Setting employee goals isn’t a formality, it’s a necessary tool for businesses to thrive.
A Harvard Business Review Analytic Services study of more than 550 executives across a variety of industries examined the state of employee engagement. The report found that 71% of executives believe employee engagement is very important in achieving overall organizational success. Yet only 24% say that their organization’s employees are highly engaged.
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The study also classified respondents based on how important they consider employee engagement, on a scale of 1 to 10. The “low prioritizers” rated employee engagement between 2 and 6, while “high prioritizers” rated it as a 9 or 10. The majority of low prioritizers (51%) felt that there were too many disengaged employees within their organization, while less than one-quarter (22%) of high prioritizers felt that they had too many disengaged employees.
So, there’s a clear connection between how highly companies prioritize employee engagement and how those employees respond—but what factors do business leaders consider to be most important for improving employee engagement?
Goals and Purpose
The word that kept coming up in the study was “goals”, specifically how an employee’s goals relate to organizational strategy. 70% of respondents believe that individuals having a clear understanding of how their job contributes to strategy is one of the most impactful employee engagement drivers.
Other key drivers include: Senior leadership continually updates/communicates strategy (according to 70% of respondents); Business goals are communicated company-wide and understood (69%); Individual staff goals are aligned with corporate goals (67%); and Assessments and performance reviews are aligned with corporate goals (64%).
Remember that 71% of executives believe employee engagement is very important, but only 24% of employees are highly engaged. Goals could be the reason behind that disconnect.
A Lack of Planning
Gallup found that only 13% of employees strongly agree that their manager helps them set performance goals. And only 19% of employees strongly agree that they have talked to their manager in the past six months about the necessary steps to reach their goals.
And another survey of over 23,000 employees discovered that only 2 out of 10 employees see a clear connection between their tasks and the goals of their team/employer.
The data indicates that the majority of organizations aren’t taking an active role in employee goal-setting, nor are they aligning employee goals with company-wide goals. This can leave employees without a clear sense of direction or purpose. When that happens, disengagement isn’t far behind.
The Upside of Goals
When companies are proactive about helping employees set and track goals, those employees are engaged at a much higher rate. According to Gallup research, 72% of millennials who strongly agree that their manager helps them establish goals are engaged in their work. And when a manager holds them accountable for their performance goals, employees are 2.5 times more likely to be engaged.
But how does engagement actually affect business performance? Gallup’s analysis discovered that business units in the top quartile of employee engagement are 21% more profitable, 17% more productive, and have 10% better customer ratings. Again, goal-setting isn’t a performance management formality, it directly affects engagement and the bottom line.
You can learn more about how to align employee goals with business goals here.