How to Set Performance Goals: A Guide for Department Heads and Executives

Performance goals are the cornerstone of organizational success. For department heads and executives, setting the right goals is about more than just improving output, it's about aligning individual and team efforts with the broader business strategy.

With clear, measurable, time bound goals, leaders can drive accountability, foster growth, and ensure that individuals and teams work toward the organization’s mission.

In this comprehensive guide, you'll learn how to define, implement, and track effective performance goals. We'll explore goal-setting frameworks, provide real-world examples by department, and share strategies to avoid common pitfalls.

Download our Performance Goal Tracker Template to get started.

What Are Performance Goals?

Performance goals are specific objectives set for an individual, a team or organization to achieve within a defined time frame. These goals serve to clarify expectations, align efforts, and measure success.

There are three types of goals to set:

• Individual performance goals: Tied to personal performance and role expectations.
  
• Team performance goals: Tied to the team’s purpose and guide collective efforts toward achieving strategic results.
  
• Organization performance goals: These are broad, measurable objectives that reflect the overall priorities of the business and serve as a roadmap for departments and teams to align their efforts toward shared success. 

Why Performance Goals Matter for Executives and Department Heads

For department heads and executives, performance goals are more than operational metrics, they're strategic levers. When crafted with clarity and intent, these goals become tools for aligning teams, directing resources, and tracking progress toward results that have a direct impact on business objectives. Setting meaningful performance goals fosters a culture of ownership, responsiveness, and continual improvement.

Actionable performance goals should:

• Align with strategic priorities: Ensure every action supports broader company objectives.
  
• Drive accountability: Make responsibilities and expectations explicit.
  
• Support decision-making: Provide data-driven insights for resource allocation, compensation, and succession planning.
  
• Enable agility: Help departments pivot quickly by tracking real-time progress.
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Key Characteristics of Effective Performance Goals

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Well-crafted performance goals typically follow the SMART framework which is used at fortune 500 companies like Apple, Google and Amazon. SMART goals are defined as:

• Specific – The goal is clearly defined with a concrete outcome.
  
• Measurable – The goal is quantifiable or trackable over time.
  
• Achievable – The goal is realistic given the resources and timeframe.
  
• Relevant – The goal is aligned with business strategy and the team’s function.
  
• Time-bound – The goal has a pre-defined deadline.

All performance goals should follow the SMART framework as the bare minimum, but if you want your goals to bring real impactful to the organization and follow your north star metric, the goals you set should also be:

• KPI-aligned: Every performance goal should map to one or more key performance indicators (KPIs) assigned to the person, team or department delivering them to foster ownership and accountability.
  
• Connected to OKRs: Performance goals should equally connect to Objectives and Key Results (OKRs) to ensure strategic alignment with key results.

The main difference between performance goals, KPIs and OKRs is that performance goals are measurable by outputs or deliverables over a short to medium time frame, whereas KPIs are measured relative to trends or targets and are ongoing, and OKRs are measured by outcomes over a specific period.

Difference between performance goals, OKRs and KPIs

Understanding the difference between performance goals, OKRs, and KPIs is key to managing performance. While all three are tools for driving results, they serve distinct purposes. Knowing how they differ, and how they work together, helps organizations create focus, alignment, and accountability at every level.

Performance Goals

Performance goals are the individual or team targets that define what success looks like. They provide focus by outlining the key outcomes and behaviors expected within a set timeframe. Unlike broad company objectives, performance goals are personal and actionable, helping employees grow their skills while contributing to business results.

What are performance goals: Individual or team targets tied to job responsibilities or development.
Purpose of performance goals: Define what success looks like for someone in their role.
Scope of performance goals: Usually personalized, set annually or quarterly.

Examples:

• “Close $2M in new sales this year.”
  
• “Deliver at least 3 client workshops that have a rating of “Excellent”.”

KPIs (Key Performance Indicators)

KPIs are the critical metrics used to track ongoing performance and monitor the health of a business. Unlike short-term goals, KPIs provide continuous visibility into how well strategies and processes are working. By focusing on quantifiable data, such as revenue growth, customer retention, or efficiency, KPIs help leaders make informed decisions and course-correct when needed.

What are KPIs: Metrics that track ongoing business performance.
Purpose of KPIs: Monitor whether we’re healthy and on track.
Scope of KPIs: Continuous measurement, not tied to a single goal cycle.

Examples: 

• Monthly churn rate (%)
• Average deal size ($)
• Time to resolve support tickets (minutes)

OKRs (Objectives & Key Results)

OKRs are a goal-setting framework that connects individual and team efforts to the company’s overall strategy. They consist of ambitious objectives paired with measurable key results, ensuring everyone is aligned on what matters most. OKRs are designed to stretch teams beyond the status quo, fostering focus, alignment, and accountability across the organization.

​​What are OKRs: A structured goal-setting framework that aligns individual/team objectives with company strategy.
Purpose of OKRs: Stretch goals that inspire progress and keep teams aligned.
Scope of OKRs: Company-wide, cascading down to teams/individuals.

Examples:

• Objective: Become the leading SaaS provider in our market.
• Key Results:
  • Increase ARR by 30% by Q4
  • Acquire 50 new enterprise clients
  • Boost NPS to 70+

How to Involve Stakeholders when Setting Performance Goals

Performance goals are most powerful when they’re not created in isolation. Involving stakeholders, whether that’s managers, HR, peers, or even clients. It keeps goals aligned, realistic, and supported. When stakeholders have a voice in the process, employees gain clarity, leaders build trust, and the organization moves forward in sync.

Here’s how to make stakeholder involvement a natural part of setting performance goals:

1. Start With the Big Picture

Before diving into individual targets, revisit the company’s strategic priorities. Stakeholders need to understand the broader vision so that performance goals contribute to something larger than day-to-day tasks. This alignment keeps everyone pulling in the same direction.

2. Bring the Right People to the Table

Performance goals don’t just affect an employee and their manager—they often touch multiple teams. Consider inviting cross-functional leaders, HR, or even external partners to weigh in. A wider perspective helps spot blind spots and ensures goals reflect the realities of how work gets done.

3. Make It a Two-Way Conversation

Instead of handing down goals, facilitate a two-way discussion. Ask stakeholders:

• What outcomes matter most for your team?
• Where do you see opportunities for growth?
• What would success look like in six months?

This collaborative approach not only improves the quality of the goals but also boosts buy-in.

4. Balance Business Impact with Development

Stakeholders often focus on business outcomes, but performance goals should also nurture employee growth. This is important to future proof your operations. A strong balance might look like:

Performance goal: Reduce customer response time by 15% this quarter.

Development goal: Build advanced conflict resolution skills through training and application.

By addressing both, you create goals that are motivating and sustainable. 

5. Define Success Together

Clarity is key. Work with stakeholders to agree on measurable success indicators—what will be tracked, how progress will be reported, and when results will be reviewed. This shared understanding prevents confusion and strengthens accountability.

6. Communicate and Document

Once goals are finalized, share them transparently with all relevant stakeholders. Clear documentation ensures that everyone knows what’s expected and how they can support the employee in achieving success.

7. Keep Stakeholders Engaged

Stakeholder involvement shouldn’t end once the goals are set. Build in regular check-ins, monthly or quarterly, to review progress, adapt to changing priorities, and celebrate wins. This ongoing dialogue keeps goals alive and relevant.

Involving stakeholders in performance goal-setting isn’t just about collaboration. It’s about creating alignment, clarity, and shared ownership. When goals reflect both organizational priorities and individual growth, employees are more motivated, stakeholders are more engaged, and the business is better positioned for long-term success.

Step-by-Step Guide: How to Set Performance Goals

Setting performance goals using the SMART framework works best when your decisions are backed up by data. Data-backed goals make onboarding your teams onto the goals smoother and more meaningful, showing how everyone’s contribution aligns with the company’s goals.

1. Start with strategy

Review your company's strategic priorities. Begin with high-level business goals, such as entering a new market, increasing revenue, or improving retention.

For example: if the company goal is to grow revenue by 20%, a department like marketing might aim to generate 30% more qualified leads if there is capacity and more attractive cost of customer acquisition.

2. Analyze past performance

Before setting new goals, assess historical performance metrics to identify the areas of improvement. Look at quarterly reports, dashboards, or performance reviews to identify trends, bottlenecks, and outliers.

For example: if customer churn increased in Q2, the Customer Success team might focus on increasing renewal rates or implementing early-warning churn notifications.

3. Involve your team

Engage department leads or direct reports in co-creating performance goals. This creates ownership and accountability.

For example: a sales director working with regional managers to set region-specific quotas. The more collaborative the process, the more likely teams will feel invested in the outcomes.

4. Define outcomes

Every goal should have a measurable outcome.This makes performance measurable and the results scalable.

For example: instead of “Improve onboarding,” define it as “Increase onboarding CSAT to 85%.” 

5. Set the right cadence

Choose timelines that make sense for your business rhythm—quarterly, biannual, or yearly. Fast-moving teams like product or sales may set quarterly objectives, while compliance might use annual targets.

For example: Set frequent goal progress check-points to detect issues and change course of action early to hit the goal despite obstacles that may arise.

How To Onboard Your Team Onto New Performance Goals

Onboarding your team onto performance goals starts with clarity. Employees need to see how their goals connect to the bigger picture. Framing goals within the larger mission makes them feel purposeful, not just like tasks to check off. This context builds motivation and helps everyone understand the “why” behind what they’re working toward.

Making goal-setting collaborative and practical deepens your team’s understanding of the goals. Rather than simply handing down targets, involve your team in shaping them. Break goals into smaller milestones so they feel manageable and achievable. To set your team up for success, focus on:

• Clear success metrics: define what “good” looks like.
  
• Support and resources: provide training, tools, or coaching.
  
• Regular check-ins: create space for progress updates and adjustments.
  

Finally, keep goals alive through ongoing conversations and recognition. Instead of revisiting them only at performance reviews, weave them into weekly or monthly discussions. Celebrate wins, big and small, so your team feels valued and energized. When employees see progress being acknowledged and linked to growth, they’re more engaged, more motivated, and more likely to deliver on their performance goals.

How to set and track performance goals in Sama

Sama is a people development platform that helps you set and track performance goals across departments at all levels of seniority. Each team member you add to Sama gets matched with a coach who guides them towards achieving their individual goals.

Here’s how goal tracking works in Sama:

1. Sign up to Sama

Singing up to Sama takes less than 5 minutes: you’ll be asked 5 questions that help Sama match you with a performance coach who has experience in your area of work.

2. Get matched with a coach who focuses on performance

Sama’s AI matching algorithm will take in your personal preference as well as your professional background and match you with a coach that will guide you in setting, tracking and improving your performance goals.

3. Identify performance goals during your first session

After scheduling your first session, your coach will ask you about your goals, help define them, make them SMART, make sure they are aligned with your company’s long term objectives, and segment them into easily trackable check-points that you can then insert directly into Sama.

4. See goal progress of your team on your Sama dashboard

Leaders can see their organization’s goal progress at scale on Sama’s dashboard. The dashboard keeps track of performance improvement as well as goal progress.

Try Sama now →

How to Monitor and Track Performance Goals

1. Use Dashboards and Tools

Centralizing your performance data ensures clarity, transparency, and actionability.

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• Project Management Tools (e.g., Asana, ClickUp, Monday.com): Ideal for tracking task-based goals and initiatives.
  
• Performance Management Systems (e.g., Lattice, 15Five, Leapsome): Track OKRs, facilitate check-ins, and automate review cycles.
  
• CRM & Sales Tools (e.g., Salesforce, HubSpot): Great for tracking pipeline velocity, conversion metrics, and revenue targets.
  
• Engineering Tools (e.g., Jira, Linear): Use for sprint completion rates, bug counts, and cycle times in technical teams.
  
• Data Dashboards (e.g., Tableau, Power BI, Looker): Combine data across platforms for custom executive dashboards and real-time visibility.
  

Tip: Automate reporting as much as possible. Use integrations or APIs to sync your systems and avoid the trap of outdated manual updates.

2. Weekly & Quarterly Reviews

Cadence matters. Choose a rhythm that encourages accountability without causing burnout.

• Weekly Syncs: Review immediate progress, blockers, and priorities. These are great for short-term tactical adjustments.
  
• Monthly Deep Dives: Examine KPI trends, discuss resource needs, and review project health.
  
• Quarterly Business Reviews (QBRs): Tie progress back to OKRs and strategic goals. Use these to celebrate wins, recalibrate targets, and reprioritize.

3. Increase Transparency

The more visible your goals and progress are, the more aligned your teams will be.

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• Goal Dashboards: Make OKRs, KPIs, and status updates visible to leadership and team members.
  
• Cross-Functional Sharing: Encourage departments to present their goals and progress in all-hands or leadership meetings.
  
• Public Progress Tracking: Use leaderboards, project completion rates, or milestone visuals to celebrate movement and build momentum.

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Executive Tip: Avoid hidden work. Integrate progress tracking directly into the tools your teams already use, like Slack updates, automated Jira syncs, or Asana checklists. The easier it is to update, the more likely it is to stay current.

Next Steps:

• Audit your current performance goals.
  
• Set up goal tracking in your tool stack.
  
• Set up goal review calls.
  
• Download our Performance Goal Tracker Template to get started.
  

Need help implementing performance frameworks for your team? Get a performance goals advisor to guide your teams.