Smart targets may not be so smart
Many of us recently went through the annual ceremony of defining goals and targets for the coming year. It feels good to align all forces toward a common ambition. Often, we want these targets to be smart. Commonly, this is understood to be an acronym for specific, measurable, achievable, relevant and time-bound. It makes targets much more quantifiable, whereas objectives and key responsibilities often are more qualitative. This is what makes us feel especially good: modeling the world into a measurable plan we just have to execute.
As a result, we emphasize specific, measurable and time-bound over the other parameters. It’s also not so easy to determine what’s realistic or what will remain relevant for our business. That’s especially the case when we have to set the targets for the entire year.
I remember once coaching a black belt working on improving the target-setting process. Because of the difficulties mentioned before, she proposed a frequency of four times per year. Management said they didn’t have the time to do it that often. I’ve often wondered which tasks are more important than aligning the entire workforce toward a common ambition, but these managers were much better paid than me, so I’m sure they knew best. I felt my client had a valid point, though, because of the intrinsic uncertainty in the many things we do – insights on what’s achievable and relevant may rapidly change over time.
Targets have a clear role in aligning the workforce with the company’s ambition and objectives. Unfortunately, I often meet people claiming we have to set challenging targets, otherwise we won’t get the best results out of people. It’s a view that people are easily satisfied, need to be pushed out of their comfort zone and won’t grow when not challenged. Many studies, however, show that especially knowledge workers are intrinsically motivated and perform best when given some autonomy and appreciation. A demanding leadership style with unrealistic expectations and excessive reporting works counterproductive, creates a fear of failure and leads to sandbagging, less ownership and a blaming culture in the organization.
Things get even worse. At the end of the year or early the year after, managers have to evaluate the performance of people. I often see companies where one of the key inputs for this evaluation (and often the first thing on the evaluation form) is the fact whether or not the targets have been met. And the ‘smarter’ the targets, the easier the job for the manager to complete the evaluation, especially when employees are expected to deliver the outcomes of performance indicators. Do managers deserve such a high salary for such a simple task?
Of course, people’s performance has nothing to do with meeting the targets, and salary adjustments even less. The salary should reflect a market value and the market value increases when you’ve learned something. Meeting the targets doesn’t necessarily mean you’ve learned something, except for maybe how to better negotiate next year’s targets. It could well be that people who didn’t meet the targets learned even more than those who did and therefore deserve a bigger salary increase.
Some managers claim that real professionals should be able to predict the future and deliver on agreed targets. However, today’s world is full of uncertainty and real professionals are no longer characterized by being able to predict the future, but by being able to quickly adapt to changing conditions. And in doing so, avoid the need for sandbagging and putting unnecessary buffers on committed targets.
Of course, it’s not that easy. The entire circus of target setting starts at the top, often even with shareholders or their representatives in a supervisory board. They’re so far away from the real operation that they can’t think of anything better than to judge performance based on whether or not agreed targets are met. These targets are then cascaded down in the organization, delegating uncertainty to the level it can no longer be controlled other than by adding buffers resulting in lower productivity. This being a common practice doesn’t make it a good practice.
So, the entire idea of defining smart targets seems not to be so smart after all. And maybe, in the end, I may agree with the manager mentioned before that the entire exercise of target setting has little value and is a waste of time. He indeed had better things to do, like spending his time applying his knowledge and expertise to help his people learn and improve their contribution to the company’s objectives.
