Why are we so obsessed with targets?

I think we should do away with targets. Hey, don’t shoot me. Listen to my complete story.

I think it is our obsession with targets and that too unreasonable targets that are responsible for many problems that a business faces. Some of these are:

(a) Loss of capable employees. For instance, recently Lenova lost a number of its key marketing and sales employees primarily because of unreasonable targets in terms of sales and market share. Quiet some time back Bajaj Auto lost is marketing head for the same reason.

(b) Unethical practices being adopted by employees to somehow reach targets. Companies end up overstating sales, profits or understating expenses. We have all heard of Enron and Sanjay Kumar of Computer Associates. I have a president of the company tell me that his sales people sold timeshare based on the fact that the resort property had two pools whereas it didn’t even have one. But the real issue is to find out why were the sales people doing what they were doing? Simple. Unreasonable high targets.

(c) Focus of the organization shifts from long-term to immediate-term which perpetuates a never ending cycle of schemes/scams to meet targets.

Recently, two sales guys in the media industry came to my office and the converstaion somehow landed on this subject. So when I told them about my thought, they gave me two examples which actually proved my point.

One of them told me that the guy who was handling the property supplement of a leading newspaper was on a high. The property business was roaring in 1994/95. Based on the past 2 years performance, he made business projections that were just astronomical. The management also bought into his story. But guess what, the property market slumped in 2006/07 and all the projections / targets went for a toss. Hey, anybody can extrapolate based on past performance.

The other guy gave the example of a guy who somewhat understood what I am talking about. He was representing the newspaper in Lucknow. Now his major client was Sahara Group. He was a smart fellow. Whenever, he made projections, he separated business from Sahara from the rest of the business. Why? Because he wanted to make sure that his management assessed him on his actions that he was taking to improve the business in general rather than on pure numbers majority of which came from the Sahara Group.

Lets look at Lenova’s case. Even though they were growing faster than the industry, still Lenova’s management was not happy. What do they think? Just by changing executives they can achieve their targets. If such was the case, there would be no company in the world which would not achieve its target because all they would need to do is change their executives. This gives me an idea. We can have a pool of executives who we giving to the various companies on a rotational basis which would help everyone to achieve targets. Lets say, that if two companies were not achieving targets, we would just exchange their executives and targets would be met.

I believe we should assess performance based on the actions that an executive takes rather than purely on achievement of numbers. For more details, please read my article on the subject in my website www.management-talk.com.

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