All entries for Tuesday 22 October 2013

October 22, 2013

The problem with targets…

After today's class, an interesting debate occured concerning targets and their use that has led to me developing the idea for this blog. It concerned the use of targets when measuring performance and/or acting as an incentive or goal for employees to reach. Essentially, the first criticism of targets was how to correctly predict them? Because if you are launching a new product, for example, it is almost impossible to accurately predict how many units you may sell. If the target is too low, employees may be demotivated once they have hit their target, and if the target is too high, employees may think they have no chance of reaching it, and may choose to miss the target by 100% as opposed to working hard, missing it by 5% and being in the same position of missing the target.

A good example of the shortcomings of targets could be highlighted by a sales worker. If they have hit their targets for the week, they may become complacent for the rest of the week. If for instance, someone phones them up asking to place an order, the sales person may defer the actual order until next week so it can contribute to their targets for that week, reducing sales for that working week and delaying the time the customer may receive the product. Furthermore, the use of targets, like performance related pay can increase competition within an organisation, which can in turn have an adverse effect on productivity, morale and the overall performance of employees within an organisation.

Therefore, there must be potentially alternative solutions to the use of targets that can still guide and help see whether an organisation is meeting expectations or not. As opposed to frequent targets (e.g. weekly), the use of either periodic targets or/and one flat annual target may help reduce some of the issues discussed above. However, the use of performance reviews of employees may be a better way of measuring employee's work and the organisation's output. This is because data is analysed concerning performance and variables may be understood rather than just offering a statistical insight into productivity with no information as to why targets were or were not met. Therefore, this and the use of key performance indicators is potentially a more suitable and useful measuring tool than just setting targets. More importantly, customer satisfaction feedback also offers more insightful and detailed information on not just whether targets are met, but whether the product or service offered is meeting or exceeding the customer's demands.

Therefore, I feel that the use of targets is not the most successful way of measuring results within an organisation.

October 2013

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