CEOs Emphasize Importance of Specificity and Simplicity in Goal Setting

When it comes to goal setting for William McComb, ’87, CEO of Liz Claiborne, “specificity is incredibly important, but so is simplicity.” McComb discussed his philosophies around corporate goal setting alongside Mary Ann Tolan, ’92 (XP-61), founder and CEO of Accretive Health, in a Management Conference panel at Gleacher Center on May 18.

Moderated by dean Edward Snyder, the discussion revealed marked similarities in the two CEOs’ thinking about the process of setting goals, as well as the process of clearly communicating those goals throughout their organizations.

For both executives, ensuring that their employees have an acute understanding of their companies’ goals is key.  “We do believe in being very specific… just really having everybody with a direct line of sight and clarity to the specific goals.” Tolan explained.

McComb agreed that by setting up “milestone delivery” that outlines longer-term goals for an organization, a “line of sight for everybody around what success looks like” would emerge. He also emphasized the importance of setting goals in regards to the culture of the organization using a qualitative yet specific set of dashboards. But the dashboards should not be derived from complex “balanced scorecards” that attribute certain percentages to separate line items of a review to measure employee performance, McComb said. 

“I don’t believe in these systems that are balanced scorecard-based. If you need a balanced scorecard, I guarantee you are not hitting people emotionally,” he said. “People need to be able to compute in their head what matters. They need to be able to say it; they should be able to give it in an elevator speech between the first and 12th floors.”

Snyder asked whether successfully implementing a “line of sight approach” for goal-setting in an organization gives CEOs time to focus on other matters

Tolan said yes. “You’re freed up to really help move great ideas around the company, which is one of the great things that leaders can do. You can spot when great things are developing, you can try to encourage connections,” she said. “You’re not being consumed with the blocking and tackling of trying to tell people what the metrics are because they don’t know.”

Tolan also talked about the importance of setting “threshold” goals that are significant yet generally attainable targets, while also setting some “stretch” goals. “The stretch targets are really there for the purpose of developing the people and helping them find those innovative solutions,” she said. With these two types of goals in mind, Tolan said it was important to measure people objectively by comparing them to peers rather than against the performance plan.

“You can set a really stretch target and fall short of it, and we will still understand that is significantly better than somebody maybe who’s set a more modest target and exceeded it,” Tolan explained.

McComb agreed that setting a combination of threshold and stretch goals is important. He also talked about a third type of goal he likes to utilize called a “bounty,” which involves paying a large reward or bonus for an “extraordinary, breakthrough performance” on a “difficult, almost unachievable stretch goal.” Bounties are set on one-time, highly specific, binary goals. “It complements a culture and turns people into uber-athletes, and that’s the fun of the bounty system,” McComb said.

Both McComb and Tolan do not find fun in a goal planning system that gets mired down in negotiation; Tolan explained it can compromise innovation and promote mediocrity.

“If I had to say the most important things I’ve learned about goal setting in my career, again it’s the trap of getting into the negotiation culture and measuring people against their adherence to plan. I’d avoid it like the plague at all costs,” Tolan said.

—Emily Hiser Lobdell