3: agree targets for performance contract
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3: agree targets for performance contract |
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At this stage, each BU knows its goals and the strategy to achieve them. The next step is to quantify these goals in such a way that all senior managers in the organisation understand clearly what needs to be done. "Doubling revenues in three years by expansion into country X" might be the medium term goal but this needs to be translated into a set of KPIs that can measure progress down the road. This means setting specific targets to define progress via successive annual budgets that run towards the achievement of the overall goal. Medium or longer term goals provide a stretch vision of where the Unit needs to be. Annual targets within the Unit's budget define how the Unit proposes to achieve these goals. This process of goal and target setting may cascade down further - to sub-units or to teams at the smallest level. It will provide the foundation for setting personal goals for each team member further down the line. Annual targets represent a performance contract between the Unit and the corporation. An effective performance related bonus plan will need to be clear about what people will get in return for delivering these agreed goals. A genuine performance contract is created only by making a very clear linkage between agreed performance levels and the reward that will be earned for achieving them. |
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