A Goal Setting Framework for CEOs | Khorus A Goal Setting Framework for CEOs | Khorus

A Goal Setting Framework for CEOs

If I’m sitting with a new CEO and I ask about the goals he’s going to set for his company next year, the response is usually something about revenue or profit.

“Is that it?” I usually ask. “What about non-financial goals?”

At this point I often get a blank stare. The question I am really asking is, What is the overall structure you use to think about your business?

While revenue and profit are important, they are the outcome of many activities in a company. As CEO, it is your job to make sure those activities are optimized for producing the maximum revenue and/or profit. In the time I’ve spent coaching and talking to CEOs, I’ve seen tunnel vision on financial goals repeatedly. The lack of clarity on what needs to happen across the whole business can lead to certain areas being neglected and others overemphasized. Or even worse, it can result in the total absence of coherent objectives at the company level.

I’m a big believer in the power of a good model, and here’s the one we at Khorus use to help CEOs select appropriate, balanced goals for their organization each quarter. It’s intended to give you a template for choosing goals that encompass each of the key areas of the company and that lay the groundwork for good goal setting at every level of the workforce.

 

The Definition of a Business

The model starts with the definition of a business. I propose that it goes something like this. A business is:

An organization that produces and delivers a product or service while balancing the needs of shareholdersemployees, and customers.


Shareholders, employees, customers. These are the three constituencies whose distinct needs the CEO must balance. And that must be reflected in the organization’s goals.

We also see that the defining activity of the business is producing and delivering a product or service. This typically requires three key functions: productmarketing, and sales. These functions, too, must be reflected in your organization’s goals.

We now have two groupings related to the organization’s (1) core constituencies and (2) core functions:

.

The 6 Goal-Setting Categories

When we overlay these two triangles, we get a full picture of the major areas an organization needs to cover in its corporate-level goals:

This structure also reveals a good makeup for the leadership team, with one executive dedicated to each of the six areas. Although there are certainly exceptions—perhaps a company has a large legal component, which adds a new area—this structure applies to 90 percent of mature businesses out there.

Here’s how the model plays out in an example company. (For more company goal examples, check out our full executive goal-setting guide.)

Product

Executive: VP of Product, VP of Engineering, Chief Product Officer, etc.

Sample goals:

  • Release mobile app by 10/1
  • Develop strategy for new service offering
  • Redesign QA process


Sales

Executive: VP of Sales, CRO, etc.

Sample goals:

  • Close $15M in new bookings
  • Launch sales plan for product A
  • Improve alignment with marketing


Marketing

Executive: VP of Marketing, CMO, etc.

Sample goals:

  • Generate 2,000 marketing qualified leads
  • Optimize marcom website
  • Develop go-to-market strategy for mobile app


Employees

Executive: VP of Human Resources, CHRO, Director of Talent, etc.

Sample goals:

  • Become the employer of choice in our industry
  • Retain 90% of top performers each quarter
  • Deploy cloud-based HR system


Customers

Executive: VP of Customer Success, Director of Customer Success, etc.

Sample goals:

  • Improve NPS to over 45%
  • Reduce churn by 5% in Q3
  • Add 2 new members to support team


Shareholders

Executive: CFO

Sample goals:

  • Achieve 25% net margin
  • Build 5-year financial plan
  • Drive operational excellence


It’s very possible that your current organizational structure doesn’t perfectly match this model. For example, I believe there’s great value in having a customer success executive and an HR executive who report directly to the CEO, but many companies don’t structure themselves that way (or are too small to have gotten there yet).


But regardless of the current makeup of your executive team, I do recommend considering each of these areas as you select the goals your company will pursue. Each one is critical and should not be neglected at the expense of another.


If you cover these bases, you will have a well-balanced set of objectives for your entire company to work toward together.

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