Set the right targets

Gathering Performance Data

Setting performance targets is a bit of an art. Choose target-setting strategies that could help inspire employees—without overwhelming them.

Flash version

A manager wants to set an inspiring target for her group's safety record. She notes that the number of safety incidents in her group decreased an average of 2% each quarter over the past several years. So she sets a target that calls for the number of safety incidents to decrease 7% to 8% per quarter for the coming year.

What mistake has she made?

She failed to establish a baseline, or starting point, for her target.

Not the best choice. This manager actually did set a baseline, by examining the changes in performance on safety incidents in her group over the past few years.

The manager did not define a target range for her employees.

Not the best choice. This manager actually did define a target range for her employees—a decrease in safety incidents of 7%-8% per quarter for the coming year.

The target is too ambitious compared to the group's historical performance.

Correct choice. Achieving a decrease in safety incidents of 7%-8% (compared to the historical 2%) is asking too much of this team. When a manager sets overly ambitious targets, employees may conclude that they can't reach them—and so they don't bother trying.

To set realistic targets for your team's sales performance, you decide to benchmark. Which of the following steps would not be part of your benchmarking strategy?

Comparing your team's sales achievements against those of other companies in your industry

Not the best choice. This actually would likely be part of your benchmarking strategy.

Reviewing your team's sales from the previous year, then setting a target that improves on the historical figures

Correct choice. This does not constitute part of a benchmarking strategy. Instead, it is something you would do to establish a baseline, or starting point, for your sales target.

Finding out how other sales teams in your organization have performed

Not the best choice. This actually would likely be part of your benchmarking strategy.

A manager wants to establish a minimum, moderate, and stretch target for his group's performance on a quality control metric. What would you advise him to do to get the best performance on these targets from his employees?

Ensure that the stretch target requires slightly more effort to achieve than the moderate or minimum targets

Not the best choice. To be effective, stretch targets should actually require significant, not slightly more, effort to achieve than the moderate or minimum targets in the specified range.

Let employees know that the "real" goal is the minimum target, so that the moderate and stretch targets will seem more manageable

Not the best choice. In setting minimum, moderate, and stretch targets, it's the moderate point in the range—not the minimum point—that is usually considered the "real" goal. Identifying the minimum point as the "real" goal won't likely motivate employees to strive for performance beyond that point.

Explain to employees how improving product quality will reduce returns, thereby saving money and making more funds available for the company's profit-sharing program

Correct choice. By showing employees how achieving a stretch target on one metric will lead to good performance on another—and generate valuable rewards for employees—managers can inspire their people to strive for the stretch target.

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