Accountability is critical at every level of every organization, whether you lead a startup, nonprofit, or government agency. In this series, we discuss each element of accountability, why it matters, and ways to build it on your team.
Following our last post, you have hopefully defined what you need to measure. But now that you’re measuring your team’s performance, how will you know what results constitute good, bad, and everything in between?
The answer - performance targets.
What Are Performance Targets?
Performance targets are specified, measurable goals that enable you to tell how well your team is performing at a given point in time. They provide a critical bridge to connect your team’s day-to-day work to the successful long-term results that will fulfill your overall strategy.
Done well, targets equip leaders to identify and address performance issues early on, compare their teams’ performance to that of peer organizations, and motivate teammates by celebrating success or spurring additional action to ensure that targets are met.
Done poorly, targets confuse and frustrate teammates, provide false confidence, and fail to move your organization forward.
Example of a good target: “Reduce our division’s recruiting timeline by 50% over the next year, which will make us faster than the national average for our industry and further our strategy of hiring the best talent.”
Why it’s good: Measurable goal, definite timeline, good reason, clearly furthers overall strategy.
Example of a bad target: “Get this project done fast, but don’t spend too much of our budget on it.”
Why it’s bad: Unclear timeline, unclear budget, and no reasons provided.
How to Set Good Targets
Targets are subject to the “Goldilocks test.” Set them too low, and they can discourage productivity and innovation (e.g., aiming for 1% annual growth while similarly situated peers reach 5% annual growth). Set them too high, and they can set up your team for failure and create a culture of stress and futility (e.g., tripling your team’s output with fewer resources, fewer teammates, and no additional tools or training). Your targets need to be “just right,” situated somewhere in the middle based on your team’s capabilities.
Here are four factors that can help you set the right targets for your team:
1) Past Performance
What it tells you:
Whether your team’s performance is better or worse than it used to be.
What it’s good for:
Identifying whether your team’s performance is improving, declining, or holding steady.
Suggesting effects from circumstances that happened at a given point in time (e.g., pre-pandemic vs. post-pandemic).
NOTE: Be careful not to confuse correlation with causation!
2) Peer Performance
What it tells you:
How your team’s performance compares to that of peer organizations.
What it’s good for:
Identifying your team’s competitive advantages/disadvantages (e.g., why customers would choose your competitor over you, or vice versa).
Pinpointing areas where your team can improve based on what other organizations have accomplished.
3) Customer Demand
What it tells you:
What customers expect from an organization like yours (e.g., speed of application review, customer response time).
Additional/reduced demand for your organization’s products or services.
How much you might need to scale up.
What it’s good for:
Setting growth goals.
Helping your team think above and beyond what you and your peers have already accomplished.
Providing justification for additional funding/resource/support requests that your team needs to serve its customers well.
4) Ideal State (aka Stretch Goals)
What it tells you:
What best-case scenario would look like if everything goes perfectly.
What it’s good for:
Exceeding stakeholder expectations.
Motivating your team to go beyond the normal goals (e.g., tying stretch goals to higher bonuses).
Additional Considerations for Setting Targets
Take a Macro View. After you come up with your initial targets, take a step back and view them in light of your overall strategy. If you and your team accomplish these targets, would it create the results necessary to make your strategy a reality?
If not, you might be measuring the wrong things or setting your targets too low.
Make Sure You Have a Good Reason. You need a good “why” for your targets. If the targets seem arbitrary, it will be hard to convince your team that they should work hard to attain them.
Example of a good reason: A mental health services nonprofit aims to reduce its client intake time by 50% because (1) there’s a much higher demand for their services following the COVID-19 pandemic, (2) similar health services nonprofits have much faster client intake processes, and (3) they’re unable to hire enough workers to continue the process as-is.
Example of a bad reason: A call center team is challenged to decrease call time by 30% because the director two levels up “thinks that 30% is a good number.”
Just Because You Have a Good “Why” Doesn’t Mean Your Team Knows It. Make sure you communicate the target and the underlying reasons for it to the people working to achieve it, and keep the purpose front and center amidst their day-to-work.
Track Your Targets. Set a regular rhythm to analyze your team’s progress towards the targets, explore the context (e.g., “we’re tracking slower than expected due to [XYZ]”), and determine additional actions needed to ensure success (e.g., reallocating resources to help meet the target, adjusting the target due to unforeseen circumstances).
Celebrate the Wins. Teammates get deflated when they work hard to accomplish incredible goals, just to move on to the next project without any notice or recognition. Keep your team motivated by celebrating when you hit targets and highlighting the individual teammates and actions that led to success.
When you equip your team with the right measurements and targets, you can confidently track your team’s progress towards making your strategy a reality. Clear expectations, capabilities, and measurements combine to give your team the direction, skills, tools, and context they need to execute their jobs well.
The last critical elements of accountability, clear feedback and consequences, will give your teammates the coaching, motivation, and transitions they need to continue learning, growing, and furthering your organization’s mission. We will jump into feedback and consequences in the next few posts.
Michael Lanahan serves as Founder and Principal of MBL Ventures, a management consulting firm that helps business, nonprofit, and public sector leaders navigate issues of strategy, structure, and government.
To learn more, please visit www.mblventuresllc.com.
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