What is the most effective way to set targets for my staff for 2011? Should I do this the first week back in January and should I offer incentives?
Targets and incentives are a great way to focus attention on the right things and encourage the right behaviour.
Even if you have a June year end, it is a great time to recap the past year or half year and recalibrate for the start of a new period. Having your people come back and set refreshed objectives is a great way to start a new calendar year.
The most effective way to set targets is to have well defined objectives in the first place. Start-up must satisfy the test of the multi-letter acronym SAVVY:
Specific: the objective must be specific and measurable. Every objective can be measured by quantity, quality time or cost.
Achievable: be reasonable and make the task reachable.
Value adding: not just the daily grind – something that is make or break for this year.
Very clear: no ambiguity please.
Yours: the objective is understood and owned by the employee.
Once you have SAVVY objectives you are in a position to talk incentives. Incentives should be used where there is an opportunity to exceed expectations.
In this way they do not kick in until some agreed level of performance is achieved. Then they are self-funding, as you have locked in a level of performance and then can fund the incentive out of over-budget performance. Everyone is a winner.
At no stage use the term bonus, as it sets an expectation, whereas if you use “incentive” it is always performance-linked and can be discretionary.
Please do not set incentives at such a level as they are seen as unreachable – it acts as a deterrent rather than an incentive.
You can reset the bar in future years where performance levels are consistently met.
So the answer to your question is clear:
- Set SAVVY objectives.
- Design an incentive for your business and be reasonable.
- Start in January and set it up for your business (full year or half year).
- Be inclusive as you may be surprised what your team will be prepared to go for.
In short, start the year with a refocused and clear vision and engage your team to achieve success.
This is a super opportunity and if you grasp it with both hands you can really set yourself up for success. If in doubt call an advisor who can help.
Merry Christmas and I wish you many opportunities for 2011.