Motivational Targets


Do you create different goals as well as a budget or profit plan to run your company?

Most people run more than one set of projections to manage their company, each with a different purpose. There is the official business plan or budget that the company sets, as it’s what it can count on in terms of sales, margins, fixed cost, profit, cash flow, borrowings, etc. Then there is a what it gives to the bank and investors, which is generally somewhat more conservative projections so that the stakeholders will not likely be disappointed.

Then there are targets set to motivate employees to produce more than what the budget calls for, and if these values are achieved the staff in turn gets a greater financial rewards and perks. Motivational targets provide a win-win scenario for both the staff and the company.

PREMIUM CONTENT:  Prevalence of certifications among staffing industry executives

Here is an example of how these three budgets can work.

The “official” budget may call for a 7% increase in sales, which may be the company’s average gain in performance in recent years, assuming that no risks or major changes are on the horizon. A business plan would be built on this forecast. The conservative budget may project a 5% growth, which therefore should be a safe bet and a positive surprise would be likely.

The motivational targets may be for sales to rise 10% (with a provision for financing this growth) with a 12% improvement in margins (from a 20% base), and 9% higher fixed costs (5% excluding commissions) which would result in a 20% higher profit.

The staff responsible for generating higher sales and margins would receive get 12% commission instead of the 10% as set in the official budget, translating to a 34% increase in their commission, plus perks such as an award trip. Motivational targets would be supported by a detailed profit improvement program, where everyone determines what they have to do to insure achieving these results. A metrics and monitoring system would typically put into place to keep track of their progress. Achieving thee targets would benefit the staff and stakeholders alike.

MORE: Your communication strategy can affect your growth



Michael Neidle

Michael Neidle
Michael Neidle is president and CEO of Optimal Management, an advisor to staffing firm owners and managers.

Michael Neidle

Share This Post


Recent Articles

Powered by ·