Clearly, even in archery, hitting the target is more than just will and effort but rather judgment, ability and the likelihood of hitting the target under environmental conditions. This book discusses not only the science but also the art of setting performance targets. Targets are an important part of our work life, whether we are setting them or meeting them. Target setting forms part of the budgeting process and the performance management of business units and individuals. Unfortunately, the behavioral impacts of setting performance targets on actual outcomes are not well understood, which can lead to serious consequences such as strategic game playing and suboptimal results. Target setting remains an under-researched area.
This book aims to bridge this critical knowledge gap in setting performance targets. The pivotal issue in target setting is that it is both an art and a science. Perhaps more of an art, it requires a nuanced balance between understanding the psychologies of the individuals tasked with achieving these initiatives, the scientific rigor of estimating probabilities and aligning with overarching strategies, coupled with the profound effects of various incentives. A unique feature of this book is how the authors have integrated ideas and research from diverse disciplines, an approach rarely seen in this field. Inside this book, you will be introduced to some of the most important methods in target setting, such as forecasting, sensitivity analysis, and probability analysis; all of which include practical examples to demonstrate how these techniques can be directly applied to real-world scenarios. Ultimately, you will gain a comprehensive understanding of how interrelated the various parts of organizational activities are and how they mutually influence each other. This holistic perspective is crucial because effective target setting must encompass a deep understanding of the broader organizational context, including its people, the competitive environment, organizational structure, and strategic direction, as well as the intricate impact of incentive compensation and information flows on overall performance.
