The science of setting performance targets that drive performance improvement

By Stacey Barr

Some people love targets and many people hate them. They will avoid them, set them low enough to easily hit them, and make excuses when they don’t hit them. Hardly the kind of behaviour that drives performance improvement! And isn’t that why we have targets: to drive improvement of performance? And yet, the outcome we want from targets is often sabotaged by the very act of setting them.

So let’s change the act of setting them. Let’s set them in a way that they inspire and compel people to continually improve performance, without fear of failure or judgement. Here are five steps to make it work:

Step 1: Frame targets as intentions, not expectations

When targets are framed as expectations, they encourage us to hit numbers. We all know that lots of dysfunctional things happen when people feel they are accountable to hit numbers beyond their current capability. Instead, we can frame targets as intentions, and focus accountability on the behaviours of monitoring and improving performance as a whole.

It seems right to aim for zero Workplace Injuries each month, but everyone knows it’s not going to happen. The intention of striving for zero, but focusing on continually improving toward that, is more motivating.

Step 2: Measure the baseline first 

The baseline for a measure or KPI is the current level of performance. Historic data is essential in establishing the baseline. The baseline is not  the current month’s performance; it’s an average of recent performance, to take into account the natural variability of the measure. Knowing the baseline helps us make informed decisions about the size of improvement the target should be set for.

Own Source Revenue can vary as much as 50 per cent so any one month will be meaningless. We need to establish the baseline from several months’ values. XmR charts do this brilliantly.

Step 3: Set targets for capability, not effort

Targets that focus on hitting a number every month encourage behaviours that are usually unsustainable: working faster, longer, harder, or going for quick wins. Back off the effort, and performance declines. Instead targets should focus on process capability. Improve business process design once, and we get a sustainable increase in capability that doesn’t cost any further effort.

We can try hard to hit a particular level of Attendance at Community Events, for each and every event. But we’ll find more leverage by redesigning the event promotion process.

Step 4: Give targets a timeframe

The best way to draw targets on a measure’s graph is as a point above the date by which we want to achieve it. When we set targets for capability (not effort), then we need to allow time between now and that target date, to do cause analysis, to test improvement ideas, and to implement the chosen solution.

Transport Infrastructure Defects won’t drop next month just because we set a target for it. We need time to analyse and improve the transport infrastructure design and maintenance processes, to reduce defects.

Step 5: Set a target trajectory

A target trajectory consists of two or three targets, of increasing difficulty, staged over time. The first is easily achievable, the second a little harder, and the third is a stretch. Sir Isaac Newton said “If I have seen farther than others it is because I have stood on the shoulders of giants.” The idea with target trajectories is the same. We see the way to the next target from the vantage point we achieve through reaching the previous target.

To get buy-in to reduce Water Consumption from its current baseline of 120 mega litres, a target trajectory might be 115 in six months, then 100 in 12 months, and a stretch of 80 in 24 months.

Stacey Barr is one of the world’s leading specialists in business performance measurement and KPIs. She is known for her practicality in solving the most common struggles with measuring what matters. Her book Practical Performance Measurement: Using the PuMP Blueprint for Fast, Easy, and Engaging KPIs is available at all Amazon online stores. For more, visit www.staceybarr.com.