the goals. In the work goal context the psychological factors stimulating the peoples behaviour can be

desire for money success recognition job-satisfaction team work, etc

Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'.[1] The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members

Features and Advantages [edit] Unique features and advantages of the MBO process The basic principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. They can then understand how their activities relate to the achievement of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee. Some of the important features and advantages of MBO are: 1. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2. Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. Clarity of goals 4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives. [edit] Domains and levels Objectives can be set in all domains of activities (production, marketing, services, sales, R&D, human resources, finance, information systems etc.). Some objectives are collective, for a whole department or the whole company, others can be individualized. [edit] Practice Objectives need quantifying and monitoring. Reliable management information systems are needed to establish relevant objectives and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results in reaching the objectives. [edit] Limitations There are several limitations to the assumptive base underlying the impact of managing by objectives, including: 1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.

2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity. 3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do. When this approach is not properly set, agreed and managed by organizations, selfcentered employees might be prone to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case, managing by objectives would be counterproductive. The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be advantageous. A saying around MBO -- "What gets measured gets done", Why measure performance? Different purposes require different measures -- is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set. [edit] Arguments Against MBO has its detractors, notably among them W. Edwards Deming, who argued that a lack of understanding of systems commonly results in the misapplication of objectives.[3] Additionally, Deming stated that setting production targets will encourage resources to meet those targets through whatever means necessary, which usually results in poor quality.[4] Point 7 of Deming's 14 Points encourages managers to abandon objectives in favour of leadership because he felt that a leader with an understanding of systems was more likely to guide workers to an appropriate solution than the incentive of an objective. Deming also pointed out that Drucker warned managers that a systemic view was required [5] and felt that Drucker's warning went largely unheeded by the practitioners of MBO Most of the research on goal setting has focused on the relationship between goals and subsequent performance. Much less research has been directed at explaining why goal setting works or at integrating it with other motivational theories. In this paper a control systems model of motivation is developed in

which a goal is considered a referent or desired state to which performance is compared. Any discrepancy (error) between goals and performance creates a corrective motivation. Predictions based on this model are tested in a classroom situation using a longitudinal research design involving 188 college students. Results support many aspects of the proposed model. It is concluded that goal setting should be viewed as a dynamic process in which both self-set goals and environmental feedback are incorporated into a system that monitors performance relative to a desired state and adjusts subsequent goals, behaviors, and strategies Managers cite performance appraisals or annual reviews as one of their most disliked tasks. Performance management eliminates the performance appraisal or annual review and evaluation as the focus and concentrates instead on the entire spectrum of performance management and improvement strategies. These include employee performance improvement, performance development, training, crosstraining, challenging assignments, 360 degree feedback and regular performance feedback. FOCUS Performance Management Process: Goal Setting Sample goal statements from the Medical School and Central Campus www.yale.edu/focus Financial Analysts Goals Improvement Goal Improve the flow of timely, accurate, clear and easytouse financial information to users. Consistently produce quarterly reports exclusively through FMT. Reports must be 100% accurate and available to users by the 15th of the month following the end of each quarter. Improvement/Development Goal (Stretch) Assist in building teams capacity by training new staff in reading and interpreting financial statements and managing closeout process. Formulate training plan and schedule, and design and document learning tips and tools to ensure current and future new staff efficiently learn and retain information. Staff to be fully trained and materials developed by year end. Research Administrators Goals Development Goal Enhance ability to assist PIs doing clinical trial work by learning Medical School and Department terminology, e.g. medical terms, diagnosis, treatment, adverse outcomes, etc. Attend Grand Rounds,

relevant lectures and online classes to increase knowledge base by November 2008. Improvement/Development Goal Master Yales system for submitting grants to reduce backlogs and speed submission process, by becoming fully conversant with government grants and other sponsored applications. Specifically speed the process of the preaward review and approval process by managing to turnaround proposals as close to 5 days as possible. Learn the processes utilized by GCFA and the Grants and Contracts office by February 1, 09. Administrative Assistants Goals Key Job Functions Goal Contribute to efficient and high quality department function by providing timely, high quality secretarial assistance including email, correspondence, scheduling, papers, and presentations. Work should be consistently accurate and completed by deadlines. Key Job Functions Goal Consistently manage all special functions efficiently (e.g., Grand Rounds, special presentations) by planning and organizing to ensure all details are handled in advance, and orchestrating events so that functions run smoothly. Make travel arrangements as needed, after travel. Communicate clearly the details of the travel plans, and followup to make sure reimbursements are accurate and timely. FOCUS Performance Management Process: Goal Setting Sample goal statements from the Medical School and Central Campus www.yale.edu/focus arrange reimbursements within 7 days

Academic Department Goals Project Goal Develop a Mentoring Program with a cross functional team. Select team members; develop goals, budget, project plan and timeline by midDecember 2008. In January 2009, start the implementation phase to have the program up and running by end of first quarter 2009. Meet regular director review and sign off milestones incorporated in the timeline. Project Goal Counsel incoming students on cultural norms and assist with integration into the Yale Community. Develop a guide for the new students that includes Yale specific information as well as information about New Haven. Guide needs to be completed by August 1, 2008 to allow for printing and distribution at orientation on September 2, 2008. Guide to receive a rating of 4 or 5 on a 5 point scale of usefulness via a survey to be completed by users in November 08. Finance Goals Process Improvement Goal Design and create and institute a monthend report that identifies financial allocations to improve tracking of spending patterns. Analyze data for trends and make recommendations on adjusted spending patterns by the 15th of the following month. Process to be operative by end of first quarter 09. User feedback to be gathered in 3rd quarter and usefulness of report to be rated as a 4 or 5 on a 5 point scale. Key Job Functions Goal Extract data from the financial ledger, review for accuracy, and compile data into a spreadsheet to be distributed at the weekly update meeting. After the meeting, make appropriate changes to the spreadsheet and redistribute to the team by the next day. Communications Specialist Key Job Functions Goal Edit department journal to ensure accuracy, improve flow and style, and correct grammar by the 20th of each month. Organize and plan content coordinating with web designer, consistently

ensuring that the journal is available on the web by the first of each month. Development Department Staff Key Job Functions/Improvement Goal Establish realistic target participation levels for contribution to the annual campaign by developing relationships with assigned donors. Consistently review donor profiles and update when necessary. Contact donors by letter and followup by telephone call once per quarter. Achieve 10% increase in participation from assigned donor group for annual campaign. Process Improvement Goal Design and create and institute a monthend report that identifies financial allocations to improve tracking of spending patterns. Analyze data for trends and make recommendations on PeopleStreme provides Performance Management software to give you instant reporting on your employee performance management process. Whether you are managing performance development, or strategic alignment at a high level, our performance management software helps align your employees with the plan and drive performance improvement. The system supports reviews and goal setting with full management visibility.

In today's workplace, performance improvement and the role of performance management is an increasingly popular topic. Why the intense focus on performance management now? Business pressures are ever-increasing and organizations are now required to become even more effective and efficient, execute better on business strategy, and do more with less in order to remain competitive. While human resources professionals clearly understand the importance of optimal performance management, they often face significant internal obstacles. When someone mentions performance management or reviews at your organization, what is the typical response? Do employees and managers alike cringe? Do they avoid performance management related tasks? Do visions of tracking down incomplete appraisal forms come to mind? This can be changed.

Forward thinking companies are taking steps to successfully address this negative view of performance management. They are implementing innovative solutions that ensure processes deliver real results and improve performance. The purpose of this guide is to provide concrete guidelines and practical steps that can be used to improve the performance management processes at your organization. In addition, a new class of automated performance management solutions has emerged to specifically address small- and medium-sized businesses. We conclude this guide with a few tips for selecting an automated performance management system to implement best practices across your company. The Performance ReviewOnly Part of an Ongoing Process Frequently when performance management is mentioned, people think of the employee performance appraisal or review. Performance management, however, involves so much more. Properly constructed appraisals should represent a summary of an ongoing, year-round dialogue. Focusing only on an annual appraisal form leads to misunderstanding and under appreciation of the benefits of performance management. An effective performance management process enables managers to evaluate and measure individual performance and optimize productivity by:

Aligning individual employee's day-to-day actions with strategic business objectives Providing visibility and clarifying accountability related to performance expectations Documenting individual performance to support compensation and career planning decisions Establishing focus for skill development and learning activity choices Creating documentation for legal purposes, to support decisions and reduce disputes

Business performance management is a set of management and analytic processes that enable the management of an organisation's performance to achieve one or more preselected goals. Synonyms for "business performance management" include "corporate performance management" and "enterprise performance management".[1][2]

Business performance management is contained within approaches to business process management.[3] Business performance management has three main activities: 1. selection of goals, 2. consolidation of measurement information relevant to an organisations progress against these goals, and 3. interventions made by managers in light of this information with a view to improving future performance against these goals. Although presented here sequentially, typically all three activities will run concurrently, with interventions by managers affecting the choice of goals, the measurement information monitored, and the activities being undertaken by the organisation. Because business performance management activities in large organisations often involve the collation and reporting of large volumes of data, many software vendors, particularly those offering business intelligence tools, market products intended to assist in this process. As a result of this marketing effort, business performance management is often incorrectly understood as an activity that necessarily relies on software systems to work, and many definitions of business performance management explicitly suggest software as being a definitive component of the approach.[4] This interest in business performance management from the software community is salesdriven[citation needed] - "The biggest growth area in operational BI analysis is in the area of business performance management."[5] Since 1992, business performance management has been strongly influenced by the rise of the balanced scorecard framework. It is common for managers to use the balanced scorecard framework to clarify the goals of an organisation, to identify how to track them, and to structure the mechanisms by which interventions will be triggered. These steps are the same as those that are found in BPM, and as a result balanced scorecard is often used as the basis for business performance management activity with organisations.
[citation needed]

In the past, owners have sought to drive strategy down and across their organizations, transform these strategies into actionable metrics and use analytics to expose the causeand-effect relationships that, if understood, could give insight into decision-making. History Reference to non-business performance management occurs[citation needed] in Sun Tzu's The Art of War. Sun Tzu claims that to succeed in war, one should have full knowledge of one's own strengths and weaknesses as well as those of one's enemies. Lack of either set of knowledge might result in defeat. Parallels between the challenges in business and those of war include[citation needed]:

collecting data - both internal and external discerning patterns and meaning in the data (analyzing) responding to the resultant information

Prior to the start of the Information Age in the late 20th century, businesses sometimes took the trouble to laboriously collect data from non-automated sources. As they lacked computing resources to properly analyze the data, they often made commercial decisions primarily on the basis of intuition. As businesses started automating more and more systems, more and more data became available. However, collection often remained a challenge due to a lack of infrastructure for data exchange or due to incompatibilities between systems. Reports on the data gathered sometimes took months to generate. Such reports allowed informed long-term strategic decision-making. However, short-term tactical decision-making often continued to rely on intuition. In 1989 Howard Dresner, a research analyst at Gartner, popularized "business intelligence" (BI) as an umbrella term to describe a set of concepts and methods to improve business decision-making by using fact-based support systems. Performance management builds on a foundation of BI, but marries it to the planning-and-control cycle of the enterprise - with enterprise planning, consolidation and modeling capabilities. Increasing standards, automation, and technologies have led to vast amounts of data becoming available. Data warehouse technologies have allowed the building of repositories to store this data. Improved ETL and enterprise application integration tools have increased the timely collecting of data. OLAP reporting technologies have allowed faster generation of new reports which analyze the data. As of 2010, business intelligence has become the art of sieving through large amounts of data, extracting useful information and turning that information into actionable knowledge.[citation needed] [edit] Definition and scope Business performance management consists of a set of management and analytic processes, supported by technology, that enable businesses to define strategic goals and then measure and manage performance against those goals. Core business performance management processes include financial planning, operational planning, business modeling, consolidation and reporting, analysis, and monitoring of key performance indicators linked to strategy. Business performance management involves consolidation of data from various sources, querying, and analysis of the data, and putting the results into practice. [edit] Methodologies

Various methodologies for implementing business performance management exist. The discipline gives companies a top-down framework by which to align planning and execution, strategy and tactics, and business-unit and enterprise objectives. Reactions may include the Six Sigma strategy, balanced scorecard, activity-based costing (ABC), Total Quality Management, economic value-add, integrated strategic measurement and Theory of Constraints. The balanced scorecard is the most widely adopted[citation needed] performance management methodology. Methodologies on their own cannot deliver a full solution to an enterprise's CPM needs. Many pure-methodology implementations fail to deliver the anticipated benefits due to lack of integration with fundamental CPM processes.[citation needed] Designing and implementing an approach to managing employees that ensures they are a source of sustainable competitive advantage is the objective of "strategic human resource management". A strategic human resource management system reflects the concerns of multiple stakeholders, is linked to the organization's specific business strategy, represents an integrated and coherent set of HR practices, and it is continuously monitored, evaluated and revised . This chapter describes the implications of these four features of strategic human resource management (HRM) systems, focusing on organizations pursuing strategies that require innovation . We show how an integrated HRM system addresses four major tasks : managing behaviors, managing motivation, managing competencies, and managing opportunities . After illustrating how these tasks are shaped by a strategy of innovation, we consider some of the key challenges that arise when applying this framework . Finally, we note that the performance management system should be monitored and evaluated to assess how effectively it (a) sends a clear, consistent message to employees and (b) represents the concerns of multiple stakeholders . Taking corrective action based on performance against these goals is essential for the organization's continuous learning and improvement

A firm has a competitive advantage when all or part of the market prefers the firm's products and/or services . Because competition is the name of the game, companies seek ways to compete that can last a long time and cannot easily be imitated by competitors . That is, they seek to gain a sustainable competitive advantage (Barney, 1991 ; Porter, 1985; Schuler, Jackson, & Storey, 2001) . Some firms use their human resource management systems to gain a sustainable competitive advantage . Several conditions must be met if an organization is to gain a sustainable competitive advantage through human resource management . Perhaps the most obvious condition needed is that the firm's human resources-employees-must be a source of added value . Employees can add value in a variety ways : through their interactions with customers, by attracting other talent to the firm, by adapting quickly to changing conditions and so on. A human resource management system that encourages employee behaviors such as these can therefore be a source of competitive advantage . If the employees in competing firms add similar value, no advantage is gained . Thus, rarity is another condition required in order for human resources to be a source of competitive advantage . One way in which employees might be rare is that they have unusually high levels of skill or knowledge . Employees who are unusually committed to the organization and its goals could help the organization to gain competitive advantage by keeping down the costs associated with high turnover . Employees with unusually high levels of organization-specific knowledge may be less likely to repeat past mistakes and be better able to recommend changes that will improve the operation of the total system . By helping an organization acquire, develop and retain employees such as these, a firm's

human resource management system contributes to its competitive advantage . Finally, in order for a firm's human resources to be a source of sustainable competitive advantage, they must be difficult to copy and there must be no other substitutable resources that competitors can rely on . The most difficult human resource to imitate is a corporate culture that has evolved over a period to suit the specific needs of the organization. Thus, a human resource management system plays a strategic role when it supports the development and continuous evolution of a unique corporate culture that is tailored to the needs of the organization . Designing and implementing an approach to managing employees that ensures they are a source of sustainable competitive advantage is the objective of "strategic human resource management" . To be strategic, a human resource management system must reflect the concerns of multiple stakeholders, be linked to the organization's specific business strategy, represent an integrated and coherent set of HR practices, and be continuously monitored, evaluated and revised . By implication, a strategic approach to managing individual performance requires that these same issues be addressed . In the remainder of this chapter, we discuss the implications of these four features of strategic human resource management (HRM) systems, focusing specifically on the implications for managing individual performance . Throughout this chapter, we use the term performance management system to refer to those human resource practices that together can affect employee performance . As will be described in more detail later, several HR practices that can be considered to be part of a performance management system, including aspects of the selection process, MANAGING INDIVIDUAL PERFORMANCE: A STRATEGIC PERSPECTIVE ADDRESSING THE CONCERNS OF MULTIPLE STAKEHOLDERS 373

socialization and training, performance measurement, as well as rewards and recognition programs. To the extent that any particular HR practice can have a meaningful impact on employee performance, we consider the practice to be part of an organization's performance management system . Although managing individual performance is one of the primary goals of most HRM systems, it is not the only goal . For example, another important objective of an HRM system is to manage the flow of employees into and through the organization . Recruitment, career planning, terminations and retirement planning are examples of practices that are particularly relevant to managing employee flows . As another example, in some organizations, the goal of managing labor costs is particularly important . In such organizations, reducing the costs of employee benefits may be especially important . ADDRESSING THE CONCERNS OF MULTIPLE STAKEHOLDERS Stakeholders are individuals or groups that have interests, rights, or ownership in an organization and its activities . Stakeholders who have similar interests and rights are said to belong to the same stakeholder group . Customers, suppliers, employees, and strategic partners are all examples of stakeholder groups (Clarkson, 1995 ; Freeman, 1994 ; Jones, 1995) . CUSTOMERS Customers may be seeking goods and services that are low in cost, high in quality, or simply unique . Their concerns can be addressed by performance management systems that incorporate customers' perspectives into performance definitions and employee evaluation measures . For example, customers' views can be used when developing job descriptions, designing training programs, and appraising individual employees . EMPLOYEES Most employees are concerned about being treated fairly and paid well . These concerns can be addressed by transparent and fair performance management systems that allow all employees to translate their efforts into rewards that they value . Increasingly, organizations

are finding that employees also are concerned about balancing their work and nonwork roles . Designing policies and practices that make it easier for employees to perform well in all of their life roles is one way that performance management practices can address the concerns of employees . For example, a performance management system that emphasizes the specific number of hours and the schedule of work can create time conflicts that make it difficult to perform nonwork roles . In contrast, a system that emphasizes performance results and accepts variation among employees regarding workload and scheduling may improve employees' ability to successfully juggle multiple roles . OWNERS AND SHAREHOLDERS Most owners and shareholders invest their money in companies for financial reasons . Their concerns are addressed when a firm evaluates the cost-effectiveness of its performance management practices Use S.M.A.R.T. goals to launch management by objectives plan By Robert L. Bogue April 25, 2005, 7:00am PDT Recommend 0Votes 11Comments 11Share more +

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Management byObjectives, or MBO as it is affectionately called, is a concept expressed byPeter Drucker more than 50 years ago. This strategy for managing people, whichfocuses on managing teams based on their ability to complete individual andteam goals, has been used in larger organizations since its inception. Small tomidsize organizations, however, can also benefit from adopting this strategy,particularly if you also take on the S.M.A.R.T. (specific, measurable,achievable, realistic, and time-based.) method of implementation. Making the case for MBO MBO worksbecause it helps to align the individual efforts of broad teams around theorganization's collective objectives. MBO works in the same way that a laserworks. A laser is, at its heart, just light. We have light all around uswhether through the light bulbs overhead or the computer screen that we'rereading this article from. However, that light is diffused. It is scattered,going in every direction. As a result it doesn't cut through the things that itstrikes. Similarly, unless the light is very bright and/or extremely focused,it isn't generally noticeable. Lasers, however, take a relatively small amountof light and focus it into a narrow beam which is very noticeable and atsufficient size can cut metal. Management by Objectives does the same thing. Organizationstoday are often diffused light sources with each member of the organizationfocusing on different, often personal, objectives. So instead of being able tocut through the market and capture more market share, or command higher prices,organizations are lucky to make steady growth. The MBO processstarts with the organization defining its objectives. The process of strategic planning,goal setting, or visioning generates from its process a set of objectives thatthe organization should strive to achieve. From there it is up to theindividual departments to form their objectives, most if not all of whichshould align and support the organizational objectives. Individual objectives arethen established to support the departmental objectives. Setting goals atthe employee level that align with company goals is the key. Here's how you canuse the S.M.A.R.T. system for establishing those goals. First steps Once you'vedecided that you're going to give managing by objectives a try there are twoimportant steps that you'll have to take. First, you must explain to youremployees what you're doing and why you're doing it. The second step, settingthe actual objectives, can be challenging in its own right as you seek to findthe right balance. Communicating the message MBO is designedto improve the management process and maximize the effectiveness of the membersof individual teams. You need to explain that the MBO process is focused

onhelping team members understand the individual roles they play and how theirjobs contribute to company success. By focusing on the message that MBO is meantto help the employee assess and prioritize efforts to make certain thoseefforts are focused on the bottom line and organizational values. The processalso helps your team understand what the organization doesn't value and what itmay not need to do any more. The so called "ActivityTrap" is one where we get so busy doing things that we forget to askwhether what we're doing are the right things. This is an important concept foreveryone in an organization to understand. Helping to explain how the activitytrap happens and how MBO is designed to help avoid it will help your employeesunderstand the goal of making the work that they do more effective. There's anatural resistance to change that occurs even when there is an understandingthat the intent is right and fair. In order to combat this natural resistance,consider making smaller (more tactical) objectives and measure them on ashorter basis than you normally might (quarterly or half a year instead of atypical one-year pattern.) Setting S.M.A.R.T. objectives The objectivesetting process is a difficult one for most individuals, particularly those who'venever been asked to set objectives. The process seems daunting. However, itdoesn't need to be. The process can be as simple as sitting down with thedepartmental objectives and asking the question, "How can I best help tomeet these objectives?" From that answer comes the core for setting theindividual's objectives. For example, if the departmental objective is toimprove the customer satisfaction score, the team can work on providing moreself-service information to reduce the number of calls and call waittime or offertools to improve customer service levels by clarifying how to communicate witha customer. The S.M.A.R.T. methodis one way to help you remember how to walk through the process of setting yourfirst MBO objectives.

S for Specific: There are several key factors which should be present in the objectives that are set in order for them to be effective. They should be specific. In other words, they should describe specifically the result that is desired. Instead of "better customer service score," the objective should be "improve the customer service score by 12 points using the customer service survey." M for Measurable: The second example is much more specific and also addresses the second factormeasurable. In order to be able to use the objectives as a part of a review process it should be very clear whether the person met the objective or not. A for Achievable: The next important factor to setting objectives is that they be achievable. For instance, an objective which states "100 percent customer satisfaction" isn't realistically achievable. It's not possible to expect that everyone must be 100 percent satisfied with their service. A goal of "12 percent improvement in customer satisfaction" is betterbut may still not be achievable

if it's assigned to the database developer. They aren't likely to have enough influence over the customer interaction process to improve satisfaction by 12 percent. R for Realistic: This leads into the next factorrealistic. Realistic objectives are objectives that recognize factors which can not be controlled. Said another way, realistic goals are potentially challenging but not so challenging that the chance of success is small. They can be accomplished with the tools that the person has at their disposal. T for Time-based: The final factor for a good objective is that it is time-based. In other words, it's not simply, "improve customer service by 12 percent," it's "improve customer service by 12 percent within the next 12 months." This is the final anchor in making the objective real and tangible. This final factor is often implied in MBO setting. The implied date is the date of the next review, when the employee will be held accountable for the commitments that they've made through their objectives.