From multi-billion dollar corporations to small businesses just starting up, targets are important to every department in every company.
By definition, a target is a goal that a business aims to reach. However, targets do not just narrow the focus onto what we are aiming for – targets help identify shortcomings and the scale of work necessary to bridge the gap.
Targets are necessary to for accountability and to really see whether departments are making gains or not. But how should targets be set?
The four tips below will bring clarity.
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Be specific
The more defined the target is, the clearer that target will be communicated, received and achieved by those it is set for. For example, “increase sales by 5% over the next 12 months” is numerically specific and is a far better target than to just “increase sales”. Being as specific as possible sets a very clear picture of what you are aiming for and focuses attention on hitting goals.
“Increase sales by as much as possible” might seem like a more encouraging goal but in reality that sentence implies that maximum sales must be achieved at all costs – regardless of the detrimental effect it could have on other targets, like customer service or quality-related targets.
Setting a specific, realistic target removes ambiguity and means everyone knows what they are trying to achieve when they get to work in the morning.
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Be realistic
Setting unrealistic targets is a recipe for disaster. You, and anyone working with or for you, should know at least roughly what your capacity is, and what is or isn’t achievable. Targets should always be stretching, and challenging – but not so far that they seem hopeless because that will just be demoralizing.
Being realistic means taking into account the possibilities. You can look to your competitors or industry benchmarks for guidance, but always be aware of your own capacity. That isn’t to say that capacity can’t be increased – in fact hitting a vital target could be a very good reason to increase capacity, by investing in more workers and equipment or by improving the way things are done. But setting targets which can’t (or are highly unlikely to) be achieved at current capacity and without willingness for extra investment in capacity will lead to failure.
The balancing act required here, in order to meet the lofty expectations set out by W. Clement Stone, while remaining realistic, is a big part of what makes a good target-setter!
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Support top-level targets with lower level targets
Targets can be outcome-based (i.e sales/profits) or operational – such as ensuring the quality of your products during manufacture. If your top-level targets are not supported throughout the delivery process, you will be unlikely to achieve them.
To set, and meet a challenging top-level target such as increasing company profits, other targets must be met, right across the delivery chain, from customer satisfaction to product quality to staff engagement. Any inefficiencies in the system will drag down the top-level results, making it harder to hit your target. Also, setting targets for top level outcomes without monitoring the achievement of lower level targets can cause frustration.
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Gamify!
Make targets fun! The idea is to take cues from the compulsive behavior often elicited from people through games. Point scoring, bonus goals and a structured reward system all act as psychological “hooks” which persuade people to engage.
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