Are you spending more time trying to reach this year’s objectives or set next year’s objectives? I suppose that depends on how progress is going in meeting this year’s objectives.
Have you ever asked a team to provide stretch objectives? What does that mean anyway? Does that mean you want them to sandbag their regular objectives and then give you a matching set that makes them look like miracle workers? Or does that mean you want them to critically consider the performance they can deliver with the resources you allocate and then develop a set of objectives they cannot reach? Or is there another way?
Leaders who ask their teams for stretch objectives need to provide some direction on what they are asking for. Not doing so leaves room for application of significant creativity in gaming outcomes. For teams working to deliver outcomes having two sets of objectives, often with the same resource allocation, can be frustrating. It is hard enough to hit one target without having another target of greater value.
Asking for a higher benefit for the same resource allocation can lead to decisions that alter the risk profile of the effort. Teams working to stretch an objective may also increase the potential for downside outcomes as they look at ways to reduce expense and in doing so cut corners. Sometimes this may pay-off and sometimes it may not.
Teams may meet their stretch objective by jeopardizing next year’s performance. An example would be a sales team that pulls much of first quarter sales into fourth quarter. They may deliver the stretch objective but in doing so create a sales desert for the first months of the following year.
Executives should be considering risk when they authorize objectives. One way of doing this is to consider what the range of acceptable outcomes would be. Set a downside goal and an upside goal. Ask the team to perform within that range.
There are times when a small increase in resource may yield a disproportionally large increase in benefit. Leaders can set a range for resources. The range may have a set amount of authorized resource with the potential for allocating more resource should the business case merit it. Opportunities may not be apparent until the year progresses. This approach buys time for more information on each opportunity to be developed and applied.
Communicating to the team that additional resource is available if the outcomes seem achievable provides leaders with the option but not the obligation to devote more resource in anticipation of greater returns. This provides leaders with a strategic resource reserve that can be shifted to areas of promise.
Committing reserves to areas showing more potential is preferable to trying to shift resources from one effort to another. Some resources such as specialized skill sets may not be readily transferrable. Labor costs are often the bulk of an effort and redeploying them requires a period of inefficiency associated with the realignment. This puts both the resource donor and resource recipient efforts at risk.
As we approach the end of the year and begin looking ahead, now is the time to consider how you will set objectives for your team. What range of performance are you looking for? Have you covered your downside with the ability to apply resource to high side performance? As a leader, how much will you stretch to reach your goals?
© 2016 Differentiating Strategies, LLC