Signal Improving organizations use dynamic goals at 46% against 33% of declining ones

Summary

McKinsey finds that organizations whose performance is improving are more likely to set goals dynamically. Among leaders in improving organizations, 46 percent use dynamic goals, compared with 33 percent in organizations where performance is declining. The report argues that annual ratings tied to past outcomes fit poorly with knowledge work that increasingly involves AI. It recommends replacing yearly ratings with goals that are transparent and adjusted as conditions change, backed by managers trained to coach continuously. The gap between the two groups suggests that flexible goals are one of the practices that distinguish organizations on an upward path.