How To Set Better Targets

A team can hit every target it has been given and still fail the business.

Marketing can increase the number of leads while sales revenue falls. Customer service can reduce call times while customer frustration rises. Recruitment can fill positions quickly while staff turnover increases. Operations can reduce unit costs while damaging quality.

In each case, the metric improves and the business outcome deteriorates.

This is not necessarily evidence of poor performance. It may be evidence that the company has confused a performance indicator with the goal itself.

Metrics are supposed to help people understand reality. When they become detached from commercial intent, they can encourage people to produce a more flattering version of it.

Every metric contains an assumption

A company rarely wants more leads simply for the pleasure of having them. It wants leads because it believes some will become valuable customers.

The lead target therefore contains an assumption about quality and conversion.

If that assumption stops being true, the target loses its value. Yet the marketing team may continue pursuing it because lead volume remains the agreed measure of success.

This problem appears throughout a business.

The company measures response speed because it assumes faster responses improve the customer experience. It measures utilisation because it assumes productive time supports profitability. It measures output because it assumes more activity creates more value.

These relationships should be tested, not taken for granted.

A metric is useful only while it remains connected to the result the company actually wants.

People optimise for how they are judged

Employees pay close attention to the measures used in performance conversations, recognition and compensation.

If a sales team is rewarded for revenue without considering margin, it will pursue heavily discounted deals. If customer service is judged by ticket closure, complex issues may be closed too quickly. If managers are measured on keeping costs below budget, they may delay necessary investment.

This is not always malicious manipulation. It is predictable behaviour.

Leaders sometimes respond by telling employees to “use common sense.” But common sense is difficult to apply when the formal system rewards one outcome and leaders informally expect another.

People should not have to choose between hitting their stated target and serving the real interests of the business.

Measures need to reflect the trade-offs that matter.

Activity metrics provide emotional comfort

Activity is attractive because it creates visible movement.

Calls were made. Campaigns were launched. Products were released. Meetings were held. Candidates were interviewed.

When results take time or remain uncertain, activity reassures leaders that something is happening.

But activity is not automatically progress.

A team can become highly efficient at work that should not be done. It can complete projects that no longer support the strategy. It can increase production without improving demand.

This is why performance conversations must move beyond “What did we do?” to “What changed because we did it?”

The second question is more difficult, but it is much closer to the business goal.

Too many metrics reduce accountability

When performance is disappointing, companies often add more measures.

The resulting dashboard looks comprehensive but creates room for selective interpretation. Almost every team can find a number that improved.

A marketing report may contain website visits, impressions, followers, downloads, enquiries, leads and conversion rates. If revenue falls, the discussion can still be directed toward whichever activity increased.

More data has not created more truth. It has created more places to hide.

A strong performance system usually has a small number of clearly prioritised measures. Supporting data can help diagnose changes, but it should not compete with the main outcome.

Leaders should be able to say which measures matter most and what decisions each one informs.

Targets can preserve outdated strategy

Targets are often set during an annual or quarterly planning process and then treated as fixed commitments.

But the assumptions behind them may change.

A competitor enters the market. Customer behaviour shifts. A product problem affects retention. The company changes its pricing or ideal customer profile.

Continuing to pursue the original target may no longer make commercial sense.

This does not mean targets should be casually abandoned whenever performance is difficult. It means they should be reviewed in context.

Leaders need to distinguish between a target that is challenging and a target that has become irrelevant.

Otherwise, the company can spend months successfully executing an obsolete plan.

Connect measures through the business

Individual and departmental measures should form a chain of reasoning.

For example, the business may want profitable growth. To support that goal, marketing must generate suitable demand, sales must convert that demand at an acceptable cost and operations must deliver the promise without destroying margin or customer satisfaction.

Each team has its own indicators, but no team can understand its performance entirely in isolation.

If lead volume rises while sales conversion falls, marketing and sales should investigate the relationship together. If sales grow while delivery costs increase disproportionately, the commercial success may not be sustainable.

This prevents departments from declaring victory at one another’s expense.

It also changes the purpose of a performance review. The conversation becomes an examination of how the system is working, not a competition over whose dashboard looks healthiest.

Measures need explanation

Numbers do not remove the need for judgment.

A metric tells leaders that something changed. It rarely explains why, whether the change will continue or what should be done.

Every important performance report should combine the number with an interpretation:

• What happened?

• How significant is it?

• What caused it?

• Does it change our assumptions?

• What action is needed?

• When will we know whether that action worked?

This makes it harder to accept superficial success or panic over temporary variation.

It also encourages managers to think commercially rather than merely report accurately.

Start with the decision, not the dashboard

Before introducing a metric, leaders should ask what decision it will help them make.

If nobody can answer, the measure may be interesting but not useful.

Companies should also identify the behaviour a target might encourage. What could someone do to improve this number without improving the business? Which competing outcome might be damaged?

No measure is perfect. A balanced set of indicators can reduce distortion, particularly when it combines results with information about quality, cost and sustainability.

Most importantly, metrics should remain subordinate to the goal.

A number is not the strategy. A dashboard is not the business. A target is not proof of value.

When employees hit their measures but the company misses its objective, demanding more effort will not solve the problem.

First, leaders must examine whether they asked people to win the wrong game.

The first number becomes the gravity the rest of the talk orbits

Drop a number into a discussion and it starts pulling everything towards it. A supplier opens at a price, a board member floats a target, a competitor lists at a figure, and from that moment the conversation is about how far to move from that point rather than what the thing is actually worth. The opening number does not have to be reasonable to do this. It only has to be first.

Anchors keep working after you have seen through them

The uncomfortable bit, and the reason this sits in the Your Brain part of the series alongside illusory truth, is that knowing the anchor is arbitrary does not free you from it. We are wired to look for a cause and will settle for an association, so we treat the first number as though it carries information even after being told it was chosen at random. You can know the supplier's opening quote is theatre and still find your counter-offer creeping upwards towards it.

Contrast does most of the persuading

A lot of what feels like a judgement about price is really a judgement about what sits next to it. Put a £180 option on the page and the £95 one stops looking like a splurge and starts looking sensible. Retailers have known this for a long time, which is why the "compare at" number sits to the left and the real price to the right, and why it is set in a different colour so your eye reads the gap as movement. The product did not change. The frame did.

I watched a founder talk herself out of a price rise using exactly this machinery, in reverse. She wanted to move her hero candle from £28 to £34. Reasonable, given what had happened to her wax and freight costs. Then she opened her own store, saw the £28 she had looked at every day for two years, and the £34 felt outrageous to her, the person who had set the original price. Her customers carried no such anchor. The handful who had bought before were a thin slice of her new traffic. She was negotiating against a number in her own head, and losing.

You can blunt an anchor, but do not expect to delete it

The one habit that seems to help is deciding what you think a thing is worth before you let anyone else's number in. Write your price, your offer, your target, then look at theirs. It will still tug at you. At least you will be able to see the tug.

Where this gets genuinely hard is internal targets, which is the subject of a later post in the series on building your map. A figure you set as a stretch goal in January quietly becomes the anchor every later forecast is judged against, long after the world has moved on from it. Whether that is a useful discipline or a slow trap depends on something I cannot settle in six hundred words: whether anyone still remembers where the number came from.

 

Key takeaways

• Whatever number lands first in a conversation tends to become the point everyone else argues around, even when it was picked out of the air.
• Anchors mostly work below awareness, so knowing the "right" figure often fails to shake the first one loose.
• In pricing and supplier talks, the side that puts the first number on the table usually shapes the range the deal settles in.
• Much of the pull comes from contrast: the same price reads as cheap next to a dearer option and steep next to a cheaper one.
• Producing your own estimate before you hear theirs can blunt the effect, though it rarely removes it.