Here's how you can effectively set performance goals for employees in small businesses.

World's best companies (Google and Intel) use a strategy called OKR in setting up and achieving their goals. And that's why they are so successful. Here is how you can do this: 1. Ask what your ambitious goals you want to achieve this year/next 3 years/ this quarter/month etc.? The answer generally comes from your mission/vision statements. 2. Make sure you don't have more than 3-4 goals. This increases focus thereby improving the chances of you achieving these goals. 3. Since you want to focus only on 3 goals, make sure they are the most important for your business. If done well, 80% of your problems will be solved. 4. Now, for each Goal, right down 3-4 (max) key results that have to happen for that goal to be achieved.

SMART goals: Specific: Clearly define what needs to be achieved, why, by whom, where, and with what resources. Measurable: Include criteria for tracking progress and success, such as quantities, amounts, or deadlines. Achievable: Ensure goals are challenging but attainable with available resources and skills. Relevant: Align goals with overall business objectives and personal aspirations. They should be worthwhile and purposeful. Time-bound: Set clear deadlines for completion to create urgency and aid planning. Example: "Increase monthly sales of Product A by 15% in 3 months by improving digital marketing strategies."

Anything that gets measured, gets driven. Attention is like sunshine. You give something attention, it grows. I have seen most business owners not having smart goals for themselves. They rather get lost in micro details and day-to-day of business operations. This is dangerous. And building (and) monitoring SMART goals for yourself at the top is the most crucial activity that a business owner must do.

Provide regular feedback on the progress towards the goals. This will help employees stay motivated and make necessary adjustments.

Be flexible and open to adjusting the goals as circumstances change. This will ensure the goals remain relevant and achievable.

We started a new performance review program where team members and managers work together to craft personal development plans for the coming year. These plans empower our team to take charge of their professional growth by identifying skills, tools and approaches that align with their interests and the company's strategic direction. With the help of this program, we foster a culture of learning and development, which also leads to a more skilled and adaptable team, boosting overall efficiency and problem-solving capabilities. Ultimately, this program positions our team for continued success in a competitive market.

Empower employees by involving them in the goal-setting process. This will increase their commitment and ownership towards achieving the goals.