Wednesday, May 18, 2016

SMART Goal Setting

Recently on here we’ve been talking about figuring out what we want to accomplish in our life and creating the goals and plans that will get us there. Remember how the old saying goes? “Failing to plan is planning to fail”. Creating an achievable plan by setting effective goals is the first and most critical step in our journey to success. But the key is to learn how to set “effective” goals.

Most of the time people set general goals that are too general, intangible, broad, abstract, and only give a long range direction to head in. But there is a type of goal setting that is referred to in the business world as “SMART” goals. This is the type of goal setting that my employer makes us do each year for the coming year.

What are “SMART” goals?

SMART” is an acronym that stands for:
Specific
Measurable
Attainable
Realistic
Timely - short term

First, I want you to should start with identifying a few of the highest level objectives that you would like to accomplish in your life, i.e. Early Retirement. Then we will use SMART goal setting to define the goals that will allow us to get to our overall objectives.

How to establish SMART goals:
  • Specific – goals are concrete, detailed, focused, well-defined, straight-forward and action oriented. When setting goals that are specific, ask:
o   What am I spending my time on? Use action verbs such as develop, execute, conduct, build
o   What % of my time per week/month/ quarter, etc. do I spend on each activity?
o   Why is it important? (rank each item based on its overall importance)
o   Determine how this goal ties back to your lifetime objectives
o   When do I want this to be completed?
o   How am I going to do this?

  • Measurable – goals that are measurable allow you to know when you have, or have not, accomplished them and provide you with hard evidence to support progress against the objective. When establishing measures it is important to set a threshold measure, the expected results for acceptable performance, and also a stretch measure that would indicate above average performance. Stretch measures, by design, will not be easy to achieve but are possible. When establishing measures consider:
o   How will I know when this objective has been achieved? (time commitments)
o   What metrics are available for me to track progress? % complete, net worth of, income of, how much? How many? Where can I get the data to track and measure this metric?
      o   If I am at risk for “missing” a defined measure am I able to apply countermeasures to 
correct? 
  • Achievable - goals are those that you can actually accomplish (something you can really do within the time frame set). Achievable goals need to challenge you but not so much that they are impossible to complete. Achievement of stretch goals should not be automatic and will require above average effort to complete.
  • Realistic - goals are those that you have the ability to obtain the needed resources to accomplish including skills, funding, education, etc. When setting goals that are realistic, ask:
o   Do I currently have the resources to accomplish? If not, how can I obtain them? 
o   Do I need to rearrange my priorities to accomplish?
o   Is information available to track and measure this objective?
  • Time-Oriented - goals are those which have deadlines for completion. The time frames create sufficient urgency and lead to action. The deadlines, just as with overall goals, must be achievable and realistic. For large goals, break them into smaller parts or action plans with completion dates for each element. When setting goals that are time-oriented, ask:
o   What is the earliest yet achievable and realistic date for this objective to be completed?
o   Have I included this date in the statement of the goal?
o   If I am at risk for missing deadlines can I apply countermeasures to get back on-track?

Examples of well written SMART Goals that I currently have:
Do at least 5 pushup everyday this year – stretch 10 push ups
Reach a net worth of $172,500 by 29th birthday - stretch $177,500
Reduce mortgage to $100,000 by 30th birthday – stretch 29.5.
Net income of $52,500 (including 401(k) contribution) while I’m 28 – stretch $55,000
Be able to pay off mortgage by 32nd birthday (i.e. taxable investments > mortgage) – stretch pay off mortgage by 32nd birthday
Net worth of $500,000 by 37th birthday – stretch 35th birthday
Relocate to within 8 hours drive from family by 37th birthday – stretch 35th birthday



Other articles in this series include:
     What Is Your Motivation?
     Finding the time to work on Goals 
     Developing Your Action Outline