Target Setting And Performance Appraisal For Entrepreneurs
by Samson Itoje
Target setting simply implies defining the set of activities or tasks that an individual or a team seeks to achieve within a given time frame.
Defining the tasks and activities the company or organisation seeks to achieve through its employees gives employees a clear vision of the goals of the organisation and establishes a basis for determining the performance of each employee (or team of employees) against the set targets or objectives.
In simple words . . . target setting and employee performance appraisal go hand in hand.
This is the very reason when every well managed national and multinational company takes target setting seriously.
In fact, at the beginning of each year, every standard national and multinational company establishes the targets for the year in very clear terms so that employees have a clear vision of where the company is headed and what is required of each team (or department) and, hence, each employee within those teams.
For example, a company's growth objective may be to achieve a 15 percent growth in sales volume year on year for the next 10 years.
In turn, that broad company-wide objective may mean that operations need to grow its manufacturing volume by 15 percent year on year for the next 10 years.
Achieving 15 percent growth in sales volume year on year over a 10 year period is not an easy feat.
Therefore, R&D must put on its thinking cap and set targets for its product development employees that incorporates deadlines for new product development and existing product improvements that increase market demand and sales.
However, it is not sufficient to just manufacture all of those products. They must all be sold to achieve the company's objective of 15 percent growth in sales volume year on year for the next 10 years.
Who has responsibility to sell all of these products and bring in the cash to the company?
Of course, the sales and marketing department!
Get the point?
Target setting gets the ball rolling and keeps everyone in the company on their toes.
Employees who consistently fail to achieve the company set targets are often shown the way out.
No wonder employees of national and multinational companies work so hard irrespective of whether their CEO is in town or in some remote Caribbean island on vacation!
Target Setting - Use It To Your Advantage!
The discussion above relates to how target setting works in big companies.
The big question is: How do you put target setting to work in your small to medium business?
You do that by implementing the same principles of target setting and performance appraisal in your business, no matter how small your business is.
So, how do you implement this:
1. Create an employee file for each employee you hire
2. Ensure every employee you hire gets a written job description and set targets
3. Have weekly meetings with employees to discuss the expectations for the week and what is required of each employee (Many companies / teams have their team meetings on Monday mornings to set the tone for the week)
4. Give feedback to employees regarding their performance on a regular basis
5. Conduct written performance appraisal of each employee every quarter to keep them on their toes
6. Employee misconduct after one or two corrections should be followed with a written query, which the employee must respond to within 24hrs
7. Fire non-performing employees who consistently do not meet the set targets
Want a real life example of how target setting can affect your productivity?Click here to read this entrepreneur target setting case study
It is important to keep records of performance related infractions by employees. Remember that disgruntled ex-employees can hit your company with a lawsuit even years after they leave your business. So, keep those employee records intact. You will need them for that unexpected lawsuit.NOTE 2:
Entrepreneurs must be ready to take tough decisions if they want to grow their business to be national and multinational companies. Don't be afraid to fire poor performing or toxic employees