Although setting explicit targets can be beneficial to a company when it comes to productivity, it can also distort behaviour and damage potential, according to business consultant Jean Gamester.
A relentless focus on business growth by attracting new clientele can distract business bosses from maintaining relationships with existing customers, the director of business consultancy firm Semaphora said.
She added: “They explain huge customer losses by saying that customers can’t be relied upon to stay around. What is missing here is purpose; all the time they ignore customer retention, they will struggle to achieve their purpose.
“What is your organisation’s purpose? Do your targets serve that purpose or distract from it? Are you prepared to take control of these targets?”
Secondly, an unyielding focus on meeting targets can be inherently detrimental to work ethic, Ms Gamester said, adding it could encourage employees to do just enough work to carry them over their personal objectives.
“They also want to make it easier to deliver results in the next period. So the records of achievement don’t reflect what really happened – only what was registered. By holding back registering achievement, they are holding back achieving,” she said.
Setting targets that stretch the workforce and take into account what has been accomplished in the past will go some way to circumventing this situation, according to the consultant.
Ms Gamester added: “Suppose the targets are too stretching, or don’t reward effort or growth – the risk is that teams become despondent and give up. Instead, evaluate what you can do to move closer to the target, to record and celebrate incremental movements.
“Every world record in sport looks unachievable before it’s broken (for example the 4-minute mile). After that lots of people break that barrier because someone has proved that it can be done.”
Business heads should also exercise a degree of tact when creating new targets. Objectives should not foster unhealthy competition, which could lead to employees withholding information, resources and learning in order to trump their colleagues.
Instead, they should reward people and teams for collaborating and sharing knowledge. Ms Gamester said: “If the targets help us, great. If the targets distract then let’s work around them, challenge them and change them.”
Adviser view
Jonathan Rowley, director and IFA at Sheffield-based Hamnett Wealth Management, said: “Part of the reason why banks have launched a financial advisory arm and failed is because their whole business model was set upon attracting new business at the expense of their existing clients. I say this as someone who worked in banking before becoming a financial adviser.
“We would never entertain the idea of offering exclusive deals to new clients. To do so would go against the ethos of our practice, but I would not be surprised if this type of thing was done by other practices. If anything, we would offer discounts to existing clients to get repeat business because it is easier to do due diligence on a client you already have, than it is for a new one.”
