Goal-setting guide: how to set, cascade and review goals

Goals are the backbone of performance management: they tell people what good looks like before the work starts, and they give the review something fair to measure. This pillar guide brings together how to write good goals, how to cascade them from company to team to individual, how to keep them current, and how to use them in reviews, with links to the playbook’s deeper guides on each step.

What the evidence says

Goal setting is one of the best-researched areas in work psychology. In their review of 35 years of research, Locke and Latham concluded that specific, difficult goals lead to higher performance than vague “do your best” goals, provided people are committed to them, have the ability to reach them and get feedback on progress (Locke and Latham, 2002, American Psychologist 57(9), 705–717).

The CIPD performance management factsheet summarises the practical implications for HR:

• Objectives work best when they centre on specific outcomes and are stretching.
• Employees must be committed to their objectives, but, contrary to popular opinion, it is not generally better for employees to set their own goals.
• For complex tasks, learning goals or open-ended objectives usually work better than rigid targets.
• For roles that rely heavily on teamwork, objectives focused on behaviours can be more effective, and team goals make sense where responsibility for results is shared.
• Monitoring progress towards objectives is strongly motivational, which is why goals need regular review, not just a year-end score.

SMART and FAST goals

Acas recommends that objectives are fair, reflect the employee’s usual workload, and are specific, measurable, achievable, relevant and time-bound: SMART. Its own example is reducing average response time to customer emails, with a review meeting in three months.

SMART is a good test for an individual goal, but it says little about how goals are used. Donald and Charles Sull, writing in MIT Sloan Management Review (2018), argue that goals should be FAST: embedded in frequent discussions, ambitious in scope, measured by specific metrics and milestones, and transparent for everyone in the organisation to see. Use both: SMART to write each goal, FAST to run the system.

Choose the right type of goal

The examples are illustrative.

A six-step goal-setting process

1. Start with company priorities. Leadership sets three to five priorities for the period, written as outcomes.
2. Set team goals. Each team lead translates the priorities into team goals and shares them openly before individual goals are written.
3. Agree individual goals. Managers and employees agree two to five goals each, mixing types where it fits. The manager proposes; the employee shapes; both commit.
4. Check alignment. HR or team leads check that every team goal links to a priority, and that no important priority has no owner.
5. Review progress regularly. Discuss goals in one-to-ones at least monthly, and reset them when priorities change.
6. Use goals in the review. Rate progress against goals alongside behaviours and skills, using evidence gathered across the period.

The number of priorities and goals is playbook guidance. To practise the process, try the free goal-setting simulation, which cascades goals across a fictional company.

Before and after examples

The examples are illustrative.

Cascading and alignment

Cascading does not mean copying a company goal down every level. It means each team can show how its goals contribute. The CIPD factsheet notes that clarifying how organisational KPIs cascade to employees is vital, because good performance for individuals is often less clear than at company level. For a step-by-step example, read the goal cascade worked example for product squads; for engineering teams using OKRs, see OKR and performance review alignment; and for the common failure modes, read goals that don’t cascade and why leaders can’t see team goals.

Transparency is what makes alignment work in practice. Plum, a London fintech, reports reaching 96% goal alignment, with 588 goals across 87 people, in under four weeks using Revolut People; the details and source links are in the Plum customer story. If you want to see how company, team and individual goals link up in Revolut People, book a 15-minute discovery call.

When priorities change

Annual goals set in January are often out of date by spring. Reset goals when priorities change, record the change and the date, and judge people against the goals that applied at the time. Priorities shift, goals don’t sets out six fixes, and the McKinsey goal-setting summary covers the research on adaptable goals.

Goals in performance reviews

Goals should feed the review, not be the whole review. Rate deliverables against goals, and rate skills and behaviours against a written talent bar by seniority, so that someone who hits targets in a way that damages the team is not rated the same as someone who hits them well. Record goal progress in the performance review template, keep development goals in a separate development plan, and make sure managers can write good goals; the manager training guide starts with exactly that.

Common mistakes

• Too many goals. More than five per person usually means none are a priority.
• Activities instead of outcomes. “Attend training” is a task, not a goal.
• Set and forget. Goals reviewed only at year end do not motivate or guide.
• Rigid targets for complex work. Use learning goals where the route is unclear.
• Hidden goals. If teams cannot see each other’s goals, they cannot align.

FAQ

Setting goals for your next cycle? Book a 15-minute discovery call to talk through your approach.

Sources: Locke, E. A. and Latham, G. P. (2002), Building a practically useful theory of goal setting and task motivation, American Psychologist; CIPD, Performance management factsheet; Acas, Performance management: setting objectives; Sull, D. and Sull, C. (2018), With goals, FAST beats SMART, MIT Sloan Management Review; Revolut People, Plum customer story. Goal counts and examples are playbook guidance and illustrative.

More guides

• Manager training for performance management
• Employee development plans and career conversations
• Goal cascade worked example for product squads
• OKR and performance review alignment for engineering teams
• Performance review checklist for HR managers
• How long should a performance review cycle take?
• Goal-setting guide: set, cascade and review goals
• All guides