Why Set Targets?
Onwards and upwards!
Setting targets, whether in a business or a personal situation is key to ensuring momentum in the desired direction; the right trajectory. Consider this:
- Without something to aim for it is all too easy to drift along
- Without knowing the destination, it is difficult to plan the route
And, as the old saying says goes: “A failure to plan is a plan to fail”. Think about it for a minute. If you don’t know where you’re going, you’ll never get there.
Setting goals and targets will let your employees know where the business is heading, it will hopefully inspire them that they’re on a journey, a path, ensuring everyone is going in the right direction and pulling together as a cohesive team. They will hopefully have bought into the plan and be encouraged that they themselves are influencing its outcome and through their own endeavours will personally benefit.
Of course, in order to set targets it is necessary to understand where you are now – at this moment in time. Evaluating the current situation may feel like you are having to take a step backwards, but if you don’t know where you are now, it will be difficult to figure out a realistic set of achievable targets.
To reach a port, we must sail — Sail, not tie at anchor — Sail, not drift.
Franklin Roosevelt
SETTING TARGETS IS HARD!
Sticking to them is even harder!
We help businesses of all sizes improve performance, set goals and achieve their targets.
Targets Should Be A Negotiation
Targets are perhaps most commonly talked about in a sales environment – weekly/monthly/annual targets are often set for salespeople and they are rewarded with bonuses for hitting or exceeding them.
It’s rare however for such targets to be simply applied by management.
True, senior managers should be aware of what turnover they want to achieve over a specific period and what that translates to in terms of sales. However, allocating a monetary figure to an individual based purely on management requirements is unlikely to be successful.
If an individual hasn’t ‘bought in’ to the overall aims and aspirations of the organisation in which they work – if they don’t understand why a particular target has been set, what their role in achieving that is and what they can realistically expect as a reward – then they are unlikely to be particularly motivated to achieve it.
It’s for these reasons that sales targets are usually arrived at via a process of negotiation: what can a person in that role realistically achieve; is someone in a similar role likely, or able, to achieve more or less; is the goal or target within their reach; will their goals actually assist the company in achieving their goals?
There is little point giving someone a target they are unlikely (for whatever reason) to be able to achieve. It would effectively be setting someone up to fail and that is a guaranteed way to demoralise anyone.
Case Study
A friend once told me of a job he held as a Marketing Manager for an inward investment company or Free Trade Zone in the Middle East. The sales and marketing department was very international with colleagues from the UAE, India, Pakistan, Egypt and the UK. Work had been divvied up so that the Indian and Pakistani staff serviced India and Pakistan, the Egyptian colleague North Africa, and so on.
Being the only European in the department it fell on him to service Europe and North America. This was fine, except the type of businesses wanting to invest varied significantly from most other regions.
Indian businesses, for example, were typically small traders, importers and exporters requiring rarely more than an office, sometimes a small warehouse. European businesses on the other hand were more value-added, manufacturers, invested considerably larger sums and the whole investment process took much longer to conclude.
Hence, European businesses numbered far fewer than Indian, Pakistani and Middle Eastern businesses.
When discussing targets he was told to ‘just name a figure and it doesn’t matter if you don’t make it. We just need a target.’ Goals were measured by the pure number of investors. It was clear these would be few.
Lo and behold, when these unrealistic numbers weren’t achieved he was brought to task which only made him unhappy, caused friction and resentment, and it wasn’t long before he left.
Setting any kind of target for your employees (sales or otherwise) needs to involve negotiation in one form or another. What you are aiming to do is have your teams own their targets by involving them in their creation.
How much more likely is someone to really push to hit their target if they were part of the process of setting it as opposed to being told they have to get to x,y,z?
Understanding why a target has been set helps too; hearing that the company wants to increase production by X units is meaningless in itself but understanding that increasing production by X units will increase profit by £YYY and thus up their bonus/salary by £ZZZ makes dollars and cents and gives them a personal incentive.
When talking with your employees about their targets have in mind what you (the company) need to achieve – what outcomes are you looking for? Take a look at our previous article ‘Short, Medium and Long-Term Goals: Making Business Planning Effective’ where we talked about goal setting in the short, medium and long term. Hopefully you have a plan, know where the company is going and understand what you have to do to get there.
You will need to marry the requirements of the company with the expectations and realities of your employees. If your current workforce is already working at full capacity, is it realistic to expect output to increase even further?
Your ultimate business target can be set as high as you like but always endeavour to break this target down into smaller steps or chunks, each with a definable and achievable KPI (Key Performance Indicator).
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For example, your target is to increase production by 100,000 units within a year; break this down by month – start smaller, say month one target is baseline plus 5,000: month two is month one plus 2,000 and so on, increasing exponentially throughout the year towards the end target.
The stepped approach allows for tweaks and modifications along the way to account for unexpected situations.
When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.
Confucius
What Does the Agreement or Target Look Like?
Once you have taken the necessary action/negotiation to establish employee targets, then what?
Do you communicate said targets verbally?
Are they pinned to a notice board for all to see?
Do you send them an email?
The answer could be – ‘all of the above’ BUT if you want to be able to check progress, monitor KPIs and reward your people appropriately a written agreement containing details of the required targets, dates by which they should be achieved AND what the individual may expect for reaching (or exceeding) their personal targets needs to be created.
Ideally you would also ask your employees to sign the document to indicate that they accept the requirements and understand that failure to comply will mean they don’t receive the bonus/salary increase/extra holiday (or whatever their incentive was).
Regular progress meetings/evaluations/appraisals will be necessary in order that the employee knows they are on track but also to enable YOU to make any necessary adjustments to your plans in order to ensure your overall targets are met. It’s far easier to make minor course corrections along the way rather than discover too late that a different approach could have made a big difference.
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Targets Can be a Motivational Tool
Whilst there’s no doubt that targets are a great business tool – they allow companies to stretch themselves, to grow and develop and even to find new markets – the motivational aspect of targets for employees shouldn’t be overlooked.
Humans, for the most part anyway, are competitive animals – we like to win! Setting someone a target can be used as a motivational tool – especially if there is a reward at the end of it. Using the idea of stepped KPIs means that a reward may not just be the end point – smaller bonuses could be offered along the way for achieving monthly targets.
You could, if you wished, create in-house competition – which team sells most, produces most, increases sales/production by the greatest amount – or whatever KPI works best in your situation.
Be careful though about pitting individuals against each other – not everyone is uber competitive and indeed some people, whilst happy to contribute in a team situation, may feel unable to compete adequately on an individual level. Know your employees and what works best for them.
What Do You Need to Accomplish These Targets?
By this we mean not only the business as a whole, but individual employees.
In order to increase production to reach targets a business may need:
- New equipment
- More staff
- More inputs and raw materials
- Even new premises
To increase turnover a business may need:
- More sales
- More sales staff
- Increased production
- Reduced costs
Much of the above probably require an increase in expenditure – where is that going to come from? Are the increased costs sustainable?
Switching to an employee’s perspective. If you require them to improve their productivity they may need (or in some cases demand):
- Training
- Increased hours
- Increased salary
As a business owner or manager you will need to factor in all of these requirements in order to ensure that your targets work within the SMART methodology.
What is a Target in the Business Environment?
Throughout most of this article we’ve referenced targets in simple monetary terms – increased productivity/sales/turnover because that’s what business owners, shareholders and financial institutions want to see. However, targets may be applied to a whole host of other business activities.
For example, if you regularly send out email marketing, do you keep a tab on open rates, click through rates etc? If you don’t you should! Once you start monitoring these you can set targets to increase the rates and then modify your email strategy to test what works best.
What about:
- Staff retention rates
- Customer service
- Online rankings
- Help desk statistics e.g. number of calls closed
- Event bookings
Whatever can be quantified could have a target applied.
Are Expectations the Same as Targets?
The short answer is NO.
And job descriptions ARE NOT the targets either.
Can you think of a time when you had a conversation with someone, a shareholder perhaps, and they said, ‘they expected X, Y and Z’?
What was your immediate reaction to that? Probably something along the lines of ‘you can expect anything you like’!
Carry this line of thinking onto your employees – do you expect certain things from them? If so, do they know what? This comes back to an issue we discussed about the purpose of a job description – clearly defined job descriptions let your people know what is expected of them within their job role.
Specific targets (be they sales, production, customer service engagement or more) can be negotiated separately as long as they fall within the remit of the job description, i.e. don’t set a sales target for a production operative (and vice versa)!
Targets – a Summary
- A target is something that can be quantified
- A target is something to aim towards
- Without a target momentum can be without direction
- Targets can motivate and inspire – particularly if achieving them results in a reward
- Targets should be aligned with the SMART methodology
- Targets can be used in many areas of business – not just financial
- Setting and achieving targets together can help employees bond – both with each other AND the company
Without clearly defined targets, goals or objectives it is easy for individuals AND businesses to simply drift along.
- Know where you are
- Know where you want to be
- Define the steps
- Assign the necessary resources
- Assign the targets
- Monitor progress
- Make adjustments if necessary
Remember the process is fluid; things can and do change so be prepared to ‘go with the flow’ and make any necessary adjustments whilst still keeping the ultimate target in mind.
You need to realise that you must have something to aim for, something to drive you.
Rohit Sharma
