If one topic 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 grey. Even the rich and famous can’t agree.
For:
Nothing can add more power to your life than concentrating all your energies on a limited set of targets
~ Nido Qubein
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
Against:
Whenever there is fear, you will get wrong figures
W. Edwards Deming
A thing worth having is a thing worth cheating for
W.C. Fields
So, should you manage your employees with 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 want to go in.
- We prioritise using our resources to make sure we hit our targets.
- Having a target that we are actively striving towards and can see progress against makes us happy.
- It is possible to apply incentives, rewards and punishments to motivate people to hit their targets.
To put it in a nutshell, well thought through targets motivate us and cause us to strive toward greater performance levels.
That sounds abundantly sensible; we should have more targets because they drive performance. There are, however, many dissenters.
The Case Against Targets:
Many think that target setting is unhelpful:
- Targets are not always realistic or set 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 was derived. Was it imposed or negotiated? If you own a budget, you will have felt the glee of a soft target and the frustration of an unachievable “stretch”. Neither of these 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 more challenging as I get older.
- Where incentives are high, trying to reach a target can lead to many dysfunctional activities, from excuse finding to backstabbing.
- Just setting a target doesn’t mean that anybody has the faintest idea about how to reach it.
A goal without a method is cruel
W. Edwards Deming
Here is the killer issue. I will cheat if I have a target that I can’t achieve and an incentive to hit it (either a carrot or a stick). Maybe it is because I have low morale fibre, and perhaps I shouldn’t, but I am not alone.
How to Cheat
There are many ways that you can meet a target; here are a couple of examples:
Stop the clock!
Last week, a bin man arrived at my house to pick up an old television. Unfortunately, he had got the wrong address; it was my neighbour’s house he wanted. He could have popped next door, but he didn’t. He jumped back in his huge lorry and drove off. His instructions were that he should return to the depot if the address were wrong. Not doing so would have affected his performance incentive. He could reset the clock on his “time to collect” target by coming back empty-handed. It wasn’t his fault he was sent to the wrong place; why should he be penalised?
Not picking up the rubbish you are supposed to collect is fine, provided you can blame somebody else. Incidentally, I saw him pull up next door the following day.
Clean up your figures
Instead of resolving customer issues, prioritise them and ignore or close the small ones.
Here is an e-mail that I received whilst I was working for the local government:
From: Gary *****
Sent: 21 May 2010 09:35
To: James Lawther
Subject: Fault Call [Scanned]
Hi James
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?
Thanks
Gary *****
IT Support Analyst
Ext *****
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 smokescreen
It isn’t just employees that cheat; managers are just as guilty. However, they do it subtly, making cheating much more difficult to spot.
Large organisations employ analysts to create management information. First, they “mine” the data, then they slice and dice it in many ways. They can change reports daily, creating pages and pages of beautiful graphs, comments and analyses, showing what a great job their managers are doing.
How many managers have you seen creating analytical smokescreens? 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 the law. Between 1980 and 2015, China had a One-Child Policy. The policy aimed to reduce population growth in the country. The theory was that this would curtail demand for natural resources and help economic development. The government managed adherence to the target by stringent financial penalties for those parents who had more than one child. This target setting has, in some ways, been successful. China’s population is thought to be some 300 to 400 million lower than it would have been without the policy (a circa 25% reduction). But there have been some unintended consequences:
- Little Emperor Syndrome: spoilt children who lack social skills
- Adopted and orphaned children
- Worst of all, infanticide
The official ratio of male to female children born in China in 2000 was 117:100. The ratio across the rest of the world was 101:100. Consequently, approximately 30 million Chinese men are 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. But how else do you meet a one-child policy if you desperately want a son?
So What is the Solution?
Use measures, not targets
Measuring performance is great, but it isn’t the same as targeting it. The minute you add an incentive or criticise somebody for poor performance is the minute that the behavioural problems start:
- Targets get talked down
- Performance gets talked up
- Figures get fiddled
When a measure becomes a target, it ceases to be a good measure
Charles Goodhart
Reduce the number of measures
I was once passed a government manual; it stated 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
How is one organisation supposed to hit one hundred targets? I support Norwich City, they have 11 players, and they struggle to hit one goal between them. Less is most definitely more.
Worry about relative measures and not absolute numbers
One of the measures I am interested in is traffic volume to this website. There are a whole host of things I could do to improve it:
- I could write a set of articles
- I could get some more Twitter followers
- I could set up some links to other websites
- I could contribute to some internet forums
I will never reach the traffic volume that some sites get, but I can double my own by focusing on getting better every day.
But I’d give up if I had a target to get as many hits as Google? Wouldn’t you?
Striving for excellence motivates you; striving for perfection is demoralising.
Harriet Braiker
Provide a method
If you set a target for somebody, coach them and guide them. If you show them what to do, make it easy for them and keep them on track, they may hit the goal. If you walk off and leave them to fret about it, that is what they will do.
Fretting isn’t the same as achieving. To repeat a quote I used earlier:
A goal without a method is cruel
W. Edwards Deming
If you must use an incentive, change it
If there is a big cash incentive, people will cheat, and anybody who gets in their way is… well… getting in their way. It may not be correct, but it is human nature; if you don’t believe me, just remember Enron or the ##insert latest banking scandal here##. If, however, the incentive is smaller, then it becomes about achievement and less about the incentive.
What would happen if you set the incentive for the team, not the individual?
The question is not, “do incentives motivate people?” The question is, “what do they motivate people to do?”
Homework
- Write a list of all the targets that exist in your organisation.
- Sit with some of the people who have been given those targets and watch what they do. Are their targets promoting the correct behaviour?
- Next to each target, write an honest assessment of how those staff members meet the target.
- Think through how managers could change people’s behaviour if they modified the way the target was set by:
- Measuring and discussing performance, not targeting
- Coaching
- Streamlining the number of targets
- Focusing on relative performance
- Changing the incentive
- Finally, change one of your targets. Test it and see what happens.
In the next lesson, we will discuss how GE uses the “Work Out” methodology to improve its business.
Thank you for reading.
Related Posts:
- Do targets work or not?: The cases for and against setting targets and an attempt to reconcile them.
- What gets measured gets done: Should you measure goals on a micro or macro level?
- What can your mother teach you about incentives?: Targets and incentives go hand in hand. Should they?
More information:
- The puzzle of motivation: Dan Pink’s Ted Talk. An introduction to the book “Drive”.
- Gaming in target world: A study of the impact of target setting in the UK public sector.
Further reading:
In his book “Drive” Dan Pink does an excellent job of explaining what motivates us. Targets and incentives have an impact, but not necessarily the one you’d like. According to the hype, this is a “paradigm-shattering book”. If you only read one book recommendation, make it this one. It will change the way you think about managing people. Have a look at the teaser video if you aren’t sure.
Post Script
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