This article, updated in 2020, describes two different approaches to establishing quality objectives to achieve your business goals.
Goal setting and communicating a vision of the future is not just the responsibility of the company President. Every manager should be setting goals for the teams they manage, and you can set yourself apart from your peers by building a vision with clear benefits to employees, customers, and the bottom line. Establishing quality objectives, and monitoring the progress toward those objectives is one of the greatest tools you can use to achieve your business goals. There are two different approaches to setting quality objectives, and you should use both.
Two Types of Quality Objectives
The most popular type of quality objective is a visionary goal. The phrase that I think captures this idea is the “Big Hairy Audacious Goal” (BHAG). Jim Collins and Jerry Porras coined this phrase in Built to Last. Visionary goals are long-term quality objectives that will require many smaller, coordinated changes intended to “level up” your business.
The second type of quality objective is a short-term goal. Short-term goals are not nearly as “sexy,” but achieving short-term goals builds momentum and creates long-term habits that are crucial to success. The two books that capture this concept best are The Compound Effect by Darren Hardy and The Slight Edge by Jeff Olsen. Both books emphasize the importance of consistency and small improvements to achieve success. The secret to establishing short-term goals is to make sure that your short-term goals are aligned toward helping you achieve long-term goals.
In our quality system procedures, we include a section for monitoring, measurement, and data analysis. For every process in your quality system, you should have at least one defined quality metric that you consistently measure. Everyone involved in that process should be aware of the metric, and data analysis should be shared with everyone in the company. Some of those quality metrics will be more important than others, but everyone must expect to achieve the goals that are set. You can pick anything you want to measure for a process, but for the metric to be used as a quality objective, it must be measurable and consistent with your quality policy. I like to define measurable by saying, “You must be able to graph it.”
6 Steps to Achieving Big Hairy Audacious Goals (BHAG)
Not all quality objectives have to be small, dull, or easy. You are required to establish quality objectives. Both the QSR (21 CFR 820.20, management responsibility) and the ISO Standard (ISO 13485:2016, Clause 5.4.1, require that top management establish quality objectives. These objectives must also be reviewed during management reviews, and they should be established at all levels throughout your company. Some of these objectives will be small, but you should make at least one of your quality objectives big, exciting, and hard to achieve. If you want to set your first BHAG for your team, try following these six steps.
STEP 1: Involve your team in setting quality objectives
Weak managers dictate goals, but leaders get teams involved in the goal-setting process. Getting your team involved gives them ownership of the goal. If you’re unsure of how to get your team involved, you might try a brainstorming session. A good brainstorming session is relatively short (i.e., – < 1 hour). Everyone needs to understand the goal of the brainstorming session: to generate many ideas for a possible BHAG. Everyone needs to understand what a BHAG is. These examples might help:
- Reduce average monthly scrap by 80% with a Pareto Chart
- Reduce the average number of nonconforming material reports by 50%
- Increase the ratio of preventive actions to corrective actions to > 1.00
Finally, negative comments should not be tolerated. Bad, good, and silly ideas should all be encouraged because the purpose of brainstorming is to generate many ideas. After you have 100+ ideas, you and your team can schedule another meeting to select the best goal(s).
STEP 2: Predict the bottom-line impact of quality objectives
Top management’s perception of a BHAG will be directly proportional to the impact on the bottom line. If the impact is small, the “B” in BHAG is a “b.” You and your team should use the potential impact on the bottom line as the first selection criteria for picking the best BHAG from the brainstorming list. The accuracy of these estimates doesn’t matter initially. Still, once you choose the goal, you will need to verify the accuracy of the financial impact and define how that impact will be measured.
STEP 3: Look to the future, but focus on the next milestone
Picking a five and ten-year goals is appropriate for discussions with Human Resources about your career, but companies are measured on quarterly financials. Therefore, you will need to focus on the goals you can achieve in three to six quarters. The number of milestones you set should also be few, and you should focus on one at a time. If the goal is only three quarters away, you might have monthly targets, while longer projects need interim milestones.
STEP 4: Milestone momentum
Longer projects often become delayed because people will procrastinate, and teams will lose momentum. When you break your long-term goals into smaller chunks, everyone can focus on the next milestone and see the progress. Each piece should be a sound stage of the project, and completion of the stage must be clearly defined. To create momentum, you must achieve each milestone–always. The pattern of consistent milestone achievement builds confidence, and your team will gradually develop the habits needed to sustain your progress.
STEP 5: Assign the Skeptic to Report on Quality Objectives
A good statistician can make the numbers look any way you want, but skeptics in other departments (and within your team) will criticize your claims of success. One way to silence the skeptics on your team is to make them responsible for measuring and reporting the team’s progress. This approach ensures that progress reports are conservative and accurate, rather than inflated or unbelievable. Progress should also be reported publicly because public victories are something your team can be proud of.
STEP 6: Promise a Reward for Achieving Quality Objectives
Some managers believe that the reward for hard work should be a paycheck. That’s sort of like telling your children that they get to eat for doing something you’re proud of. Employees are not children, but you are responsible for developing them into more valuable employees so that they can be promoted. If there is no incentive, your team will not be engaged. Therefore, pick a reward that is proportional to the bottom-line impact. Five percent of the bottom-line impact is what I like to target, but you would be amazed at how effective a few small rewards at each milestone can be. If you have trouble getting management approval for rewards, remind your boss of the bottom-line impact and link the rewards closely to the impact.