It is common for companies to set targets on increased growth and profitability. That does not necessarily make employees happy or more motivated. Increased growth and profits are rather a consequence of other types of clearly defined targets. Increased growth and profits are difficult targets to address unless you know what to do to get there. An employee who goes to work thinking ”Oh man, today I’m really going to create some growth” might run a little faster, but not necessarily in the right direction.
I got some help from my colleague Ellinor to look at how clearly defined targets on individual level, broken down from overall company targets, contribute to business performance. To show that it will pay off to set good, individiual targets. As the graphs above and below show, clearly defined individual targets benefit both growth and profitability.
But, what is a good individual target? When we talk to our customers about setting good targets it is all about setting goals on behavioural level. The targets will then focus on something the employees can work with and change, rather than the outcome you are hoping for, e.g. increased growth or profitability. One example is to set targets for sales representatives on how many calls they should make to prospects, rather than how much sales revenue they should generate. We would certainly hope the calls will lead to increased sales, but by targeting the behaviour rather than the outcome, it will be very clear to the employees what they are expected to do every day. If they do what they should every day, it will create a sense of fulfillment – something we know increase motivation and lead to better performance.
Good individual targets can also be directly derived from overall company targets, through business unit and team level all the way down to individual level. Managers on all levels in the organization need to ask themselves. What should my employees do in order for us to reach our targets? What do they need from me as a manager to be able to do it? What can I, as manager, do to recognize and reward my employees when they do the right things? And what do I need from my manager to be able to do my job in a good way? One of the most powerful means of aligning the organization or the team towards common goals is to recognize and reward desired behaviours. This will reinforce actions and behaviours that will take the team towards its targets in the most efficient way.
If you want to know more of how we can help you with growth and profitability, contact us here.