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The step in your performance measurement process at which you set targets has a critical impact on how sensible and achievable those targets will turn out to be.

Let’s describe the generic process of measuring performance in the following steps:

1. Set the goals you want to achieve.
2. Select the measures to monitor those goals.
3. Report and interpret what the measures are doing.
4. Decide how to respond to each measure.

In which step should targets be set? Most people set them too early. And that’s a problem, because some of the critical information you need to set a meaningful and achievable target doesn’t exist yet.

Should you set targets when you set the goals? No.

At the time we set goals, we rarely know exactly how we’re going to measure them. Targets are for measures, not goals. You can’t set a meaningful target for ‘Increase customer loyalty” but you can set a meaningful target for ‘Average number of times customers return’.

Should you set targets when you select the measures? No.

Even when we have decided on the measure, it’s still only a guessing game to set a target straight away. Too often we don’t yet know where current performance is. If we don’t know where we are starting from, we don’t know how much we can aim for.

Should you set targets when you report the measures? No.

It is important to include targets on the graphs of our performance measures, so we can visually see the gap between as-is performance and to-be performance. But the very first graph we do for a measure reveals to us for the first time its current or as-is performance. We need to see this first graph, showing the measure’s baseline performance, before we can decide where the target could be.

Should you set targets when you respond to the measures? Yes.

The target for a measure can be anywhere on the good side of the measure’s baseline performance. But how far into the good side should it go? That depends on a deliberate assessment of what it will take to shift performance, both in time and effort. We need to scope the constraints holding the baseline where it is, and consider potential solutions to weaken or remove those constraints. Then we can make an informed decision about what the target will be.

So to set meaningful and achievable targets, we need to know exactly what we’re measuring, we need to know the measure’s baseline, and we need to know what we can invest to move that baseline. Without these three inputs, targets are nothing more than tokenistic.

DISCUSSION:

Are your targets tokenistic? What procedure was used to derive them? Do people believe they are meaningful and achievable?