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How to Set Performance Targets of Teams to Meet Strategic Objectives

February 17, 2014

Leadership & management

Management by Objectives

Starting from the top of a company, the six stages of Management by Objectives (MBO) are (Drucker, 1993):

  1. Define corporate objectives at board level
  2. Analyse management tasks and devise formal job specifications, which allocate responsibilities and decisions to individual managers
  3. Set performance standards
  4. Agree and set specific objectives
  5. Align individual targets with corporate objectives
  6. Establish a management information system to monitor achievements against objectives

Situational leadership

Situational leadership refers to leadership that’s contextual, formed as the result of a certain situation.

A person who naturally emerges as a leader in situations that represent some kind of crisis and inharmonious situations is best equipped to deal with these particular situations, this is called situational leadership.

Situational leadership leads a natural response and has evolved to make sure we stand the best chance of survival in such dire situations, picking the correct leader for a group can mean the difference.

The successful leader is one who is able to behave appropriately. … If direction is in order … able to direct; if considerable participative freedom is called for … able to provide such freedom.”(Tannenbaum & Schmidt, 1973)

Situational leadership relates the following context directly or indirectly:

  • Task behaviour: The extent to which a leader engages in one-way communication by explaining what each follower has to do, as well as when, where, and how tasks are to be accomplished.
  • Relationship behaviour: The extent to which a leader engages in two-way communication by providing socio-emotional support, “psychological strokes”, and facilitating behaviours.
  • Readiness: The ability and willingness of a person to take responsibility for directing his own behaviour in relation to a specific task to be performed.

Performance management

A definition of performance management by Armstrong and Baron (1998):

a process for establishing shared understanding about what is to beachieved, and an approach to managing anddeveloping people in a waywhich increases the probability that it will be achieved in the short andlonger term

The links between team performance and strategic objectives

Successful performance of teams is based on basic principles:

  • Understanding the strengths and weaknesses of individual team members
    When you understand the skills of every team member and his/her personal perspective you can use this to successfully combine these and setup the team
  • Fair remuneration
    When there is a transparent and fair pay structure within a team and people are rewarded for their efforts and success, this will then build credibility and trust within the team.
  • Match individual skills
    It is important for every individual team member that he/she is capable to carry out the work asked for within their potential.
  • People relationship
    When people are surrounded by people where they have a good relationship with, this will increase morale and productivity.
  • Setting targets
    By setting goals (quantifiable targets) for the team you can boost performance and increase productivity.
  • Shared space
    To foster a sense of cooperation and solidarity between individuals it is useful to put them in a shared space, the best way to do this is to put them in one physical location, but virtual is also possible.
  • Belief, trust and credibility
    When all team members share the same beliefs, trust and credibility this will relate to the ‘team feeling’.

An example of the link between the strategic objectives and team performance

The strategic goal of an insurance company:
S-Goal 1: deliver high-quality, cost-effective pension plan for company pensions

Annual performance plan goals that cascade from S-Goal 1:
PS-Goal 1: maintain at previous year’s levels, customer satisfaction, processing times, and accuracy rates pertinent to processing new contracts for company pensions
PS-Goal 2: maintain at previous year’s levels, customer satisfaction with the service team and the timelines of written responses to inquiries

Team goals:
T-Goal 1: continue to streamline work processes when such opportunities occur in order to reduce new contracts processing times and improve processing accuracy (PS-Goal 1)
T-Goal 2: reduce new contracts processing error rates by providing increased training in workplace competencies (PS-Goal 1)
T-Goal 3: improve the accuracy and professional appearance of complex correspondence while reducing staff effort by developing additional ‘smart-template-letters’ that can be tailored to meet different fact patterns  and can be personalised (PS-Goal 2)

Team performance:
TP-1: accurately settled contracts (T-Goal 1)
TP-2: competent, well-trained employees (T-Goal 2)
TP-3: accurate and professional written correspondence (T-Goal 3)

Tools and techniques available to set team performance targets

Define and implement objectives and performance measures (like KPI or balanced scorecard)

There are 5 key performance objectives by which an operation can be evaluated (Slack, Chambers, & Johnson, 2001):

  1. Quality: doing things right
  2. Speed: doing things fast
  3. Dependability: doing things on time
  4. Flexibility: being able to change what you do
  5. Cost: doing things cheaply

Some examples:

  • All the policies have the right name, the right tariff, etc. (Quality)
  • All new contracts are set in force 15 days after receiving the application (Speed/dependability)

Team/employee performance

A way of setting goals with teams or individual employees can be done by defining key performance indicators (KPI).

When team/employee goals are defined in terms of the companies KPIs this will ensure that what they are doing is aligned with the goals of the organisation.

Some examples:


  • Vision: known by our customers for our superior service
  • Objective:  reduce dissatisfied customers by 20%
  • KPI: customer complaints unresolved each week


  • Goal: increase complaint resolutions by 10% in period X
  • KPI: satisfactory complaints resolutions per period

Team member

  • KPI: weekly satisfactory complaints resolutions versus unsatisfied complaints resolutions

KPIs should be measurable and SMART.

There is a simple ‘trick’ to see if your KPI is fit for purpose by using the SMART abbreviation.

The definition of SMART (Chartered Management Institute, 2012):

  • Specific: objectives should outline clearly and precisely what is required. Usually includes a rate, number, frequency or percentage as a guide or target
  • Measurable: or at least assessable so that an objective judgement can be made of how well the individual has performed against the objective.
  • Achievable:  objectives should be designed to stretch the individual, but it’s important that failure is not built into objectives. The employee and the manager should agree to the objectives to ensure commitment to them.
  • Results: it is important to focus on outcomes rather than the means of achieving them.
  • Time bound: by what date must the outcome be achieved?

The value of team performance tools to measure future team performance

In my opinion team performance can not only be measured by tools like KPI. A lot of the team performance is also depending on other factors that cannot be influenced by the team themselves.

A big ‘result factor’ will be the ‘team composition’, in other words do you have the right people in the team to do the job (number of people, knowledge, etc.). Another important factor is the leadership role. Is the team leader performing effective leadership? My experience with underperforming teams a lot of the issues are the result of a manager who doesn’t give clear direction, has no vision, etc. Team members will just follow his guidance. No KPI will solve that problem. 

What’s your best advice for applying influencing and persuading skills to the dynamics and politics of personal interactions?