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The Goal-Setting Cycle – When SMART Just Isn’t Enough

featured / blog / performance reviews / career development / organizational performance

"Regardless of the system used, in the vast majority of cases, all of the parties involved are unhappy with the appraisal process" - DeNisi & Sonesh (2011)

I’m not sure there’s another sentence of any article that’s stuck with me more than the one above. DeNisi and Sonesh go on to describe that, they believe, this is because nothing productive ever comes out of the review process. Perhaps this is because it took us as I/O Psychologists until the early 1990s to realize that performance improvement should be the ultimate goal of the evaluation process.1 This notion – that performance appraisals exist not only to measure but also to improve employees’ performance – represented a fundamental shift in a field that was previously obsessed with studying performance appraisal for the purpose of improving rating accuracy. What does this mean for your annual evaluations? Well, it means SMART goals might not be enough.

SMART Goals

When done well, goals can improve both task performance and learning. Goals also play a vital role in employees’ careers within a company, helping clarify growth opportunities that exist and connect everyday aspects of their job to their broader career plans. The problem is that much of the discussion surrounding goal-setting in modern organizations is outdated and, frankly, all too often anecdotal. The goal (see what I did there?) of this post is to reframe the way we think of goals and the role they play in modern organizations.

Chances are that, if you’ve made it this far on a blog post about performance reviews and goal setting, you’ve heard that goals should be specific, measurable, attainable, relevant, and time-bound (or, SMART). But, this is only half of the story – what’s missing is context on what you should set your goals for and how these goals then tie back into your day-to-day job. I’d argue that this is likely what DeNisi and Sonesh were talking about when they wrote that no one is happy with the appraisal process. Regardless of how positive their reviews, employees rarely see a clear next step after their performance review. Being annual review season at FMG, we’ve thought a lot lately about the role goals play in employee development and annual evaluations. What we learned is that your reviews might not always be at fault; it might be your goal-setting process.

Goals – What Are They and Why do They Exist?

As a motivation and learning researcher, I’ve cited DeShon and Gillespie’s (2005) article more than I’d like to admit (30 times alone in my dissertation!). Besides using this blog post to add one more to that list, I bring their article up here because it similarly represents a fundamental shift in how we view goals. Inspired by their article, we’ve defined goals as measurable behavioral plans that bridge a gap between an employee’s current and desired proficiency levels.

I like this definition because it answers both what goals are and why they are written. It also helps answer why so often annual reviews don’t improve performance.

Where Goals Come From

In order to understand how performance appraisal fills a developmental role, we must stop viewing performance appraisal and goal-setting as separate events. Thinking back on it, this is precisely the reason my graduate program offered a combined “training and performance management” class. Failing to fully integrate the two results in goals that exist within a vacuum and employees who lack direction after their reviews.

Fors Marsh Group Goal Setting Process

When done well, evaluations should give employees a clear understanding of exactly the behaviors they need to demonstrate over the next year. This view removes much of the ambiguity (and stress) that surrounds the goal-setting process – employees should be able to take the information provided in their annual review and easily turn this information into goals for development. Don’t believe me when I say it’s easy? Consider this example:

Let’s say that, as an employee, you and your supervisor discuss that you have yet to consistently demonstrate an ability to independently offer constructive solutions to your supervisor, an important piece of problem-solving. Want to know what your goal is for next year? Easy! "Independently offer constructive solutions to supervisor."

Subgoals – Working on Goals in Your Day-to-Day Job

You might have noticed that this goal is hardly specific, measurable, actionable, or time-bound. However, it does fulfill arguably the most important criterion – relevancy. This is a specific behavior that this employee is yet to demonstrate and, therefore, it is highly relevant to their role and career growth. It directly ties into their performance review and existing competencies.

Taking goals a step further by writing subgoals clarifies exactly how employees’ day-to-day tasks align with their goals and performance plans. Subgoals are the employee-specific, contextual representation of these goals in an employee’s day-to-day job. The example above lends itself to quite a few subgoals relevant to my job: (1) Identify and recommend two process improvements to a tracking study, (2) Provide initial ideas for addressing an ad-hoc client request, (3) Identify three potential sampling methods for a new contract, (4) Propose a new methodology for improving quality control procedures. What’s exciting about subgoals is that they are easily identifiable tasks on my day-to-day job that directly relate back to my overarching goal of independently offering constructive solutions to my supervisor. Moreover, let’s say my responsibilities or projects change; I can easily modify my subgoals to be about different tasks that still connect back to my overarching goal. Just because my projects change, my overall developmental needs have not.


1 Ilgen, D. R. (1993). Performance appraisal accuracy: An illusive or sometimes misguided goal? In H. Schuler, J. Farr, & M. Smith (Eds.), Personnel Selection and Assessment. Hillsdale, NJ: Erlbaum.


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