What are some types of internal growth goals companies can set?
Internal growth goals are often overlooked and their importance is frequently underestimated. One of the most important items a business can have is an anonymous employee suggestion box. This box provides a method for employees to communicate their ideas to management, even if they feel uncomfortable doing so in the direct presence of their managers.
Businesses should track not only the number of employee suggestions implemented but also the number of suggestions received. If a business does not receive suggestions, it might indicate that employees feel managers will not value their thoughts.
Other internal growth goals might include the requirement that employees complete a certain number of hours of outside training.
What should managers bear in mind when setting goals for employees?
The key adage to remember is, ‘What gets measured gets done.’ Goal-setting procedures often provide employees with a good set of key metrics they can try to achieve. However, these goals should be balanced across several dimensions to ensure that the process isn’t subverted by the actions of employees.
For instance, some plant managers of manufacturing operations receive merit pay based on the number of products shipped every month. While this seems like a laudable reward for keeping the production line running smoothly, some plant managers mandate that all products be shipped to retailers at the end of the month regardless of the products’ performance in quality inspections.
Such an action could have been prevented by issuing merit pay to plant managers based on the number of units shipped and quality performance.
Many organizations incentivize employees to meet aggressive ‘stretch targets.’ What types of issues might arise with these goals?
Stretch targets allow boards to push the boundaries of organizational growth. They are designed to be goals that can be achieved with extreme dedication of the entire team. However, stretch targets can pose numerous corporate governance issues.
For instance, if the targets are too aggressive, they may incentivize employees to sacrifice long-term gains in order to meet short-term goals. One could argue, for example, that the compensation schemes of many bank executives prior to the 2008 crash incentivized improper behavior.
Directors, executives and managers must be careful to impose realistic goals for subordinates that will not encourage damaging behavior when establishing performance review metrics. This maxim holds true at all levels of the organization.
ADAM WADECKI is manager of operations for Cendrowski Corporate Advisors LLC. Reach him at [email protected] or (866) 717-1607 or visit the company’s Web site at www.cca-advisors.com.