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When Being SMART Isn't Very Smart

What Makes a ‘Bad Hire’

At a Roundtable we hosted, the topic of hiring was discussed. Hiring is expensive, training is expensive – and so it is important to be able to avoid making a ‘bad hire’. We discussed several aspects of what that might mean.

  • not able/not willing to perform the job as required

  • quits within a short period of time

  • does not fit in culturally/socially to the group

When evaluating job performance, a common ‘best-practice’ is to set ‘smart’ goals for employees. Smart goals accomplish several really useful things. They set standards for jobs, and establish expectations for the employees. They also communicate to the employee priorities of what the organization considers to be important. Smart goals are by definition, actionable (see below), and numeric (measurable) goals are perceived as being more objective. Because good smart goals require some thought to create, they are perceived as being generally superior.


The S.M.A.R.T. acronym first appeared in the November 1981 issue of Management Review, in the article "There's a S.M.A.R.T. way to write management goals and objectives." by George Doran, Arthur Miller, and James Cunningham. Here is the original acronym, and some of the many other variations that have evolved in the last 36 years.

  • Specific: significant, stretching, stimulating, simple, self owned, strategic, sensible…

  • Measurable: meaningful, motivating, manageable, maintainable…

  • Assignable: achievable, attainable, action-oriented, appropriate, agreed, ambitious, accepted, audacious…

  • Realistic: relevant, rewarding, results-oriented, resourced, recorded, reviewable, robust…

  • Time-Based: time-bound, time-lined, track-able…

For more information on Smart Goals see the Smart Goals Guide

The Problem: SMART Goals Aren't Very Smart

Who doesn’t want to be ‘smart’? However, as Lean and Agile practitioners we must be careful how we treat (especially) numeric targets of any kind. It is useful to reach back to the writings of Deming. When Deming speaks of “management by fear and numbers” he is talking about exactly this: the setting of employees goals. Here is a quick recap of some reasons to be wary of smart goals – especially when tied to individual performance:

Random Variation. We shouldn't penalize (or reward) for individual, random variation (‘the red bead experiment’), as 90% of performance can be explained by the system.

Quotas as Limiters. A target, or quota, Deming argues is limiting on the upside, and indiscriminate on the downside. A small miss is penalized just as much as a large one, and once the target has been reached, there is no incentive to continue performing.

Management By Objectives. Deming attacked the prevalent practices of Peter Drucker’s MBO framework because MBO relies too heavily on converting strategic intent into numerical results. Any narrowly defined result can and will be gamed, and so the strategic intent is inevitably perverted. He famously wrote "Peter Drucker originated Management By Objective. He knew the fallacies of doing it the wrong way but people don’t bother to read Peter Drucker."

Limits of Rationality. The setting of goals assumes that the manager setting the goal understands the overall system well enough to be able to establish the correct goals. Systems are often much too complicated for this to be done with any degree of certainty.

Ability to React. In a world of uncertainty and/or complexity, if goals are set (as they often are) annually or semi-annually, they restrict the ability of the organization to respond to new information, and the organization ends up ‘getting what it asked for (you get what you measure) – instead of what it needs.

The Solution: Just Add Leadership

Deming asks us to “…substitute leadership instead”. We discussed last month the case of an employee that, rather than be fired for poor performance was instead found a role that better suited their capabilities and strengths. Communication of Strategic Intent should be explicit, taking into account that situations and objectives are expected change. Use metrics extensively – the problem occurs when a metric becomes a target.

Our Takeaway

Performance Improvement Plans: Every employee should be on a performance improvement plan, all the time. However, that ‘plan’ shouldn’t include ‘smart’ goals, but should be focused on the needs of the organization, the system, and those of the individual. We should be continuously improving all of our processes and all of our people.


© 2020 by Balanced Hoshin