Stop Setting Targets for Your Team
In his autobiography, Jack: Straight from the Gut, former GE chairman Jack Welch talked about how he learned to set targets that his people wanted to hit.
He said that every year his CFO would tell him what the sales numbers needed to be to satisfy Wall Street. Welch would write these numbers on a sheet of paper and put it in his back pocket.
Then, he would go to his department heads and ask them what products, patents and sales they could launch or complete that year. For 25 out of 26 years, the dollar amounts provided by the employees were higher than the numbers Welch had gotten from finance.
One of our clients, Lawrence – divisional director of sales - used the same tactic. He asked his salespeople to spell out target numbers for the year and their numbers were also higher than those set by senior management. He actually had to convince the CFO to not present the company numbers, which were lower!
Many businesses fear doing what Jack Welch did: committing to a strategy of ‘bottom up’ target setting. They don’t trust that the numbers will add up to what the company needs to succeed. Ironically, they unwittingly miss the opportunity to achieve outstanding sales performance.
We don’t have a problem with companies having sales targets. We do have a problem with any targeting process that interferes with salespeople performing at their best.
For example, let’s examine the typical annual target-setting ritual. It starts with a sales manager being told by his boss to estimate how much his team can sell in the coming year. He sits down with his reps and asks them to review their accounts, determine how much can be sold in the next year and how many new accounts they think they can win.
But the sales manager also knows that his team is setting him up: lowballing their figures, telling him how tough it is out there, how products are lagging behind the competition, how prices are too high, etc.
The sales manager goes away, ups the numbers to what he thinks is possible, and then meets with his boss or the finance department. He is given figures that make his eyes water. The gap is as wide as the Grand Canyon.
And so the negotiation gets underway. He might get some concessions, but the result is a mammoth target that he has no idea how to hit. Now he’s faced with the Herculean task of selling the target to his team.
Their reaction to the target is much the same as his. Anxiety gives way to stunned silence. The air in the room is thick with impossibility.
Why do companies do this over and over again, when the result is a demotivated salesforce that starts the year believing they can’t win?
Companies set sales targets because they’re nervous that their salespeople are going to take advantage of them. After all, the general belief about salespeople is that, when it comes to target-setting, they are ‘sandbaggers:’ they estimate low and they sell high, doing as little as possible for the most money they can make.
Furthermore, setting targets for people is a risky business because it’s very difficult to give someone a target that they are delighted with and excited to receive. If the target is too high, it instills anxiety and fear; too low and it puts in place an artificial ceiling on performance.
Either way you lose.
Furthermore, companies that set targets may send the wrong messages to the very people who are keeping them in business:
‘You can’t motivate yourself - we have to do it for you.’
‘You won’t be honest with us about what you can achieve.’
‘You won’t perform at your best if we don’t give you something to shoot for.’
‘If we don’t set targets, you won’t sell enough to keep us going.’
By guarding against the downside, companies set themselves up to miss the upside. They don’t engage the natural enthusiasm, the drive, and the self-motivation that salespeople naturally bring to a challenge of their own making.
When target-setting time rolls around again, you might start something radical: do a variation on what Jack did. Before the ‘official’ process starts, say to your team: ‘I don’t know what’s going to come down from up top, but let’s do something that could make us all a lot of money.’
Set up individual conversations:
Talk about how much money they want to make and what they could earn if they really blew the lid off.
Next, ask why it matters to them and keep asking them ‘why’ until they hit their core motivation. This part of the conversation often ends up with a purpose much bigger than the practical need for making more money just to buy more stuff.
Help them work out a plan that gets them to where they want to go.
Ask them what they want you to do – or use your influence to get others to do – to help them achieve their plan.
Then, add up all the sales targets that people have set for themselves. Keep that number in your back pocket.
When finance or your boss provide the new annual targets, do one of two things:
If the company targets are lower than your people are planning to do, smile sweetly and say, ‘We’ll commit to those targets.’
If the company targets are higher, pull out your team’s plans and argue strongly for an adjustment to the targets.
Competitive people love to set targets for themselves a lot more than they enjoy someone telling them what to do. Tie into this energy, work hard to make your compensation plans reward this energy, and remove the obstacle that ‘target-setting’ can place in your team’s path.