Performance Measurement

Determine a target range

Many managers set a three-point (minimum, moderate, and "stretch") range for certain targets.

This approach offers several advantages. Minimum targets can feel more manageable to employees and help them see what progress they need to make in order to reach the moderate and stretch goals. Though minimum targets aren't truly subpar, managers don't want employees to stop at achieving these targets. The "real" goal is usually the moderate point in the target range.

The "stretch" point in a target range represents the most ambitious target of all. In determining stretch targets, you need to achieve the delicate balance between challenging your employees and being realistic. A stretch target is intended to "raise the bar" enough to get your employees' competitive juices flowing or to stoke their desire for achievement. And it usually requires significant effort to achieve. But it also must be set at a level at which your direct reports have the skills, knowledge, and company resources (equipment, processes, workspace, time) required to meet the target.

To set stretch targets, make sure you're familiar with your employees' capacities and abilities. How have they reacted in the past when presented with ambitious challenges? Ask yourself how much of a stretch will motivate them to outdo themselves without becoming overwhelmed or demoralized. Also consider whether stretch targets carry the risk of encouraging negative or unethical behavior, such as "gaming" the system to achieve the desired performance.

Finally, show your employees how achieving the stretch target on one metric will lead to outstanding performance on another and generate valuable rewards.