Every owner or manager has goals for their business and will usually set targets to achieve them. Properly set targets give meaning and purpose to daily activities and without them there can be a lack of motivation and direction among staff. The challenge is to set goals and targets that are right for your business.
It goes without saying that some goals can be more challenging than others. It is therefore important to carefully assess and address the risks associated with any goals to avoid any negative consequences. If targets are set too high and are not meet, such failure can kill motivation and damage performance. However, if targets are set too low the business may never reach its real potential.
When setting goals and targets it is useful to ask yourself the following questions:
– Has recent performance been strong or weak?
– Does the business have surplus resources?
– How aggressive and difficult is the goal?
– Does the goal require the business to work differently?
In relation to the recent performance of the business, an analogy can be made to sports. Challenging contests are often seen in an entirely different light when a team has been doing well rather than poorly. The same approach applies to business. Staff of an over performing business are more likely to be well positioned to tackle the opportunities and risks when faced with a difficult task.
Often a more critical factor is the availability of resources. Surplus capacity is needed to allow the business to explore new ideas and absorb the inherent set backs arising from difficult goals. It is useful to consider the availability of the following key resources:
– Time and money
– Knowledge and experience of people
– Business equipment
Businesses with strong recent performance and surplus resources are usually in the best position to benefit from more difficult goals. However, such businesses tend to become conservative because they are already successful. The adage “if it is not broken why try to fix it” does not always apply and can be a threat to businesses operating in disruptive industries. A tactic to avoid complacency is to consider the situation in terms of potential losses, asking what could happen if the business stands still. The reason for this is that people typically feel losses much greater than gains.
This does not mean that underperforming or constrained businesses do not need to set goals and targets, quite the opposite. What is needed to turnaround a business are smaller, less difficult goals. This can be achieved by adopting the following strategies:
– Pursue small incremental wins.
– Eliminate inefficiencies.
– Focus on learning and innovation.
When setting goals and targets for your business, it is important to get the balance right between the degree of difficulty and the existing capabilities. Success does not always come from big leaps, sometimes it comes from small, persistent steps.
Hopefully you are addressing these areas well. If you would like help in planning for improvements in your business, please contact David or John on 07 3221 4465.