Is Your Target Way Off Target? Tips for Setting Meaningful Performance Targets

Measurement and target-setting often go hand in hand.  They don’t have to.  In my work with social enterprises and investors, I find there is a mysterious hurry to set performance targets.  My view is that targets can be a useful tool to foster learning and inspire performance, but too often they are set prematurely, in haste, and aren’t necessarily meaningful to those that define them. 

On the plus side, targets:

  • can be inspiring and focus an organization towards a common goal;
  • are a tool for learning about progress, and can be a jumping off point for discussing what works and doesn’t;
  • can be a useful link between strategy and day-to day operations.

On the negative side, targets:

  • that are irrational may demoralize;
  • may too narrowly defines success in an organization. As a famous physicist once said, “Many of the things you can count, don't count. Many of the things you can't count really count.” (Albert Einstein).
  • May be set without any sense of what is achievable. 

In cases where the achievement of certain targets are tied to rewards or punishment (like in public sector performance budget, funding applications, or even in personal performance reviews), there may be perverse outcomes.   For example,  one such outcome is the “ratchet effect”, where, there is a strong incentive to report persistently low levels of performance, if high achievement merely results in increased expectations.

Still, targets can be a useful tool when applied properly.  Here are a few tips about how to set and use targets:

  1. Make sure your indicator is rock solid. By solid, I mean that you should only set a target around something that is largely within your sphere of control and which is a good indicator for the outcome you seek to achieve.  If you set a target for an output instead of an outcome (for instance, something like # of students instead of an educational achievement score), make sure there is a clear connection between it and desired impact in an impact map (i.e. logic model).
  2. Don’t articulate indicators and targets without articulating what you are trying to achieve as an outcome first. 
  3. Set useful, achievable targets. You should ideally have baseline data that shows what  is normal in your operations. You should also have a strong sense of the potential for change and how that might occur, and set the target in consultation with those who will help achieve it. Make your target inspiring but possible.  If you are just launching your operations, things may be topsy-turvy for a while. Hold off on setting targets until thing settle into a calmer pattern. 
  4. Do not set targets too far in the future, but not too soon either.  What is reasonable may depend on your situation, but in general, the further away in time something is, the less influence you have directly over the outcome.  Conversely, if you set a target to near in the future, you may not have had enough time to effect the change you want and to see the result.
  5. Don’t oversimplify.   Looking at performance relative to a target is only one tool in interpreting success.   Pay attention to other insights that may be there in the data, and those that are held as part of the wisdom and experience of the people in your organization.  Don’t ignore data uncertainty and variability.


blog type: 
Issues & Ideas
performance measurement