Studies have shown that companies that align the goals of individual employees with that of the organisation experience dramatic performance improvements. However, it can be challenging to set performance maximisation targets without experiencing harmful side-effects. Employees may try to achieve performance targets in ways that are not desirable to the organisation and negative attitudes can cause lack of motivation and a decline in company morale. Companies should be cognisant of data manipulation, which is another key concern in setting performance targets. It all starts with establishing the company’s mission and vision before bringing management and the employees into the fold. A company may opt to measure company growth by the number of lives that were impacted by their products, rather than the profits and income that was generated. Employees will feel that they are a part of something bigger than just a profit margin. Cynics might question the efficacy of such an altruistic view, but it does help employees and clients alike to form an emotional connection with the organisation. Mid-level managers who are tasked with negotiating reporting-related politics to senior managers may find motivational strategies more cumbersome. One way to handle that, is to figure out what motivates each individual staff member.
Managers are faced with the mammoth task to establish performance targets and measures that provide direction and purpose to individual employees at different levels and in different parts of an organisation. There are four key areas to consider:
1. OWNERSHIP CULTURE
Performance rewards can cultivate an ownership culture within an organisation. When a certain department achieves a performance target, the organisation could invest in technology or tools that will improve work conditions for them. Considering the financial and non-financial rewards employees will achieve for hitting performance targets should be considered regardless of the selected approach. Likewise, penalties for failing to reach a target are also important.
2. MONITORING PERFORMANCE
Managers must implement an information flow system with adequate performance monitoring and learning support. To do so, managers must differentiate between and implement:
Feedback – a tool that enables employees to undertake corrective actions.
Feedforward – information that enables organisations to learn and generate ideas, make plans and implement strategies. Ensuring that these systems are in place will support communication regarding targets and performance information.
3. PERFORMANCE INFORMATION AND EMPLOYEE EVALUATIONS
The way in which performance information is used is the single most important factor that influences employee behaviour. Managers must consider the behavioural implications of a flexible or rigid performance evaluation. Rigid evaluation styles base evaluation purely on employees’ ability to meet targets. That means that employees who don’t achieve the targets will be given an unfavourable evaluation, irrespective of other factors, which might be considered in a more flexible approach. The flexible approach also uses target information as a performance indicator, but the evaluation is also conscious of other aspects. Managers must consider whether it is worthwhile to use a different evaluation style in order to attain positive outcomes
at the different organisational levels and in different settings. In today’s competitive business climate, it is more important than ever to align organisational goals with employee decisions. Target setting and performance measures will continue to play a fundamental goal in the business world, and managers have complex decisions to make. They must constantly reflect on their approaches and adapt it in order to maximise individual employee and organisational performance.