Is It Time To Rethink Your Targets?
When trying to persuade people in your organization to do something important, you could present standard business metrics, KPIs (key performance indicators), or perhaps detailed spreadsheets. After all, setting targets and measuring results is essential in business. But without a realistic vision that reaches peoples’ hearts and sparks their imaginations, they are just numbers.
Leaders recognize that goal setting and measuring results are how business performance is measured. But without a compelling story and believing that the results are attainable, seasoned leaders also know how easily a target can demotivate people, reveal inter-organizational conflict, and discourage people from acting against their self-interest.
At their best, measures and their corresponding targets “should” help clarify priorities and resource allocation, and drive desired behaviors. They are intended to align all stakeholders. Targets must be perceived as achievable, “directionally right,” and reflect the realistic context of internal and external conditions, otherwise, they may very well take the wind out of people’s sails right from the start. At their worst, targets can be divisive. They may create false bravado or, to the contrary, ignore considerable progress.
A big problem with targets, simply put, is they can backfire. Consider this scenario:
A private company CEO meets annually with her executive leadership team (President, CFO, COO, CHRO, Sr. VP Sales and Marketing) to determine goals and targets for the next fiscal year. A KPI (key performance indicator), in this example, is set – 15% net profit. 15% net profit across-the-board, from all four revenue-generating divisions, regardless of product, service, customer mix, and geography.
Division 1 leaders believe they have a good shot if everything goes their way. Division 2 leaders quietly think they can knock it out of the park – they have done so every year! Division 3 has never come close and does not think they will this year either. Division 4 is launching a new product with limited data – they cannot project year-end results with any degree of confidence.
Divisional leaders will assess the playing field, whether they believe in the target, and how they are going to “sell” the KPI to their teams. This is when the “what ifs” and disbeliefs begin.
What if a talent shortage makes it impossible to find key personnel?
What if company resources have been diverted to new product marketing?
What if production lines were re-tooled for improved efficiency in some areas but not all?
Raw material prices hold steady in one division and increase dramatically in another.
A particular division is positioned poorly for geographic growth.
One division’s main contribution is to be a customer feeder for other divisions but their KPIs do not reflect that contribution.
Incentive compensation is not aligned with the KPIs and other indicators conflict.
Mixed support follows. Organizational energy is wasted on debating the targets rather than on innovative ways to meet them.
A target most people do not believe can be achieved is a strain target - it creates stress, anxiety, worry, and even anger. A target people believe they can reach with support and persistent effort is a stretch target - a worthy goal worth working towards.
Effective leaders set targets in a way that reflects the realities, opportunities, challenges, and potential of each division. Their nuanced approach allows for ample time to have those difficult, albeit courageous, conversations up front. They also consider the importance of having qualitative goals in addition to quantitative goals which reflect company values and measure the employee experience.
What would happen if leaders came together and co-created “shared” goals? If they developed targets that were rooted in a shared understanding of reality and did not over-estimate or under-estimate what achieving goals really requires.? What if these goals and targets were not only "handed down,” but embraced by all as stretch targets? What is stopping that from happening in organizations?
Is it time to rethink your targets?
Don’t miss out on the Lead For Good Fall Cohort, comprised of four two-day sessions on Thursdays and Fridays:
October 12 – 13, 2023
November 9 – 10, 2023
January 11 -12, 2024
February 8 – 9, 2024
Sherri McArdle is a wife and mother to adult children and has been a business leader/owner for over 25 years. She is also a Master Certified Coach and Certified Neuro-Transformational™ Coach to leaders and executives across the country, and a trained mediator. Sherri McArdle LLC is a New York State certified woman-owned business enterprise.
