Creating business targets for the full business
Target setting in business generates groans or delight (OK mostly groans). It is almost like a presidential candidate; you will either like it or dislike the experience.
I expect you know someone who has experienced at least one of the following scenarios.
1) Targets have been imposed on workers without discussion.
2) Targets are set too high and thus create de-motivation and undue stress.
3) An air of tension is generated when a manager and worker negotiate the targets.
4) Data is skewed before, during or after the target is set to emphasize a point of view.
5) Only the simplest measures are taken and more complex matters not targeted or considered.
6) Targets take over the culture and priority of all work reinforcing silo behavior.
So, how do workers, colleagues and managers feel about this process?
If the leadership has gone away for a weekend of blue sky thinking they may return and impose seemingly unreasonable targets upon the actual people who have to perform to those targets.
This unfair approach is a significant reality across many companies and generates higher staff churn rate and lower employee engagement.
Here I will offer an approach to target setting that will cross the bridge to a common understanding, strategy and satisfaction from leaders through to the very people that are expected to deliver the desired target performance level.
Targets in Context and Design:
The design of your target should communicate its intention. There are various formats of design which I share below, be clear to communicate with all stakeholders which design format has been used and applied.
- There are absolute expectations in targets i.e. £30,000 sales target met or not met.
- Other target designs include stretching performance for instance increasing the number of followers on your Social Media platforms. These stretched targets should be seen in the context of a journey and best guess than an absolute expectation.
- Benchmark targets are useful for regulatory or industry standard measures, their use can be as a reference gauge or an absolute measure of performance success.
- Aspirational targets are quite prevalent across industry, these include Zero defects, zero accidents, 100% customer satisfaction, and 100% employee satisfaction.
Even though your target has been designed to the meet the above design and successfully communicated, there still requires the work of language definitions used surrounding the targets.
The targets should have a clear time line and consistency attached.
For instance, if a sales person has a higher performance than their normal monthly target, should they be warned for poor performance if a single month is not to the target?
Was the target therefore a monthly expectation or averaged across the whole year?
The above is a critical element and can change the culture of your business. I have helped sales departments move from tactical sales to a combined tactical and strategic sales force through careful selection of target design.
In one such case, we had 90% of our staff working on tactical daily sales and 10% working on strategic longer term larger sales. This addressed the need for continued cash flow, stock churn but also increased out top line sales over a longer period of time.
In another example, I have seen how Net Working Capital as a target was unfortunately set to be counted on an absolute date.
The date and accounting period chosen was very unfortunate as across the whole supply chain a significant amount of other companies had similar goals. This rendered in an annual shortage of product due to the post reporting period higher demand of product. A better approach in these cases was found with some innovative solutions which JAMSO offered.
Applications of measurement:
The best targets should be designed and measured with clear methods of calculation.
For instance, a warehouse forklift driver will be interested in the number of pallets moved, the production will be interested in the number of widgets moved and the warehouse will be interested in the number of good widgets shipped to customers.
Their mangers may be more interested in variations, peaks, trends, averages of the same results as where further up the business leadership the costs and profitability of these actions are of most interest.
Establishing a clear path and link between each step is a vital part of successful target setting. The use of target road maps in such cases is one example of how we help companies in this area.
Targets Seen Through Visual Performance:
The methods of visual representation today are significantly better than at any other time in history. For presenting targets the most common methods of sharing and presenting are simple performance charts. These often do not allow the best insights.
For optimal and best performing target charts include the below:
· Statistical valid samples
· Appropriate scale and time lines (x/y axis)
· Trends explained
· Exceptions detailed
Creating accountability for targets is critical for their sustained success. Of equal importance is the role of self-created targets and recognizing key elements of responsibility of areas each person can influence. External effects on targets (regulation, natural rare crisis etc.) should be recognized across the whole organization.
The appeal of cheating to gain success with metrics is an ethical line often overlooked by management and leaders and yet is never too far away from our weekly newspaper reads.
From insurance and banking scandals to engineering emissions on cars or slave labor being used to produce our goods, the effects of targets and people’s behavior is significant.
Often the targets themselves are not the core influencers for behavior change but the rewards in gaining target success are. For this to be managed out by a business appropriate and proportional management of reward schemes should be introduced.
Effective Target Setting Tips
Like most bold initiatives effective target setting starts from the top of the organization. Strategic acceptance of target setting design, resource management and expectations need to be defined as cornerstone elements of the business performance management structure.
Systemic approaches to target setting offer clear insights to impactors, risks and understanding of how a specific target links to a wider and more meaningful customer or business objective. This openness of target design generates opportunity for accurate inputs and acceptance of accountability.
Our recommendations are clearly stated in the image below. Feel free to download the image and use as a guide for your own business.
Beyond simply creating Targets, we strongly suggest you research implementation of gamification as a supportive tool.
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