“If you think you can grow 5%, let’s double that and do 10%.” That was the mantra of a former boss who embraced aggressive growth goals as a way of life. Everyone liked working for him, so we just nodded and did the best we could. But in retrospect, we should have fought back against goals that were set in such an arbitrary manner.
Throwing out numbers without giving them much thought can be counterproductive. And the reality was that many people did start to feel that our goals were so ridiculously high that they became meaningless. As public companies know all too well, it’s better to be realistic and beat expectations even if it means revenue actually declined. Look at Citi's latest earning report. Revenue actually declined 2% but because they beat forecast, their stock will probably rise today. So how can you approach goal setting in a more realistic fashion:
1. Know your industry. Wanting to grow every year is great in theory, but if you work in the banking or housing industry, you know that the last few years haven’t supported growth. Read up on what the economists are saying about the outlook for your markets and industry. If you’re not the one who has the power to establish the goals, be prepared to defend your position when you push back.
2. Allow for differences in markets. High level goals may be established for the company, but once they’re driven down to markets and teams, there needs to be some differentiation. Some markets just don’t have the same opportunities. If you have a 3% corporate growth goal, you wouldn’t allocate it evenly between say Detroit and Washington DC. If you’re a small company within one geography, you still need to look at the opportunity differences between territories.
My sales team never complained about stretch goals, but when there was no basis in reality, they gave up before they started. Everyone needs to believe they can be successful or eventually they’ll move to somewhere they can be.