TRANSCRIPT
You've probably heard the classic maxim "what gets measured gets managed". It is popular because it is true. Which means there is an extra importance on getting the measurements right. Unfortunately, not many managers take enough time when designing and deciding measurements.
One particular area I want to caution you about is in the area of repeated measurements. Repeated measurements are those goals that we use year after year, because they are relevant. Consider revenue goals or sales goals. The big issue with these goals is that we tend to become very formulaic on how we use them. For example, a company may raise the sales goals by 5% every year because it is a growth target and it is a stretch, but not impossible.
However, this becomes a problem when we don't look at the underlying elements of the goals. The question to ask is: has something dramatic or significant happened that should change the goal?
Here is a great example. I worked at a company where the sales managers were given a yearly target that went up at the same rate year after year - just like my example above. Finally, one of the executives questioned the goal. He noticed that our marketing team had been spending a great deal of time improving how they were finding and qualifying candidates. This meant that the sales people were seeing candidates who more directly fit the profile of our desired customer and it was reasonable to expect higher conversion rates and therefore higher sales numbers.
If we would have left it at the standard 5% growth, everyone would have blown their targets out of the water. We ended up radically changing the sales targets based on location, qualified customers, and a few other factors. It required a significant change management and communication program to explain the changes and why they occurred, but it was the right thing to do.
Quick note: this can also mean you need to revise sales targets downward. The key is to base the sales targets so that they align with business goals as well as the reality of the sales situation.
When was the last time you really analyzed the basis of your measurement targets vs. simply keeping them the same or adding a small stretch target? If it has been more than a year, time to revise.