Allocating individual targets: make them ambitious and realistic?

‘It's a stretch but it's fair’...although something of a cliché, this dictum is very often heard in the context of a company’s national target.

However, the beneficiaries of target-based bonus schemes often see things differently. Indeed, the effectiveness of schemes such as these depends on how fairly the overall or national objective is allocated to individuals.

The target allocation process is complex, prone to mistakes and inequity, and can totally demotivate those who feel their targets are unachievable or fail to motivate others who feel their targets will be achieved without much effort. In practice, this means that the company will not maximise its sales as a result of a sub-optimal process.