Earlier this week I wrote about the two best ways to set targets for performance measures (Benchmarking and using Customer Valid Requirements). As promised, here are three more ways to do it.
The third way to set targets is to look back historically at your performance. If you used to perform better than you do now, strive for that historical target and try to determine what has changed to cause your deteriorated performance and turn it around.
A fourth way to set a target is to determine “what the data shows is possible.” Let me cite an example to help illustrate this method:
- Suppose your organization is receiving a growing number of complaints each month about a variety of aspects related to your product or service quality.
- Begin to capture and categorize what types of complaints you are receiving. Think about groupings such as by product or by service, by type of defect, by day of the week, or by time of the day.
- Look for significance (where, when, or what type of complaints are most prevalent) and address the most significant type of complaint that is within your control.
- Now, to set the target for the measure. Imagine you found that, for example, 60% of your total complaints are related to a single type of defect in a single product. Upon further analysis of root causes, say you found that you can eliminate 50% of these specific defects.
- Thus, you should be able to achieve a 30% improvement in your measure (by eliminating the root causes contributing to half of the total complaints).
The final way to set a target is to have it thrust upon you! In other words, you may be given a stretch target by management that is set because your customers, regulators, Board of Directors, or investors mandated it.
Revenue, profit, or quality goals are sometimes set this way and, as much as we would like to call “foul,” the target may be necessary for the health of your organization. Quality targets in hospitals set by regulators or accreditation agencies are an example of this. Regardless of how fair we think this method is, it is a reality and we must strive to achieve the targets set for us.
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