Many businesses get targets and KPIs confused (not just in terms of sales but other key areas of the business).
Mixing targets and KPIs leads to confused messaging to target carrying team members and to confused management. It can also lead to businesses rewarding individuals for achieving KPIs which is a very common but dangerous mistake.
This is the reason we covered this subject in our Business Balls Ups series.
Targets and KPIs must be treated separately.
Targets are achieved as a result of certain activities being completed (assuming both are appropriate and reasonable) and so a business can’t really manage targets. If you manage KPIs, targets will be hit.
Calculating appropriate and reasonable targets is part science and part art, particularly for high growth businesses. An important part of business planning and an integral part of forecasting, incorrectly calculated targets can result in:
- Over payment of commission and bonuses;
- Lack of motivation and disillusionment in target carrying team members
- Team members taking ‘short cuts’ - ignoring operational standards
- Under-provision of resources
- Missed opportunities
We bring years of experience in world leading organisations to help owner managed businesses establish clear, meaningful targets, underpinned by appropriate KPIs and properly understood ratios, metrics and drivers.