Are stretch goals motivational and encouraging or overbearing and disheartening?
That is a common debate and there is no easy answer. But, if you try to incorporate stretch goals, using them with OKRs is a great approach.
In fact, common usage of objectives and key results use stretch goals and OKR scoring to keep people motivated to reach higher goals.
“The sweet spot for OKRs is somewhere in the 60-70% range. Scoring lower may mean the organization is not achieving enough of what it could be.
Scoring higher may mean the aspirational goals are not being set high enough. With Google’s 0.0 – 1.0 scale, the expectation is to get an average of 0.6 to 0.7 across all OKRs.” – re:Work
There is a science to setting stretch goals for OKRs and being too aspirational that obviously comes from adjusting numbers over a series of time for the perfect application.
Most companies who even try end up failing at both the application and the stretch goals they choose, but this is the name of the game, they wouldn’t be a stretch if they were easily achieved.
Setting Stretch Goals
As with any approach to business, you’ll find a suggestion by experts on how to apply their practice to your company, but after testing you’ll see opportunities to improve within your organization. Basically, you’ll make it your own.
This is how it works with stretch goals as well. Here are two approaches we’ve seen:
Major Stretch Goals: Lofty, big and hairy goals that require major changes, such as Southwest reducing gate time to 10 minutes, when industry-wide it was 60 minutes.
This application would be a great example for using OKRs because there would be several key results that would contribute to the objective. However, if there could be an issue with scoring especially if/when the main goal is not achieved.
This stretch goal would also have to be broken down over several quarters as it isn’t likely achievable in 3 months. It’s important to note these are the goals that come to mind when people mention stretch goals, though perception and application vary.
If you are interested in creating your own stretch goals like this, HBR has a helpful flowchart for deciding whether stretch goals are a good fit for you company, check it out:
OKR Accurate Stretch Goals: These goals work perfectly for use with OKRs because you pick an acceptable goal for OKR scoring 60-80% and use the full goal for your a stretch.
For example: If you are comfortable with getting 700 new users in a quarter, then a bigger goal would be 1050 users.
This stretch goal can be derived from a formula of comfortable goal plus 50%. Or 700 + 50%. Again, this is a guideline as you should apply these in a way that motivates and inspires your team.
Are Stretch Goals Bad for Morale?
In a business world that is increasingly becoming more mindful, it’s important to consider the effects of stretch goals on employees.
As with many cases, there is no absolute answer for how employees are motivated or disconcerted, it all comes down to the application of stretch goals.
Management holds the reins, stretch goals can be encouraged and rewarded, or they can be daunting and unachievable.
Consider these scenarios:
- Manager A sets lofty goals and empowers his employees with the resources to get the job done. If tools, extra team members, or more hours are needed, they are provided.
Employees are entrusted to make good decisions and test new ideas. Failure is acceptable but the motivation on the team is such that everyone is expected to have given their all.
- Team B is also given a new major goal but are confined by restrictive budgets, no additional resources, a distant C-suite, and not enough staff. Goals are almost always missed and turn over rates continue to increase.
It’s obvious which one of these teams are more likely to succeed. And chances are, your team or company is somewhere between Manager A and Team B, but this paints a picture of the culture surrounding goals.
In order for your team to meet stretch goals, they must:
- Have the resources available to make it happen.
- Have your trust in their abilities.
- Have your support and encouragement.
- Have a personal investment in reaching the goal, usually covered by competitive salaries, equity, or other benefits that ensure their dedication to the cause of the goal.
Examples of Stretch Goals
Walmart’s environmental plan to go reduce prices for green items. In this example, the goal itself will take years to accomplish. Since more people shop for greener products to benefit the environment Walmart will make changes in the products they use to create items, as well as with the relationships they depend on to provide the items commonly purchased.
Aldi, the grocery store chain, promised to remove artificial ingredients from products. This is another example of a widely known company taking consumers’ wishes to heart. It will be an impressive achievement when they can accomplish this and it will be a major win for health-conscious shoppers.
Elon Musk’s plan to produce 500,000 vehicles in 2018. Elon Musk is known for overarching goals but this is one that the public is highly interested in. Previously only a fraction of this many vehicles has been released each year, but there is high demand to get one. This push will no doubt be labor intensive, as many stretch goals often are.
Of course, your own stretch goals can be more appropriately created based on the size of your company. For instance, you might want to offer remote work options for everyone at your company, offer better benefits for a wellness push, or go for high growth percentages on user signups.
The intriguing aspect of stretch goals is that you can make them as big as you want, or keep them realistic for your team.
Either way, we are interested in hearing if you succeed and what you learn, because no matter which way you go, you’ll have a lot to derive from the results.