5 Leadership Goal-Setting Tips for a Successful 2018

5 Leadership Goal-Setting Tips for a Successful 2018

Why set goals in these turbulent times?

You can’t underestimate the importance of organizational goals — especially in turbulent times. Goals set and measured are goals achieved and treasured. And achieving meaningful annual goals requires setting a high bar, well in advance. December is a great time to do that.

I know that after a long year, and during the home stretch to the holidays, it’s easy to get stuck in reactive mode, and to tell yourself you’ll think about goals “later.” Don’t! End-of-year/start-of-new-year goals and resolutions are just what the doctor ordered. They refocus us on the big picture, and reconnect us with our ideals. They energize us.

Case in point: Recently, I completed a series of CEO calls focused on goal-setting, as part of my executive coaching practice. The process was as illuminating as it was invigorating — so I wanted to share the exercises we went through together. 

My hope is that they will help you make the most of the season: get out of our default-reactive mode… and raise the bar on your proactive goal-setting mode for 2018. Because, once in place, your short list of business goals and objectives will seriously increase your odds for success by helping you and your team focus on what’s really important — and tune out the rest. 

Setting business goals: Make it real and keep it simple — and achievable

No matter what, or whom, you lead, the first rule in setting goals is to assume that your organization’s existence depends on them. (Because, in a very real way, it does.) The goals you pick will focus your department or organization on where to spend the vast majority of energy, attention, and efforts next year.

This exercise recognizes that your organization is a mosaic of people — and that its success and sense of cohesion are intimately tied to the hearts, minds, and actions of the professionals that choose to come to work every day. Your people.

So you’ll want to set aside some undisturbed time to reflect on what’s most important to you and your employees in the year ahead, and periodically, to revisit those goals. Be thorough and clear, and pick a short list — no more than five key goals for the year ahead. 

Below you’ll find some tips on how to design your goal shortlist for the new year. As you read through them, keep in mind that some of these can take the form of one-on-one interactions, and some will be more appropriate for executive team discussion once you’ve gotten your initial responses.

5 steps to better business goals for 2018

1) Bottom-up and top-down. No one employee — including no leader — has all the answers. So you should not only identify your business goals, but ask the people reporting to you to do the same — and then ask them to repeat the exercise with theirreports, and so on, throughout the organization. This will be essential data for setting goals that are credible and achievable.

2) Clean out your blind spots. Every organization has them — and so does every leader. Here again, you can and should draw on your colleagues and reports for help. The questions below are designed to help you and your employees find the blind spots that can lead your organization or group astray — so you can clean them out and chart a clear course forward: 

  • What have we tried to achieve in 2017 that we must accomplish in 2018, and how will that be rewarding to you and your team?
  • In thinking about our outcomes (results, quality, customer engagement, etc.), what targets are we hitting — and which ones are we missing due to our own actions as executives?
  • What am I not hearing or dealing with as a leader that I need to address?
  • Is there anything I can do to get out of the way of — and, indeed, accelerate — our success?

Related: Why Great Leaders Are Great Talent Scouts

3) Lessons learned this year… to incorporate into next year. The turn of the year offers a perfect opportunity for a business to evaluate its performance, and adjust course. Consider these questions:

  • What new lessons has 2017 taught us — and what lessons from 2017 and prior years have we yet to fully address? Are there endemic issues that need to be looked at?
  • How has our business ecosystem — market, products, customers, providers, partners, costs, competition or regulatory landscape — changed since last year? How well did our strategy track in response — or in leading those changes? And what do we need to adjust in 2018? 
  • How have our SWOT (strengths, weaknesses, opportunities, and threats) evolved in 2017 — and what should that mean for our goals in the new year?
  • What are the most relevant metrics for today? What do success, neutral, or failure look like in 2018? What should our measurable goals be going forward?

4) Make them relevant to your bigger picture. Once you’ve settled on your goals for 2018, ask yourself: how aligned are these goals — and our people — with our organization’s business plan and three-year strategic priorities? With its larger mission and vision? This is a good opportunity to check your direction before plunging into the new year.

5) Communicate! Decide the best way to package your goals, and then communicate them throughout your organization. How will you cascade these messages, and ensure everyone is crystal clear on the goals you’ve worked so hard to design?

When it comes to setting business goals, don’t settle for “doable”

The turn of the year offers a perfect opportunity to set your course for the next 12 months — and beyond. So don’t settle on “doable” for 2018. Use these tips to hone down and choose the right 3-5 goals that will have you feeling like you hit it out of the park where it really matters.


David Peck
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David Peck is a Principal at Goodstone Group, a global executive coaching firm providing seasoned, trained coaches who have themselves been leaders. He's the author of “Beyo ... Click for full bio

Multi-Factor or Not Multi-Factor? That Is the Question

Multi-Factor or Not Multi-Factor? That Is the Question

Written by: Chris Shuba, Helios Quantitative Research, LLC

Let’s pretend you are a US investor that wants to deploy some of your money overseas.  You think international developed market stocks are attractive relative to US stocks, and you also think the US dollar will decline over the period you intend to hold your investment.  Your investment decision is logical to you. But you have choices:  You could a) simply invest in a traditional index like the MSCI EAFE, b) invest in a fund that systematically emphasizes a single factor (like a value fund) that only buys specific stocks related to that factor, or c) invest in a developed fund that blends several factors together, like the JPMorgan Diversified Return International Equity ETF (JPIN).  What is the best choice? 

Investing in a traditional international market capitalization index like the MSCI EAFE is not a bad choice. It has delivered nice returns for a US investor, especially uncorrelated outperformance in the 1970s and 1980s, and helped to diversify a US-only portfolio.

Your second choice is to invest in one particular factor because it makes sense to you.  Sticking with the example of a value strategy, you might believe a fund or index that chooses the cheapest or most attractively valued stocks based on metrics like Price to Earnings (PE) is best.  

You could go find a discretionary portfolio manager who only buys stocks he deems to be cheap.  Typically the concept of “cheap” is based on some absolute metric that the manager has in mind, such as never buying a stock with a PE greater than 15.  If there are not enough stocks that are attractive, he will hold his money in cash until he finds the prudent bargains he seeks.  This prudence also obviously risks possible underperformance from being absent from the market.

The alternative is to buy a value index or fund that systematically only buys the cheapest stocks in a particular investment universe.  So if there are 1000 investable stocks available, the index ONLY buys the cheapest decile of 100 stocks and is always fully invested in the 100 securities that are relatively cheapest.  This is an investment approach that a discretionary manger may disdain.  The discretionary value manager may look at those same 100 stocks and think they are pricey.  But nevertheless, academic research has shown that always being fully invested in the relatively cheapest percentiles of stocks in the US has produced superior returns over many decades. 

Such a portfolio is called a “factor” portfolio.  Why the name?   In the early 1960s, academics introduced the concept of beta and demonstrated that individual US stocks had sensitivities to, and were driven by, movements in the broad market.  In the early 1990s, academic research began to show that other “factors” such as value and size also drove US stock returns.  Since then, several factors have been identified as driving individual stock outperformance: value, size, volatility, momentum and quality.  Stocks that are cheaper, smaller, less volatile, have more positive annual returns and higher profitability have historically outperformed their peers.  It turns out these factors also work internationally.

Related: Who Gets Sick When the U.S. Sneezes?

Of all the factors, value is the factor that has been the best known the longest (even before it was academically identified as a “factor”), thanks to the books of Warren Buffet’s teacher Ben Graham.   And if you look abroad at an array of developed global markets and create a value index and compare it to its simple market capitalization weighted brother, the historic outperformance of value has been stunning.  Until recently.  

While there was some variability by country, on average from the mid-1970s up until 2005 a value factor portfolio in a developed market outperformed its market cap weighted index by about 2% a year.  That’s a lot. By contrast, since 2005, the average developed country value portfolio has underperformed a market cap indexes by about -40 basis points.  Which is the danger of investing in one factor.  It may not always work at every point in time.

So if investing in one factor like value runs the risk of underperforming, how about a multi-factor international developed equity portfolio?

Below is a breakdown of individual factor portfolios’ performance in international developed equity markets since 2005, an equal weighted factor portfolio as well the performance of the MSCI EAFE as our performance reference.  Note that, for the last 13 years, value has been the poorest factor by far, while the others have handily beaten the EAFE.  An equal weighted portfolio of all 5 factors, while not as optimal as some of the individual factor results, beats the EAFE by 1.6% and has an information ratio, or risk adjusted returns that are superior by 37%.  The equal weighted factor portfolio also has the advantage of not having to predict which factor will work when, so even when a factor like value does not beat the market, the other factors can pick up the slack.

SOURCE: MSCI, Data as of January 31, 2018. Past performance is no guarantee of future results. Shown for illustrative purposes only.

The equal weighted factor portfolio has one other advantage over the market cap weighted alternative. Note in the chart below how well the portfolio outperformed in the 2008 crisis, so it tends to do relatively well in highly volatile sell offs.

SOURCE: MSCI, Data as of January 31, 2018. Past performance is no guarantee of future results. Shown for illustrative purposes only.

While it’s not inconceivable that one or two of these factors could erode, or underperform for a stretch, the fact that you have exposure to multiple factors in a portfolio that seems to do especially well in crises suggest the multi-factor blended portfolio remains the most attractive way to invest in developed markets.

So, when asked the question: Multi-factor or not multi-factor?  The data speaks for itself.

Learn more about alternative beta and our ETF capabilities here.

DEFINITIONS: Price to earnings (P/E) ratio:  The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings.

DISCLOSURES: MSCI EAFE Investable Market Index (IMI): The MSCI EAFE Investable Market Index (IMI), is an equity index which captures large, mid and small cap representation across Developed Markets countries* around the world, excluding the US and Canada. The index is based on the MSCI Global Investable Market Indexes (GIMI) Methodology—a comprehensive and consistent approach to index construction that allows for meaningful global views and cross regional comparisons across all market capitalization size, sector and style segments and combinations. This methodology aims to provide exhaustive coverage of the relevant investment opportunity set with a strong emphasis on index liquidity, investability and replicability. The index is reviewed quarterly—in February, May, August and November—with the objective of reflecting change in the underlying equity markets in a timely manner, while limiting undue index turnover. During the May and November semi-annual index reviews, the index is rebalanced and the large, mid and small capitalization cutoff points are recalculated.

Investors should carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full  prospectuses contain this and other information about the ETF. Read the prospectus carefully before investing. Call 1-844-4JPM-ETF or visit ww.jpmorganetfs.com to obtain a prospectus.
J.P. Morgan Asset Management
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See how ETFs differ from other investment vehicles, learn how to evaluate them, and discover how ETFs can be used effectively to achieve a diversity of investment strategies. ... Click for full bio