If there is one topic that is likely to end in a management fight it is the subject of targets and incentives. Opinions vary wildly; there are at least two sides to the argument and a whole host of shades of gray. Even the rich and famous can’t agree.
Nothing can add more power to your life than concentrating all your energies on a limited set of targets ~ Nido Qubein
Whenever there is fear, you will get wrong figures ~ W. Edwards Deming
I don’t care how much power, brilliance or energy you have, if you don’t harness it and focus it on a specific target, and hold it there you’re never going to accomplish as much as your ability warrants. ~Zig Ziglar
A thing worth having is a thing worth cheating for ~ W.C. Fields
So, should you give your employees targets and incentives or not? What is the best thing to do?
The case for targets:
The arguments in favour of target setting are many:
- The process of target setting forces us to think through what is important, and makes us define the direction we are going in.
- We prioritise the use of our resources to make sure we hit our targets.
- Having a target that we are actively striving towards, and that we can see progress against, makes us happy.
- It is possible to apply incentives, rewards and punishments to make sure that people are motivated to hit their targets. That will make us more creative and intelligent.
To put it in a nut shell, targets result in clear objectives and goals. This in turn motivates us and causes us to strive towards greater performance levels. All of that sounds abundantly sensible; we should have more targets because they drive performance.
Personally I am all for targets, I use them myself; I have set myself a target to write 1,400 words on targets tonight. They need to be coherent but other than that it should be possible. It is a SMART target; I just need to keep focused. There are, however, a number of dissenters.
The case against targets:
There are many strongly held positions about why target setting is inappropriate:
- Targets are not always set realistically or from a position of knowledge. Too high and they will be stressful, too low and people become complacent.
- Linked to this is the way the target is derived. Was it imposed or negotiated, for those of you who sit in budget meetings regularly you will have felt both the glee when you negotiate a soft target and the frustration when you get lumped with an unachievable “stretch”. Neither of those does much for performance improvement.
- Targets may be outside people’s capability to deliver. Try as I might I can’t run a 4 minute mile, and it is only getting harder as I get older.
- Just because there is a target that doesn’t mean that anybody has the faintest idea how to reach it.
- Where incentives are high, trying to reach a target can lead to a whole host of dysfunctional activity, from lack of team work and excuse finding to good old-fashioned cheating.
The last point is the real rub. If you give me a target that I can’t achieve and give me an incentive to meet it (either a carrot or a stick) I will cheat. Maybe it is because I have low morale fibre, and maybe I shouldn’t, but I am not alone.
Dirty Rotten Scoundrels
There are many ways that you can meet a target; here are a couple of examples:
Stop the clock!
A bin man arrived at my house last week to pick up an old television. Unfortunately they had got the address wrong; it was my neighbour’s television they wanted. He didn’t pop next door to pick it up; he jumped back in his very large lorry and drove off. His instructions were that if the address was wrong he was to return to the depot, apparently not doing so would have affected his target. By coming back empty-handed he could legitimately claim that he was sent to the wrong place and that shouldn’t be counted against his average time to collect target.
Not picking up the rubbish you were sent to get is fine, provided you are quick about it. Incidentally I saw him again the next day, but next door.
Clean up your figures
Instead of resolving customer issues, prioritise all of them and ignore or close the small ones.
Here is an e-mail that I received whilst I was working for local government:
From: Gary *****
Sent: 21 May 2010 09:35
To: James Lawther
Subject: Fault Call [Scanned]
We are currently changing our helpdesk system and I am going through any old outstanding faults. You logged call ref 323214, regarding a memory problem when copying a chart. Could you let me know if this is still a problem?
IT Support Analyst
Gary was a lovely man, but he was busy closing cases so his performance looked good. Nobody ever came to fix my PC’s memory. They were too busy worrying about their target.
Create a smoke screen
It isn’t just employees; managers cheat every bit as much, though usually in more subtle ways, which makes it more difficult to spot.
Does your management information come from databases? Do you employ analysts to “mine” the data? It’s amazing, you can slice and dice the data any which way you like; changing reports on a daily basis, creating pages and pages of beautiful graphs, comment and analysis, showing what a great job you are doing.
How many capable managers have you seen creating analytical smoke screens? Why do they do it? Because they are scared that they won’t hit their target, they are busy looking for excuses. Unfortunately this behaviour doesn’t drive performance.
Kill your children
Some targets are law. Since 1978 China has had a One Child Policy. The aim of the policy is to reduce population growth in the country. The theory is that this will curtail demand for natural resources and so enable economic development. Adherence to the target is managed by stringent financial penalties for those parents who’d like more than one child. This target setting has, in some ways, been successful. China’s population is now thought to be some 300 to 400 million lower than it would have been without the policy (about a 25% reduction), the jury is out on the implications for economic growth. There have, however, been some unintended consequences:
- Little Emperor Syndrome: spoilt children who lack social skills
- Adopted and orphaned children
The official birth rate ratio in China in the year 2,000 (male to female) was 117:100, compared with a normal expectation of 105:100 There are something like 30 million Chinese men looking for a wife.
Accusing somebody of killing their daughter is extreme, and I have no evidence to back it up, other than the numbers. How else do you meet a one child policy if you desperately want a son?
And the solution is?
Striving for excellence motivates you; striving for perfection is demoralising. ~Harriet Braiker
The target isn’t really the problem; it is the behaviours that surround the target that causes issues. Here are some ideas to change the behaviour.
Use measures not targets
Measuring performance is great, but it isn’t the same as a target. I avidly watch the number of hits I get on my web site, and dream up ways of getting more. If you want we can spend the next 3 hours discussing that measure and all the things I can think of to drive it upwards.
I’d probably give up if I had a target to get as many hits as Google? Wouldn’t you?
Provide a method
Coach me and guide me. If you show me what to do, if you make it easy for me, if you can keep me on track, then I may hit the goal. If you walk off and leave me to fret about it, that is what I will do. Fretting isn’t the same as achieving.
A goal without method is useless ~ W. Edwards Deming
Less is more
There is a quote from a government manual; it states that “it is unlikely that any one manager … would be able to focus on 6 – 10 targets at any one time. However that may still mean that there are hundreds of targets at different levels of any one organisation”
Hundreds of targets! I support Norwich City, they have 11 players and between them they struggle with one goal. Less is most definitely more.
Worry about relative numbers not absolutes
I said I don’t get as many hits as Google, I don’t.
- But I can write a set of articles
- Maybe I can get some Twitter followers
- I could set up some links to other web sites
- I can contribute to some internet forums
I will still never hit Google’s traffic volume, but I can double my own, if I just focus on getting better every day.
Look at the incentives
If there is a big cash incentive for me if I hit the target, I will cheat, and anybody who gets in my way is, well, getting in my way. If however the incentive was smaller, then it becomes about achievement not about the incentive, and if the incentive is for the team not me as an individual…
The way we set our incentives incentivises people. It is just a question of what it incentivises them to do.
Did I write the 1400 words? Yes, but in truth I have just finished, and it is 7:11 the next morning. I couldn’t resist that glass of wine last night.
- Write a list of all the targets that are used in your organisation.
- Go and sit with some of the people who are targeted, watch what they do, do their targets reinforce the correct behaviour?
- Next to each target write an honest assessment of how that target is being met.
- Think through how people’s behaviour could be changed if you modified the way the target was set, by:
- Measuring and discussing performance, not targeting
- Streamlining the number of targets
- Focusing on relative performance
- Changing the incentive
- Make a change to one of your targets. Test it and see what happens.
In the next lesson we will discuss how GE use the “Work Out” methodology to improve their business.
Thank you for reading.
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