Do you encounter these issues when you set corporate targets?

Corporate targets are frequently used as a motivational technique. Specific and achievable corporate targets can encourage employee to strive for success and drive sustainability performance management.

However, figuring out exactly what the right direction is and the road map to get there has become a real issue for many organisations. There are many barriers preventing the companies from setting the right and effective targets.

Based on a two-year study and interviews with nearly 100 people, the Cranfield School of Management has identified 10 common issues that undermine the effectiveness of corporate targets:

1. Forecast was mainly based on past performance so people don’t try their best, since over achievement will make the following year’s target much harder.
2. Targets were allocated inappropriately across the sales force.
3. Targets were perceived to be too high or too low. Too high de-motivates, leading to non-achievement where as too low means paying bonus for poor performance.
4. Some targets were based on wrong performance measures, which were often referred to as “hitting the target and missing the point”.
5. Targets were entirely based on financial indicators even when non-financial factors such as customer relationships were absolutely critical.
6. The data analysis process on which targets were based was poor and lacked rigour.
7. Targets were not periodically reviewed so sales departments were overtaken by events.
8. Targets were “given” to the sales people and no ownership was created.
9. The interrelation between targets was not considered causing inconsistency.
10. Agreed action plans were the exception and not the norm.

In order to overcome those issues and create more achievable and effective targets, companies must devote a proper amount of time to do that, although it can be difficult in a struggling economy. Need a guide to set targets?  Take a look at “How to set the right performance targets: a ten step target setting tool”– a white paper from CGMA - to discover a powerful target setting tool and learn how it can benefit your company.