When senior leadership goes rogue.

Are your senior leaders not working towards common goals? Your performance objective and bonus structure might be to blame.

Everyone likes performance bonuses, and in my experience, the higher up you on an org chart, the bonus-related motivation gets stronger. Bonuses are paid based on some kind of metrics, ideally tied to performance objectives.

But:

• But where are these objectives coming from?

• When was the last time they were adjusted?

• How can you be sure that they won’t result in managers setting goals for their teams that don’t support, or worse, compete with the objectives of the organization?

Performance objectives are only useful if they align with the goals of the organization. Objectives that are not aligned with the goals of the company feeds inefficiency and chaos - especially when tied to a bonus structure.

The gold standard is the SMART objective:

Specific

Measurable

Attainable

Relevant

Time-Bound

People seem to struggle most with the R - Relevant. How can you ensure an objective is relevant?

If you are having employees create their own SMART goals without them having visibility to the goals of their manager, their manager’s manager, right up to the CEO, it would be a miracle if the majority of them actually align with what the company is trying to do.

There needs to be accountability that goes beyond having something, anything in the system by a certain date. It doesn’t make sense to employ a workforce, motivate them to meet their goals with a bonus, but not be crystal clear about what those goals are.

You need to align, either from the bottom up or from the top down. A free-for-all is not an acceptable approach. I’m making the case here for top-down cascading, but if bottom-up alignment works for your org, great. For companies who have not used any real alignment before, top-down cascading is likely an easier approach to start with.

How it works: A step-by-step process

If it's that simple, why don't more companies do it?

There are a plethora of excuses. Click the arrows to expand.

"The CEO shouldn't be expected to input things into the HR system."

This is bonkers. We are talking about the objectives that will drive the company, not a timesheet. They can sit down with an assistant an HR and get it done.

"The entire senior management team is already aligned."

That is a very lovely sentiment. It’s probably wrong though.

Watch a few episodes of HBO’s Succession and you’ll realize that everybody near the top has own agenda going on. It’s human nature! This is the main reason why I advise against bottom-up alignment. If you have one leader who is on a very different path (perhaps they’re misinterpreting Org goals, or perhaps they disagree), that chunk of the workforce will be isolated from the bigger picture.

And speaking of pictures, I hope that the Succession fans among you will enjoy the visual below.

"This looks like a lot of work for HR."

I said it was simple, but I never said it was easy. This would probably require an overhaul of your current process and will mean a lot of work for HR.

But that’s what HR should be there for, to ensure that the people of the company are supporting the goals of the company.

If they’ve found another way to get the same result, fantastic. But otherwise, paying out bonuses for completing objectives that may not have been aligned with the business means that you’ve got a problem.

"People won't be on board with this."

Maybe, maybe not. Many people like knowing that the work they do matters, so it’s not a stretch to think that many people will appreciate the transparency and clarity.

Some people will not like it, especially if they have been used to making bonuses largely from goals that they’ve come up with. I’m not saying that 100% of the weight should be cascaded. If you aim for 80%, there is still room for managers and employees to set more personal goals.

"How much is this going to cost us in bonuses?"

People work mainly for income. Your CEO wants her bonus, your C-suite want theirs, and it's no different for anyone else in the company. If you want people to go the extra mile, you need to incentivize that behaviour. A good bonus structure that is tied to the employees meeting and exceeding their objectives is a must.

Remember, if the objective structure worked, your company and shareholders should be seeing the financial benefits. Some of those benefits should be allocated to paying out these bonuses.

What does this have to do with change management? Everything.

If your org is planning some kind of change, you need all levels to be on board, and this is one of the ways to do it.

The success of that change should be in the CEOs goals.

The senior leader sponsoring the change should have this reflected and incentivized in their objectives.

• I've noticed that even then most passive sponsors suddenly perk up and get things moving in the 3 months before bonuses are paid. It's not a coincidence.

Your change champion network, SMEs, people doing UAT should all have this reflected in their own goals.

End users should absolutely have some goals that are directly tied to their adoption of the change.

What are your thoughts? Is your organization’s current objective process working? Or is it just fluff? If you cascade, what has your experience been?