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Formulate target agreements
Target agreements can provide your employees with greater motivation - as long as they are formulated correctly. But what is elementary for this?
Agreements on objectives can provide your employees with greater motivation - as long as they are formulated correctly. That this is not quite as simple as it sounds is shown by many examples in which such objectives have led to excessive demands and stress rather than to more motivation.
Find out how to avoid such problems in the target agreement process and find the right balance in set targets, bonuses and promotions in our guide on "Target agreements in companies".
What is a target agreement?
Target agreement is a contractual agreement between two people or more, usually in an employment relationship with each other. The subject of most target agreements is a quantifiable performance to be achieved in a predefined period of time.
Target agreement serves as an instrument of performance management. If implemented correctly, it is intended to increase the performance of employees in the company, measure employee performance and contribute to the achievement of corporate goals.
All this is to be achieved by setting targets for an employee to reach within a certain period of time. Quarterly targets, half-yearly targets or annual targets are popular. Each company can decide for itself which specific period of time to choose, and it is highly dependent on the respective industry and the company's strategy.
The targets are usually set in a discussion or series of discussions between the employee concerned and a manager. At the end of the selected period, an evaluation meeting is held to check whether and to what extent the goals have been achieved.
Often the goals are not achieved 100%. However, this is not to be understood as failure, because even a target achievement of 50 % can mean great progress and additionally motivate the employee in the next period. The U.S. economist Peter F. Drucker significantly coined this principle of employee management in the 1950s and called it "Management by Objectives MBO".
Why are target agreements used?
Target agreements generally enjoy a very high priority in performance management. There are several reasons for this.
Achievement of corporate goals
Target agreements are a useful tool that contributes to the achievement of corporate goals. These goals can only be achieved by the company as a whole. For this to work, all employees must work towards a common goal.
To avoid chaos and bring order to each employee's work, goals are agreed upon with employees. If all goals are achieved, the company goals are also achieved.
Increase in employee motivation
People need to see a meaning in their work in order to be able to call up their maximum performance. Goals make a decisive contribution to this. An employee who has clear, achievable goals in mind is a motivated employee whose productivity exceeds that of an unmotivated employee. Especially if a reward, such as a bonus or promotion, awaits him or her when the goals are achieved. Give your employees fair and, above all, achievable targets and you will see that they will make your contribution to the company's success.
Motivating goals also ensure that employees are more likely to commit to a company. The feeling that you as a manager have a lot of confidence in your employees is worth its weight in gold. Particularly in times of war for talent, it is immensely important to retain high-performing employees in your company. If you offer your key employees good prospects, they will stay with you.
Ultimately, target agreements are also an instrument used by performance management to monitor performance. Quantitative targets in particular are ideal for this purpose, as they can be measured with clear indices. The development of individual employees can also be tracked in detail thanks to such indices.
What are the types of targets?
Different types of targets are used in the target agreement process. Each type is intended to lead to positive developments in the company in different ways.
A distinction is made between quantitative targets and qualitative targets. Quantitative targets are easier to measure thanks to key figures such as sales targets. Qualitative goals, on the other hand, are often "soft" goals, for example a positive development in the behavior of an employee. Often, qualitative targets can only be assessed through regular observation of the employee concerned in everyday situations.
Verhaltensbezogene Ziele geben Mitarbeitern vor, wie sie in bestimmten Situationen reagieren sollen. Diese Ziele sind also sehr kurzfristig und spontan zu erfüllen.
Beispiel: Auf Anfragen von Kunden soll zugunsten der Kundenzufriedenheit innerhalb von maximal 24 Stunden reagiert werden.
Development related goals
Development-related goals are intended to promote the employee's personal development. This can be achieved, for example, by attending three training courses within one year.
Task-related goals are set with regard to the employee's job description. For example, if an employee works in social media, the following could be a goal: "I send out three newsletters per week to 1000 customers".
How should a target-setting meeting proceed?
A promising goal-setting meeting must be well planned. Sufficient preparation on the part of both the manager and the employee is the key to success.
Both sides should ask themselves some specific questions in advance:
- What has the employee's performance been like recently?
- What goals has the company set for the near future?
- What part can the employee play in achieving the company's goals?
- How much time will the employee need to achieve the desired goals?
- Can the employee's success be measured?
A target agreement meeting is not a one-sided affair. Employees must also have their say in such a discussion. Only after a constructive exchange between both sides can goals be set that are realistic for the employee to achieve and not overly demanding.
Ideally, a goal-setting meeting begins with a review of past goals and the success in achieving them. Here, too, the employee can be involved by being asked for his or her personal assessment.
Past experience can then be used to formulate future goals that are ideally suited to the employee's performance, motivate him or her, and do not overtax or stress him or her.
Formulate target agreements concretely with SMART
The SMART formula can help with the concrete formulation of targets. The formulations of the goals play a major role in whether they can be achieved by employees.
S stands for "specific".
A goal must not leave any room for interpretation. It must be formulated as concretely and specifically as possible. Words such as "about" or "approximately" do not belong in any target agreement.
M stands for "measurable".
Whenever possible, goals should be measurable through key figures. While quantitative goals are always measurable, this is more difficult with qualitative goals.
Instead of assessing the achievement of qualitative goals by feel, supporting measures such as feedback discussions can be used instead.
A stands for "acceptable".
This simply means that both sides, i.e. the supervisor and the employee, are in agreement with the agreed goals.
To ensure this, employee discussions are held in advance. These discussions serve to agree on the content of the agreement and to define the objectives to the satisfaction of both parties.
R stands for "realistic"
If goals can be achieved, this promotes employee motivation. If, on the other hand, it is impossible to achieve the goals, this can lead to frustration and excessive demands on the employee. A realistic agreement on objectives is therefore immensely important.
T stands for "terminated"
The agreement of a feasible deadline is indispensable. Without a deadline, the implementation of the agreed goals can be postponed into the future at will. Accordingly, the actual implementation becomes less likely.
Formulation of goals in practice
Formulas like the SMART formula are all well and good. But you are surely wondering how goals are now formulated in practice. Here, too, you have several options. On the one hand, you can formulate goals in text form, on the other hand in the form of a table.
In text form, a target agreement could look like this, for example:
"By the end of June 2023, the number of readers of our of the blog posts on our company website should increase by 50%. The company will create a template for this and purchase SEO software. Implementation will be reviewed regularly by your manager and your progress will be evaluated once a month using various metrics."
In table form, you can present such a target agreement more clearly and ensure that all necessary information is seen by everyone involved:
|Target||Increase readership of blog posts on company website by 50%.|
|Supporting measures||Acquisition of SEO software and creation of a template|
|Deadline||June 30, 2023|
|Budget||1000,00 € for software|
Which form you ultimately choose is up to you. The only important thing is that the documentation of the target agreement is clear and understandable and can still be retrieved years later.
How can target agreements be put into practice?
Once your target agreements have been defined and documented, the next step is to put them into practice. This is where it becomes clear whether you have formulated the goals clearly enough and explained them sufficiently to the employee. If this has not been done, problems can quickly arise during implementation.
To evaluate progress on an ongoing basis, it is important to hold regular feedback discussions with the employee. Particularly in the case of qualitative goals, such employee discussions are the key to theErfolg.
How can the results be controlled?
When setting the goals, you should already have determined a time period in which they must be achieved. As soon as the deadline of an agreed goal has been reached, an analysis is due. Here, as a manager, you look at what has worked well and what can be done better in the future.
Even if it is clear from the outset that goal achievement has failed, an appraisal interview should take place. This is the only way to evaluate with employees where problems arose, where mistakes were made, and what needs to be improved in the future to ensure goal achievement.
In addition, employees who have achieved their goals should be rewarded for their efforts. In most cases, therefore, a target achievement bonus is paid out, which was previously defined in the target agreement. In addition, employees' achievements should be sufficiently acknowledged in the personal meetings.
Take enough time for this, even as the boss of a company. Imagine you were an employee. You, too, would appreciate an appreciation of your performance. Employee appraisals are a tool whose impact should not be underestimated.
Advantages and disadvantages of concrete target agreements
Target agreement is an immensely important management tool. The advantages are so great that the disadvantages are almost negligible. In addition, the disadvantages almost exclusively come into play when mistakes are made in goal setting.
- Concrete target agreements help to achieve corporate goals.
- They motivate employees.
- Tasks can be better structured and prioritized.
- Employees can proceed more autonomously.
- Employees know what is expected of them.
- Talent can be promoted in a targeted manner.
- Supervisors are relieved.
- The pressure on employees to perform can increase.
- The increased competition can have a negative impact on the working atmosphere.
- Target agreements involve time-consuming discussions and planning.
How do you create a successful target agreement?
To conclude our guide, we would like to give you a few concrete tips on how to successfully formulate a target agreement. Poorly formulated target agreements are often useless and can even have very negative consequences. This must be avoided.
Fairness is one of the most important factors in setting performance goals. Unrealistic goals that overwhelm employees, stress them out and lead to frustration must be avoided at all costs. Therefore, never set too many goals or goals that are too difficult to achieve. It's best to ask yourself if you could achieve the goals yourself.
Only with a lot and clear communication will you succeed in setting realistic goals in the first place. Regular discussions are also immensely important during the realization of the goals. You show your employee that you will not leave him alone and at the same time you monitor the progress.
Give meaning to what your employees are doing. Explain to them why they do what they do. Explain the background of the agreed goals and their importance in the big picture of the company.
It is your employees' good right to insist on promised rewards when meeting established goals. Be honest and always fulfill your side of the agreement.
Target agreements are there to improve performance in the company. However, this applies not only to employees, but also to yourself. Also question your own actions when goals are not met. It may not be the employee who has made mistakes, but you. Perhaps the goals were set too high or their achievement required unrealistic effort. Surely you too can improve something next time.
Target agreements are incredibly important for the success of a company. With the right planning, they can make a decisive contribution to the achievement of corporate goals. It is important to formulate clear, concrete goals that your employees can realistically achieve without too much stress. In practice, this is not easy - just the right balance must be found. At best, the goals should be challenging, but not overwhelming.
With our tips on goal setting, you'll be off to a higher-performing future. Take the lead and ensure that from now on, your company works in a more structured way towards the higher-level corporate goals.
Are you interested in how you can further motivate your employees? Then take a look at our guide for this: