Establish a baseline
If you're setting targets for a performance metric on which your group or company has already gathered actual data, it can be helpful to use that data to establish a baseline, or starting point, for your target. Many managers use the current period's results or a yearly average to set their targets.
For example, if your group's sales have increased an average of 5% every quarter over the past two years, you might consider setting a target sales increase of 6% or 8% per quarter for the coming year.
For metrics on which no data exist, you might research an industry average and use that as your baseline.
Using past data to set a baseline for your targets can be tricky. After all, how do you decide which number should serve as your reference point?
For example, suppose you want to use sales from the fourth quarter of last year as your baseline. How confident can you be that the fourth-quarter figure represents a useful average of your group's performance? If there were unusual circumstances during that quarter (such as a large number of unfilled sales positions), the figure may not be a good reference point—because sales would be lower than usual.
For these reasons, it's important to carefully evaluate the historical data you're considering using as your target baseline. Look at how the data for a particular period compare with the data from preceding evaluation periods, to see whether there has been an abrupt change from the previous performance. If there has been, you'll want to investigate the reasons for the change by asking your boss and peer managers for insights. And you may want to consider using a different period's data to inform your target.