Your guide to setting employee performance goals in 2026

A survey by McKinsey found that 72% of employees cited goal-setting as a strong motivator for employee performance; in other words, getting clarity on goals is key for driving both engagement and effort across the organisation. Another study revealed that when employee goals are aligned with both organisational and employee needs, employee performance increases by up to 22%.  

Performance goals should drive engagement, productivity and organisational success. Yet many organisations treat them as a tick-box exercise. Goals get set in January, then sit ignored until the annual review. By then, progress has stalled and employee motivation has faded. 

So, as L&D professionals, what can we do to ensure we set clear performance goals and maintain engagement with them throughout the year? In this post, we’ll guide you on how to set better goals for employees by establishing clear, achievable objectives and tying them with meaningful metrics for both the individual and the organisation.

What are employee performance goals? 

Employee performance goals are clear, trackable targets that outline what success looks like for someone in their role. These goals help connect day-to-day work with broader business priorities, so everyone knows exactly how their individual efforts contribute to company success. Some examples of employee performance goals might include: 

• Skill development – e.g. completing a course in advanced Excel or improving leadership skills. 

• Process improvement – e.g. proposing two new ideas for efficiency improvements each quarter. 

• Productivity improvement – e.g. increasing completed support tickets by 15% each month over the next quarter. 

Employee performance goals should be tailored to each person and their role, so even team members working side by side might have different targets to aim for. The key is to align these personal goals with company objectives, so managers can support growth while ensuring everyone is moving in the same direction. 

How to set employee performance goals 

Setting clear employee performance goals for each employee might seem daunting at first, but it helps to start by focusing on just one or two meaningful objectives per person. This keeps the process manageable so you can build confidence over time. 

Your employees need to have a clear sense of direction, purpose and support in their roles, but not all goals are created equal. To make them clear and effective, it’s important to first understand the types of goals you’re setting and how they relate to someone’s role. 

There are two main types of performance goals: 

• Quantitative goals – these can be tracked using a metric or statistic (e.g. ‘Increase customer satisfaction score from 82% to 90% in Q2’) 

• Qualitative goals – these are based on judgment without any hard data to draw from (e.g. ‘Improve confidence in giving team presentations’) 

Both types of goals have value and some may be better suited to certain roles. For instance, a receptionist’s performance may not be assessed against any specific metrics, but instead factors like professionalism, visitor feedback and friendliness. A salesperson, however, is likely to be assessed on their sales figures, lead conversions and level of activity. 

You’ll want to keep in mind what your business goals are and use them as a guide to shape individual performance goals. This ensures that everyone’s efforts are contributing to bigger-picture success. Let’s say your organisation is aiming to improve customer retention. A customer service agent’s goal might be to increase satisfaction scores by 10% through faster response times and improved resolutions. Meanwhile, a marketing team member might focus on launching a customer loyalty campaign or optimising onboarding emails to reduce early customer churn. These personal goals align clearly with business strategy, which is good news for both employee motivation and business performance.

3 tips on how to set employee performance goals 

Keen to get started? Here are five practical tips that work across various roles and industries.

1. Clarify your business goals first

Before you get started on individual employee performance goals, take a step back and ask yourself: “What is the organisation trying to achieve this year (or this quarter)?” Without having this clear understanding of broader business goals first, individual goals risk becoming unfocused or misaligned. 

Start with your business goals in mind and let these guide what follows. Perhaps your organisation aims to expand into a new market, reduce churn, increase revenue or improve internal processes. Every personal employee goal should contribute towards these higher-level aims in some way.  

Consider using your LMS to map individual goals to company goals using a framework. Totara Perform, for example, allows users to create both quantitative and qualitative Company Goals (which represent the aims of the organisation as a whole and can be assigned to many users), and Personal Goals (specific goals for individual users to achieve) using hierarchical goal frameworks.

2. Use SMART goals and OKR frameworks to stay focused

Two of the most widely used frameworks in the workplace are Objectives and Key Results (OKRs) and SMART goals. Both help you translate bigger goals into actionable, measurable progress. 

Objective Key Results (OKRs) 

OKRs are a goal-setting method that helps teams and individuals define what they want to achieve and how they will measure success. The OKR framework is widely adopted as a way to set strategy and goals over a specified amount of time for individuals and teams. 

They are used as a way to track progress and measure performance at the end of a work period (often quarterly or annually): 

• Objective – a clear statement of what you want to achieve. 

• Key Results – a set of measurable outcomes that indicate progress towards that objective. 

OKRs are typically set over shorter timeframes (often quarterly), which helps teams focus on outcomes that matter now while staying aligned with longer-term priorities. Let’s take a look at an example. 

• Example objective – Design and launch an internal employee learning and development programme for your employees. 

• Example key results: 

• Talk to three other HR Directors/CLOs on how they do internal training and development. 

• Survey 15 team leaders on training needs and gaps. 

• Draft 10 training modules. 

A key benefit of OKRs is transparency: employees know exactly how success is measured, while managers can track progress using clear, objective criteria. 

SMART goals 

SMART goals are a framework you might already be familiar with, especially in employee performance reviews. The acronym stands for Specific, Measurable, Achievable, Relevant and Time-Bound, and it gives managers and employees a shared language for framing workplace performance targets. Here’s how each part works: 

• Specific – describe your goal using a high-level mission statement that covers the 5 Ws: who/what/when/where/which. 

• Measurable – what metrics will you use to determine success? 

• Achievable – set realistic expectations. 

• Relevant – tie the goal to broader business objectives. 
• Time-bound – give it a clear (but realistically achievable) deadline. 

An example of a SMART employee performance goal might be: 

• Specific – Design and launch an internal learning and development system for your employees. 

• Measurable – Improve monthly learner log-ins and course completions by 25%. 

• Achievable – The company achieved a 15% increase in course completions last year by improving its internal employee training, so this goal is realistic. 

• Relevant – Training is important because it enhances customer satisfaction. Improving customer satisfaction and reducing churn is a key priority for the company this year. 

• Time-bound – The new system should be implemented and yield improvements by the 14th of August. 

SMART goals give employees clarity and focus. They also help managers coach toward outcomes rather than activities. When you link them with the right employee performance software, you can go even further by mapping goals to specific learning activities such as courses, coaching or workshops. 

3. Keep employee-manager conversations visible and ongoing

Line managers are the people who can bridge the gap between your learning strategy and the day-to-day work of your staff. However, one of the major challenges when setting performance and learning-based goals is that objectives, outcomes or discussion points are never mentioned again once the conversation is over. When this disconnect happens, goals can often feel like a one-off task rather than a continuous part of personal development. 

This is why it’s so important to create a continuous feedback loop between employees and managers. According to Gallup, employees who receive meaningful feedback frequently are far more likely to be engaged, with 80% reporting full engagement at work after recent feedback. So how can line managers create a performance-oriented culture through regular feedback?

Make feedback frequent and focused

Feedback shouldn’t have to wait until the annual performance review. Quarterly, monthly or even weekly feedback check-ins help people address issues and improve sooner, plus they’ll feel supported along the way.

Set expectations together

When employees are involved in shaping their goals, they become far more invested in them. Line managers can link comments to actionable next steps (e.g. pairing a communication goal with a relevant course or coaching session). Totara Perform, for example, makes this connection visible by linking goals directly to learning activities.

Use data to guide support

Customisable reporting (such as in Totara) allows line managers to see patterns, such as who’s progressing well towards their performance goals, who might need more support and where teams are aligned or lagging. Using data, leaders can tailor support instead of simply guessing what someone needs. 

3 ways an LMS can help with performance management 

The right learning management system can help you link goals, and provide feedback, next steps and data all in one place. Let’s take a look at some of the features you can use to support employee performance goals.

1. Keep goals, check-ins and employee performance reviews all in one place 

One of the biggest advantages of a learning management system with dedicated performance management tools is that every employee’s goals and progress are easy to see and track. 

Totara Perform, part of the Totara suite, is a customisable performance management system that’s designed to fit your approach. You can align employees with company goals through check-ins, feedback and evidence-based reviews, all seamlessly connected to learning activities. 

This visibility keeps employee performance goals top-of-mind throughout the year, encourages ongoing dialogue between employees and line managers and makes it far easier to adapt goals as priorities change.

2. Build a coaching culture with check-ins, reviews and fast feedback 

We’ve already mentioned the importance of line manager and employee conversations. With the right learning management system, you can support a coaching culture that drives employee performance forward. 

According to Ed Parsloe, Chief Executive of The OCM, a coaching culture is about “delivering results, improving performance and making the most of people’s potential. The emphasis is on delivering results and making each other (and the wider organisation) stronger and more capable”. Totara Perform supports this by offering the following: 

• Flexible performance check-ins that you can schedule weekly, monthly or at any cadence that suits your team, ensuring conversations are regular and ongoing. You can configure performance activity questions to suit your approach; choose from text answers, numeric or custom rating scales and set the frequency as you prefer. 

• 360-degree feedback tools that allow input from peers, managers and other key stakeholders on strengths, challenges and development opportunities.  

• Integration with learning pathways allows you to link feedback directly to learning resources and development plans. This helps you turn insights into action by connecting performance conversations with the right training. 

3. Turn insights into action with analytics

An LMS might give you a wealth of performance data at your fingertips, but this is only useful if it helps you decide what to do next. With Totara Perform, you get the following: 

• Detailed reporting that highlights performance trends, skills gaps and any areas needing support so you can address issues early. For example, you can identify your top performers and those who need extra support at a glance. 

• Integration with learning content so you can link performance goals to training, competencies and development plans. 

• Seamless integration with other HR systems for a broader view of organisational capability. 

By integrating Totara Learn and Totara Perform, you connect your organisation’s competency management processes with its learning and development priorities, keeping employee performance goals focused and effective throughout the year. 

Use this guide to cultivate a high-performance culture 

We’ve explored how to set actionable performance goals, why aligning them with business priorities matters, and how frameworks such as SMART goals and OKRs can help you set more effective employee performance goals. We’ve also explored how ongoing conversations, feedback and data-driven support can transform performance from a once-a-year task to a continuous development journey. 

Totara Perform brings all of this together in one powerful platform. If you’re already using Totara Learn as your LMS (or you’re about to start using it), adopting Totara Perform as your performance management system is a no-brainer. The two platforms dovetail perfectly to give you a comprehensive approach to both performance and development within your team.