The point where all PMS fail: Goal Alignment

 Growth is essential, and numbers are the language that proves it. Quantification of the growth index is a must. A Growth Index is a composite metric that quantifies growth by combining multiple indicators into a single, trackable score.

It means it is essential to have Growth Parameters to keep an eye on whether the company is growing or not. And to achieve this, every single function should have ‘Improvement Parameters’ to contribute to growth.

Improvement parameters are altogether different from the Growth parameters. Functions do not 'grow' in a business environment, but they support a business by continuous improvements in their deliveries.

The need to have a mechanism for continuous monitoring of ‘Improvements & Growth’ was compulsively felt when the Industrial Revolution was at its peak, and the world was moving together with a ‘Business Mindset’.

The concept of the Performance Management System was born out of this need. PMS didn’t evolve in a day or two but took decades. The initial primary contributors to the concept were Frederick Winslow Taylor, considered the Father of Scientific Management, followed by WD Scott & Henry Ford. Psychologists played their role as well. B.F. Skinner, known for Reinforcement Theory, and Douglas McGregor, who conceptualized Theory X and Y, are the prominent ones.

The Performance Management System (PMS), as a formal and structured organizational process, is generally traced back to the early 1960s.

1. First Phase of Evolution: MBO [Management by Objectives]:

It officially started in 1954. The PMS framework, “Management by Objectives,” was first introduced and popularized by Peter F. Drucker in his landmark book The Practice of Management (1954). The concept of MBO gave users an overall goal-setting framework that links individual goals to organizational objectives. Each objective needs to have certain KRAs and corresponding KPIs. KPIs are the measurable metrics used to track performance within each KRA. KPIs answer, “How will success be measured?” The SMART principle was embedded later.

It means concepts of KRAs & KPIs came into existence with MBO, much before OKRs & BSC.

Although the MBO framework was conceptually strong, it had some serious gaps.

The first and foremost was the Goal Cascading, followed by the challenge of ‘how to ensure that all the employees are aligned to the decisions taken at the top.’

These two challenges were the key reasons people began exploring changes to the MBO framework.

 2. Second Phase of Evolution: OKR [Objectives and Key Results]

In the decade of 70s, a new industry in the form of Information Technology [IT] surfaced. It had its own challenges pertaining to the KRAs & KPIs setting. Andy Grove, the CEO of Intel, made some changes in the MBO to make the concept workable for Intel, and in the process, he rechristened MBO as OKR. With the advancement of Information Technology, the concept of OKR gained momentum in the industry when John Doerr introduced OKRs to Google in the late 1990s.

The OKRs even today have some merits to the IT industry, as this industry works primarily on two objectives - Cost of Project and Project Completion Timeline. For the majority of employees in IT companies, nothing matters more than the delivery within the given timeline and the budget. Teams and employees can easily pick up common KRAs aligned with these two objectives.  But OKRs practically failed to provide ease of setting KRAs for the non-development functions in the IT sector and all other remaining industries.

Even with OKRs, the foremost challenge of Goal Alignment from top to bottom remained unchanged. There was no relief for organizations, and particularly for HR professionals, to ensure ‘proper’ goal alignment. Although people claim that they could cascade down goals, in reality, they are far from achieving proper goal cascading.

Goal Cascading & Goal Alignment remain challenges even to this day.

3. Parallel Evolution: BSC [Balanced Scorecard]

In their efforts to provide a solution for the challenge of achieving ‘effective Goal Alignment’, Robert S Kaplan and David P Norton introduced the framework of Balanced Scorecard in 1992 when they published their article “The Balanced Scorecard -Measures That Drive Performance” in Harvard Business Review. They introduced the concept of ‘Perspectives’. Four in total.

They claimed in their research paper that if the actions of all employees could be aligned to these four perspectives, organizations could easily achieve their pre-defined business goals.

If you carefully study these perspectives, academically at least, they are worth appreciation. The challenge was in their effective understanding by one and all, and its application in the real working scenario. Numerous companies in the world tried, but eventually it was almost impossible for them to continue with the framework. The BSC saw a very sharp downfall in its followers & coverage.

In the absence of better options, organizations keep experimenting with writing KRAs & KPIs under the disguise of OKRs and BSC, trying to get people aligned with business objectives. It’s a classic case of making do because something is better than nothing.

“The Goal Alignment is the point where all PMS fail miserably.”

The situation, instead of improving with time, became worse as different terminologies in the PMS - Goals, Objectives, KPAs, KRAs, and KPIs were being used & misused. The other associated challenges still being countered by organisations and HR equally are ‘How to write KRAs? How many KRAs should be on a goal sheet for an employee? How to use KPIs while setting KRAs?

The most concerning is when you see organisations writing KRAs under KPIs.

Even though there are very well-laid-out academic guidelines as given by many management gurus and business experts, there is still seemingly chaos around when it comes to their use.

Besides these challenges, another major limitation of these frameworks is their inability to fully incorporate the company’s overall Business Strategy. The Business Strategy that goes down till the last person. Critics may argue that these models are built on strategic foundations, but in practice, the strategy rarely cascades down to every individual in a simple, easy‑to‑understand manner.

4. Third Phase of Evolution: SGR [Strategy, Goals & Review]

Any PMS framework, for that matter, at the foundational level must include factors, namely Strategy, Goals, and Assessment of Performance. If any of these three factors is absent or is not supported by the framework, it is likely that the framework adoption will be a challenge and shall not add any value to the organizational goals.

SGR includes every single 'Must-Factor' in its framework; visible to all from the CEO to the last person.

Additionally, with SGR, all organizational constituents, i.e., functional managers, HR professionals & employees are equally relieved from the unwanted supervision at the time of KRA setting. As the name suggests, SGR weaves the aspects of Business Strategy and Goal Alignment perfectly into the desired business fabric in a simple, easy to understand by every kind & type of employee.

More importantly, the concept of SGR is ‘Industry Agnostic’. It can very easily be applied to any size and type of company and at every level of a function.

The principles of the SGR Framework

Across my career, I’ve seen HR leaders and CEOs struggle to rally their entire workforce around a shared purpose during numerous goal‑cascading exercises. When I began looking for a way to achieve genuine goal alignment nearly 25 years ago, it appeared to be a formidable challenge.

Organizations aim for long‑term growth in both revenue and profitability, with every employee contributing from within their functional roles. Because teams come from varied backgrounds, the idea must be presented in a way that is simple and universally understandable.

I eventually arrived at what I named SGR [Strategy, Goals & Review], a realization that made goal alignment so simple that I wonder how we failed to see it for so long.

To reduce the burden on managers and HR during goal-setting, the often‑overlooked concept of KPA is seamlessly integrated into SGR.

At the individual level, KRAs clearly articulate the results an employee is expected to deliver. From an academic standpoint, I define a KRA as “the key results expected in a pre-identified area from a role within a designated timeframe.” Complementing this, KPAs identify the performance areas determined by every functional manager, following different relevant objectives for a function, guided by both required improvements and their alignment with the company’s overarching goals. KPAs can be defined as "Areas within a function that are considered critical for initiating improvement efforts."

The sequence of actions is: "Company Objectives → KPAs → KRAs → Business Drivers → KPIs.

The approach is explained in the illustration below.

Action Point 1: Company Objective: 'Reduce revenue losses due to customer exits by 15% YOY.'

Action Point 2: For the Customer Success function, KPA can be “Reduction in Customer Churning". This KPA is chosen because resolving issues faster has a direct impact on customer satisfaction and, ultimately, retention.

Action Point 3: Individual KRAs derived from this KPA:

KRA 1: Reduce average ticket‑resolution time from 48 hours to 24 hours.

KRA-2: Achieve a minimum customer satisfaction (C-SAT) score of 4.5/5 on resolved tickets.

KRA-3: Ensure follow‑up is completed within 48 hours on all escalated cases.

KPA serves as the simplifying layer that bridges the gap between the company’s objectives and individual KRAs. It translates broad organizational priorities into clear areas of focus, making it easier to define actionable responsibilities for each role.

 

Key Performance Indicators [KPIs]

About KPIs, they are predetermined measurements under Quality, Quantity, Timelines & Asset Utilisation. Revenue & Cost, although they can be considered under quantity & quality as the situation demands, from the ease point of view, they can be added to the list of metrics. With these metrics, analysis becomes easy for organizations to take 'Improvement-centric' actions after every annual performance appraisal cycle.

A 'Mathematical' Approach to Goal Alignment

SGR eliminates the primary barrier to effective goal alignment 'MATHEMATICALLY' by defining well‑articulated business drivers that directly and indirectly support both growth and profitability. All subjectivity has been completely eliminated. The results are:

-          Ease in application

-          Easy to understand by one and all

-          Easily monitored parameters.

You can write to me at rajesh.tripathi@kenboxtech.com to collaborate on a project in your company or visit  www.prajjo.com.

Let us bring much-needed 'Real HR Transformation' together.