This is probably a question that should not be missed in any job interview for a managerial position. I do not like too much superlatives in supporting a point of view so I would resist stating that setting appropriate targets is the most important skill of all in a managerial job. However, both my sales and consulting experience convinced me that this skill is seriously overlooked in today’s business (especially sales) world and has one of the highest costs on the success of the organization.

In particular, sales managers consider that they have an easier life especially because of better measurability of the output results they handle (turnover, market share evolution, profitability ratios, managing accounts receivables…). These circumstances gave a lot of room to a macho attitude leading to bullying the subordinates with targets unrealistically high (pretty often the behavior travels through many hierarchical levels) with poor consequences for all parties involved: manager, subordinate and company.

Poor target setting can have harmful consequences:

1. Targets are unrealistically high. Sales people may give up (it happens more often than we like to acknowledge) when they see that they cannot reach the targets. This is a typical lose-lose situation. When I discuss with sales managers most of them agree in principle but very few do in practice.
2. Targets are soft. This is a no brainer: company may lose sales opportunities or pay unusually high for whatsoever performance; people will soon become complacent which is pretty risky for a salesperson.
3. Alternation of the above. It means that sometimes people get unrealistically tough targets and sometimes too soft ones (very often offered… in compensation). Although it may look balanced on average I believe it is as dangerous as any of the above for the simple reason that salespeople will quickly learn that ‘success’ is more connected with luck rather than with sustained competence and effort.

A couple of sales target setting thoughts:

• When all are similar (sales potential, share of market, market structure, effort) but experience (I mean real competence) is different it is expected that the inexperienced will do less. Otherwise how can you tell people that competence matters? And it is not unfair! Quite likely the less competent has a smaller salary too.
• If all similar (all the above and competence too) except that one is new in the territory and one is experienced the new one is expected to provide less at the beginning. Otherwise how can you tell people that personalized customer relationship matters?
• If sales targets are perceived unrealistic by the sales people, they are unrealistic in consequences (see point A above)! Quite frequently I saw targets that they were only perceived as unrealistic while in reality were not. This was because some managers found it easy to say “we do not negotiate targets here” rather than dig deeper and explain each person why the targets are right and, more importantly, how they can exceed them! It also seems easier to manage downwards than to manage upwards.
• If we do the same things (visit same customers, with the same product, with the same service, with the same budgets, marketing tools…) and expect higher results something must be wrong (well except maybe at the beginning of the lifecycle of that product or service) and needs to be faced.
• All motivational tools are likely to fail unless targets are set properly.
• Poor target setting undermines coaching and developing people seriously. If people will not learn that developing themselves can bring more success ($$$ included!) will lose commitment for it. It is impossible to coach someone on the long run just for the sake of developing without getting some degree of success. (To be continued.)

Filed under: Field Force Managers, First Line Managers, My Job, Sales Force Effectiveness, Training & Development, Uncategorized by admin