Managing People

In a well-known 1992 Harvard Business Review article as well as a book on translating strategy into action, Robert Kaplan and David Norton explained the need for a “balanced scorecard.” They encouraged leaders to develop tools with which to monitor the performance of any organization. The authors explained, “Think of the balanced scorecard as the dials and indicators in an airplane cockpit. For the complex task of navigating and flying an airplane, pilots need detailed information about many aspects of the flight, like fuel level, airspeed, altitude, bearing, etc.”

Goals are effective apparatus—a persuasive system indicating what achievements matter the most to an organization. Well-defined objectives, expressed in terms of specific goals, often direct an organization’s performance, sharpen focus on the execution of the organization’s strategic and operative plans, and boost productivity.

In terms of an individual within a company, goal-setting is especially important as a way to provide ongoing and year-end feedback. You can give employees continuous input on their performance and motivate them by setting and monitoring targets.

Still, there are four things to look out for when setting and managing targets:

• Some organizations get so overwhelmed with setting and meeting targets that managers tend to adopt whatever behaviors necessary to meet the goals set by their superiors.
• Some organizations get carried away and set too many targets. While goals are beneficial, having more of them is not necessarily better. In fact, too many targets can lead to stress, muddled efforts, and organizational atrophy. In this instance, employees feel as if they’re being asked to throw darts in multiple directions all at once. Adding to the confusion, priorities can even conflict with one another—e.g. decreasing production cycle-time while not hiring more workers or buying more equipment. According to a 2011 study by consulting firm Booz (now named Strategy&), 64% of participating global executives reported facing too many conflicting priorities. The celebrated management consultant Peter Drucker famously advised his clients to pursue no more than two priorities at a time:

Develop your priorities and don’t have more than two. I don’t know anybody who can do three things at the same time and do them well. Do one task at a time or two tasks at a time. That’s it. OK, two works better for most. Most people need the change of pace. But, when you are finished with two jobs or reach the point where it’s futile, make the list again. Don’t go back to priority three. At that point, it’s obsolete.

• Sometimes, organizations can be so eager to reach a target that they institute an overly aggressive system (unreasonable “stretch goals“) in an attempt to drive people to heroic levels of performance. Instead, it’s best to have goals that represent what senior management thinks ought to happen, not the contents of their wildest dreams.
• When grading an employee’s performance depends heavily upon that individual meeting his targets (e.g. bonuses promised to salesmen who achieve certain revenue targets,) it can pit employee against employee. This tends to create an unhealthily competitive environment with colleagues scrambling over each other to get to the client or show off their achievements to management. Conflicts and rivalry between employees is one of the dominant criticisms of the individual performance rating system and the forced ranking system that many companies currently practice.

Idea for Impact: In goal-setting, less is more and simple is better. A few well-chosen, consequential targets and goals can sharpen an individual’s or an organization’s focus and boost productivity. Too many targets can lead to stress and even disaster.