The Problem With Top- Down Goal Setting

When goals are set in a top-down manner, they can have unforeseen negative consequences. For example, employees feeling disengaged or no commitment towards achieving those goals. Perhaps, because they feel the goals are unattainable or find it difficult to relate to them. People particularly struggle to relate to the broad, organization-wide goals. More often than not, employees in a conventional, top-down company don’t feel connected to the goals and don’t engage with them in a meaningful way.

The truth is employees in such organizations don’t necessarily relate the work they do to the success of the company. There’s an undercurrent of disassociation making people go about their work in an egocentric way, hoping and striving for a bonus, a raise or a promotion. However, when a company changes its goal-setting process and moves to a bottom-up approach, they will begin to see employees as real people and connect personally with them.  


Why Bottom-Up Goals Are Better

You can open a dialog between the management and employees to help people set their own goals. In this way, you can tailor goals to every individual’s strengths. Of course, that doesn’t mean people can set any goal that they feel comfortable with. Instead, you ease into a dialog with the management and work towards achieving common ground about the goals and metrics. The idea is to develop an ongoing, constructive conversation around goals all year long.

Research has demonstrated people are more likely to achieve their goals when they consider their work to be enjoyable. When a company involves employees in the goal-setting process, they are more inclined to think of the whole exercise as "enjoyable".

When people set their own goals, they become internally motivated to achieve those goals. They feel proud when they achieve the goals they set and strive to do more. They begin to see how their work impacts the company’s success and health. Simply put, allowing people to set their own goals benefits them as well as the company.

When Employees Think For The Company

As you engage employees in the goal-setting process, they naturally feel more connected to the company. They feel more invested in the highs and lows of the company. What follows is an example of a crisis that hit Semco and all of Brazil - a time when Semco employees could have thought about just themselves, but didn’t.

In the past, Brazil was often an unstable country, economically and politically. Top-down decisions made by the government could impact business operations across the country. In 1990, the-then President, Fernando Collor, made a number of authoritarian decisions. These decisions affected people all over the country and were often implemented with little notice and without any concern for consequences. Plano Collor was one such notorious governmental decision, which placed nearly 80 percent of people’s bank savings on a freeze.

So, one day people had their lifelong savings in the bank and the next day their money was inaccessible. The savings freeze remained in force for 18 long months. They made the decision to freeze the savings to combat the astounding 48 percent of inflation. At the same time, the government also levied astronomically high inflation taxes from the people. The situation was ridiculous.

They announced Plano Collor over the weekend and the freeze was in effect by Monday. People across the nation had no time to prepare themselves for the blow dealt by their government.

Semco’s Response To The Crisis

Plano Collar affected the general public and all businesses. At Semco, all employees and business units immediately got together to discuss openly what their strategy should be and how they should operate in light of Plano Collor.

In that situation, the metrics focused less on the individual and more on what was relevant for the collective - the whole company. The sense of belonging and ownership Semco employees felt was decidedly higher than how employees in other traditionally organized companies felt.

Had Semco been a conventional, top-down company, the Plano Collor moment would have played out very differently. Employees would have been most worried about their job safety and whether or not they would receive a bonus that year. They wouldn't have concerned themselves with the company's goals or the survival of the company in a crisis. Semco employees were able to negate egocentric attitudes and felt their individual goals and the company's health and success were one and the same.

As a result, Semco was able to respond to the Plano Collor crisis (and other challenges over the years) differently. They were able to weather the difficulties and the company survived. They achieved this because the employees made the collective decision to prioritize the interests and goals of the company.

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