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There is nothing like the sheer power of numbers to scrub away layers of confusion and contradiction     - Freakonomics
Establishing meaningful performance targets can be difficult, but without them the value of management systems are reduced considerably. Targets represent a powerful expression of the underlying purpose, quality and equity of your measurement system. Therefore, it is critical, business leaders communicate: what they are trying to achieve (purpose); how they intend to achieve it (objectives); why each step builds-up the next (progress), and; what outcome levels are expected (success) before performance targets are officially established.
The difference between goals and performance targets
Too often, business leaders mistake goals for performance targets. Goals generally come from external benchmarks, ranking systems, compliance/regulatory mandates or customers and often represent the final stage of a high-standard. In many cases, present state capability exceeds defined goals, and must be routinely recalibrated to remain competitive. Performance targets, on the other hand, require explicit consideration of internal process maturity, current capability and team readiness. They are dynamic and typically present themselves as the output of equation (i.e. x compared to y = r). Well established targets promote a sustainable growth path because they combine two or more activity streams into one resulting value. It is important to note, targets that are arbitrarily set can drive unhealthy behaviors (e.g. reckless pursuit of short-term gains at the expense of long-term sustainable results) and must be mitigated.
Poorly defined measures manifest in similar ways. Projects and initiatives born to achieve high-level goals, without consideration for current capabilities that result in target setting, usually start fast and stumble quick; and they generally share the following tell-tale signs:
• Targets are not conspicuously attached to a known strategy
• Key targets do not have clearly accountable owners
• Cascaded or supporting targets do not existÂ
• Unable to collect data or data collected is of poor quality
• Multiple false starts and/or significant timeline/scope changes of key initiatives
• Excessive resource and/or champion turnover
• Key projects must "borrow" results from other projects to show momentum
• Old and lengthy incomplete action item logs
• External strategies developed without implementation plans
Rules for setting a winning performance targets
Performance targets are most effective when they are inextricably linked to strategic objectives, and identify associated measures that unambiguously illustrate progression or the lack thereof. The unofficial rules for setting a performance targets include the following:
• Business leaders must know what they are expected to deliver before they become accountable for delivery
• Accountability for achieving a performance target can only be assumed by a person who has the authority, resources and ability to deliver it
• Calculations, measures, indicators and conditions illustrating success must be transparent
• Business leaders must accept their accountability as the person who can, must and will deliver
Consider using an outsider who will "push" the team
An external resource, experienced in developing meaningful measures can facilitate the cultural change necessary to sustain and maximize returns on adopting a meaningful measurement system. A veteran external resource will challenge the team on its assumptions, foster accountability and introduce ways to improve individual, team, and systemic performance.
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