Strategic alignment is key to business success. However, only 1 in 3 managers could name their company’s top three priorities.
So when it comes to unlocking optimal organizational performance, it’s critical to cascade goals.
Cascading goals create a powerful alignment between business strategy and team goals. They can help you develop your team, increase engagement and improve your business performance. In this article, we’ll explore:
- What cascading goals are, including examples of cascading goals in action
- The pros and cons of cascading goals
- How to cascade goals the right way
What are cascading goals?
First, let’s understand what we mean by cascading goals.
What are cascading goals?
Cascading goals are goals that are first established at the highest level of the organization. Then, supporting goals are created for every team and individual within the company. They generate a powerful connection between the company-wide goals of the business and its employees.
Cascading company goals can create a strong sense of strategic alignment and shared purpose. The most common types of goals used in the cascading process are:
- SMART goals
- OKRs (Objectives and Key Results)
- BHAGs (Big Hairy Audacious Goals)
- V2MOMs (Vision, Values, Methods, Obstacles, and Measurements)
By running your top-level priorities down through the rest of the company, you can make sure that every employee is pulling in the same direction.
Examples of cascading goals
Here’s an example of how the cascading process could work in the real world:
- Overall business goal: Increase profits by 15% before end of Q3
- Sales team goal: Close 15% more sales in Q3 than in Q2
- Sales rep goal: Close 5 sales in Q3
- Marketing team goal: Increase number of marketing qualified leads by 30%
- Marketing team member goal: Increase number of page visits by 10%
- Product team goal: Roll out feature X to attract new customers by week 1
- Product team member goal: Fix bug in feature X and update
The benefits of cascading goals
1. Improve strategic alignment
Finix, a payments company, has been a runaway success since their inception in 2022. They believe that their use of cascading goals is what allowed them to scale so rapidly and so effectively in a crowded market. Fiona Taylor, Finix’s COO, explained in an interview with Built In Chicago,
“Scaling a company is a multifaceted effort, where a variety of issues need to be managed through a phase of rapid growth. One of the biggest challenges is aligning resources in pursuit of the same goals.”
Taylor advises that companies use cascading goals to create that sense of alignment:
“Defining a strategy and cascading it throughout the organization is essential. Done well, this process infuses strategic alignment into everything you do. Core goals are adopted by every group in the company, who in turn come up with their own strategy and associated goals. Cascading goals become criteria for selecting the right things in which to invest time and resources.”
Fiona Taylor, COO, Finix
2. Improve decision-making
Research confirms that cascading goals can make a major difference to decision-making. When organizations are aligned, their employees find it easier to make good decisions.
It makes sense. When you have a clear understanding of what your organization is trying to do, you also have a quick rule of thumb when making decisions. When choosing between two options, you know that you should select the option that will best contribute to company objectives.
3. Increase employee engagement
Employees with clear, defined goals are 14.2 times more likely to be inspired at work, and 6.5 times more likely to recommend their organization as a great place to work. In other words, cascading goals can contribute to both job satisfaction and employee retention. In turn, cascading goals can help boost your employee engagement.
Setting goals helps to create a sense of direction, lets you track and celebrate your progress and encourages focus on the bigger picture. When those goals are cascading, the process of goal setting also lets you see that your work has a direct impact on the work of the people around you and the results of the company you work for.
4. Create greater transparency
The process of setting and communicating cascading goals means that every employee in the organization knows exactly what the top organizational goals are.
This builds a more transparent culture, in which every employee knows how things are going and where the business needs their support. This can also create a more innovative environment. When employees know where to focus their attention, they may well come up with new solutions and creative ideas to help reach those top-level objectives.
3 pain points associated with cascading goals
Goal cascading has its critics. If not implemented correctly, cascading goals can stifle autonomy, create tedious bureaucracy, and reduce organizational agility. To make cascading goals work in your company, here are a few pain points to avoid:
Cascading goals that are top-down only
If your goals all come from the top, then employees may not feel they have the autonomy to define their own contributions. Worse, senior management may not know exactly what goals to assign to lower-level employees, resulting in meaningless or unhelpful goals.
Instead of cascading all goals (including team-level goals) from the top down, executive leaders should establish the main 3-5 corporate objectives only. Then each business unit, department and/or team can come together to decide on how they can contribute to effectively reaching those goals.
After team goals have been established, managers and individuals can come together to decide on individual goals.
Once all goals have been decided on, cross-check them both from the top-down and the bottom-up, to confirm that they are truly aligned and that all goals are relevant.
Setting goals only once a year
If you only set your cascading goals on an annual basis, you run the risk of becoming too slow-moving. While your top-level goals might only change annually, team and individual goals should be set on a more short-term basis.
Liz Lockhart, a senior director of Project Management, agrees. In an article in People Managing People, Lockhart points out that companies that set goals quarterly can generate over 30% more revenue than those that review goals annually.
Goals that are “lost in translation”
The process of goal cascading only works if everyone has a shared understanding of what each organizational goal means, and how their team contributes.
To make sure this happens, use a performance management software or create and share a document that maps out each objective and how it relates to the goals of each team.
How do you effectively cascade a goal?
Here’s a step-by-step guide to the goal-cascading workflow.
1. Review your company mission and vision
Gallup’s research shows that less than half of all US employees know what their organization stands for. Now more than ever, it’s critical that your workforce understands the purpose of their work.
So, before any goal-setting process, you need to be clear that everyone in your company understands the “Why” of your organization. What do you hope to achieve in the next 5-10 years? What is your company mission and vision? Why do you exist as an organization?
Once you’ve revised your mission and purpose, make sure that it is well-communicated at all levels of the organization. Gallup advises using a “strategy on a page” document, which should include your mission, your purpose, your long-term goals, and how you hope to achieve them (in very broad strokes). Keep the document brief, and make sure that every employee has a copy. Refer to your organizational purpose frequently in internal communications, to keep it front of mind.
You may also want to set an annual theme for your strategic focus, such as increased customer satisfaction, organizational growth, or operational excellence.
2. Define your top-level quarterly goals
Once you feel confident that every member of the company knows what you’re all hoping to do together, it’s time to set and communicate the executive-level goals for the quarter.
On a quarterly basis, leaders should identify strategic goals and outcomes. Ideally, your leadership team should set the strategic vision and desired key results for themselves but also their teams. From there, your organization will be better equipped to map out cascading goals that ladder up to the larger vision.
These goals should be:
- SMART: The acronym SMART stands for Specific, measurable, attainable, relevant and time-bound. Using the SMART goals framework is helpful with cascading goals, because it means that they are clearly expressed and easy for everyone to understand.
- Limited: To avoid biting off more than you can chew, limit your top-level goals to just three to five. Otherwise, you can create confusion and spread your employees’ focus too thinly.
- Realistic but optimistic: Research shows that goals are motivating when they are ambitious but realistic. If our goals are totally unattainable, we may become disheartened or self-critical. If they are too easy, we may get bored or underperform.
3. Use top-level goals to define team-level goals
Now it’s time to cascade your top-level quarterly goals down to each team. Every manager should meet with their team to discuss the goals for the quarter. Managers should aim to reframe the top-level goals in terms of the team’s day-to-day operations.
4. Establish individual goals
At this point, individual employees should work with their manager to set their own goals. For instance, if your team goal is to increase sales by 30%, then an individual team member might have the goal to book 15 sales calls per week.
It’s worth noting that individual goals might be task-based, or they might be development goals. For instance, instead of having the goal to book sales calls, the employee might set the goal to improve their sales call conversion rate by completing the company sales training program successfully.
After all, having these kinds of professional goals aren’t just good for the individual in question; by improving their own performance, the employee is able to make a bigger contribution to the overall success of the company.
5. Cross-check goals upwards
Now that all goals have been set, it’s important to confirm that there is goal alignment both from the top down and the bottom up. To do this, you may want to use a performance management software to map out your goals and share the information internally.
Alternatively, a simple series of documents can be used to make sure that all goals line up, and incorporate any feedback or changes implemented at the team level.
6. Schedule regular check-ins to measure progress
Once goals have been set, managers and employees should have weekly or monthly one-to-one meetings, in addition to the usual performance reviews. This is a good opportunity to address any misalignment, review goal-tracking metrics, and make sure that employee goals are reached.
Cascading goals can help develop your team and your business
If implemented correctly, goal cascading can increase strategic alignment, resulting in easier decision-making, greater transparency, and increased employee engagement. However, if you only set your goals annually, or fail to incorporate upward feedback into the process, then cascading goals can be ineffectual or frustrating.
BetterUp can help. Building strategic visions and goal-setting is more than just tactical. It requires key mindsets, behaviors, and leadership skills that will take your business to the next level.
With virtual coaching, your people will be better equipped to navigate any challenges and stay focused on the course ahead. Together, we can help your people (and your business) reach their full potential.