Every business, or organization, has goals. Goals provide a focal point on which all members of the company can rally together. But, poorly managed goals can lead to dysfunction, poor moral, and lower performance.
The target goals are based on business objectives. Depending on the organization, these objects can be set from the top down, or they can be rolled up from the front line of the organization.
The key aspect of the target goals is that they are achievable. Not necessarily easy, but realistically obtainable.
With the right management, they can be motivational to the organization as a whole. Each member can see how their activities contribute to the bigger goal.
Stretch goals are intended to be aspirational targets. While not likely to be hit, they are not completely out of the realm of possibility.
In some organizations, they simpy set a target that is 15%, 25%, or even 50% above the target goals.
Other organizations follow the 90%, 80%, and 50% likelihood model. As can be surmized from the way it’s stated, the organization sets goals and states if they are 90% likely to obtain the gaol, or 80% likely, or 50% likely.
The key to a stretch goal is that everyone understand that they are indeed stretch.
Problem with Managing Stretch Goals
There is a view among some management styles that people will work as hard as they have to hit the goals set. Under this paradigm, the stretch goals are shared with the organization as the target goal.
People need to have successes along with failure to remain motivated. When setting the organizational target goals, it is understood that they may be missed, but those misses are within a reasonable variance. When misses happen, employees need to be able to see how changes in their actions can get them closer to the goal.
Setting the stretch goal as the target goal is problematic.
First, employees will see it and know it is unachievable. This alone is demotivating. As the year proceeds, the goal will be missed by large variances. This is will be a perpetual source of negative tension and moral breaking.
Second, it provides no way for senior management to provide guidence. When it is obviouse that the target is complete unacheivable, there is little managers can say that will be taken seriously by employees. An indication that it is generally understood that the objectives can be hit, management will simple end up telling employees to “we need to just hit the goal.”
Used wisely, goals can be a motivating tool to help organizations acheive their objectives. But, they can also have devistating effects if not managed wisely.