28 December 2010

Business Targets - The games we play

I sleep walk linked this Dilbert - am all for anti plagiarism !
Business target setting in corporates is a interesting phenomenon, littered with management crap & practices which one is expected to digest and follow. As a thinking (not much sure now) manager, I attempt to articulate my thoughts on against these games we play. read on...

Last week of Dec 2010, and this is the time of the year that sets the tone for next year, literally for most of multi nationals who follow calendar year as their financial years. Target Setting in most large MNCs is a simple process (click here to read why), in a nut shell what you get this year has to be improved by a certain % points. However, managing the performance against such targets is not such a simple process, you miss the target by a whisker and you miss the bonus by a cat ! And you over shoot the target this year and you have just shot yourself in the foot. Your targets for next year move up by same amount. So in this challenging environment, the business managers do get out of their 'cubicle coma' and resort to all kinds of innovative ways to ensure they achieve what maximizes their bonuses without increasing the probability of missing the bonus(es) the next year.

Last year same time, the sales head of a large company, I worked for, called me in and advised me to stop invoices & dispatches of goods to customers. It didn't take me more than couple of seconds to grasp what was happening, but I feigned ignorance and let him go through the embarrassing explanation (how i love doing this).

I have known of other interesting ways and means that managers resort to, including incurring wasteful expenses, incurring fake expenses, incurring expenses for service that will be availed next year, stopping sales, making contingency provisions etc.

What would you call this manager behavior - ethical? or just plain smart? One of my simplistic ways of making sound business decision is to ask myself - Would I still be doing this, if this was my own business? Probably not - why would I let go of opportunity to make more money irrespective of which month or week of the year it is! After all the calendar year, the targets are just some inconsequential milestones in an otherwise ongoing business. But having said this, it is also an outcome of management practices - what if you had lesser variable bonuses linked to performance, what if there was a penalty for under-committing and over-delivering and reward for those who missed the target but the targets by themselves were stretch rather than convenient. What if the bonuses were directly linked to profits you make and not to targets.. What if each of the manager was also the shareholder of the business .. working for his own business.

We will continue to play such games, but who am I - a inconsequential cog in the world of organized money making to question this. We have choices to make, to be a part or move apart. Someday.. sigh!

Have you anything to share ! Wonder if you have experienced something similar.. drop in your comments.

DISCLAIMER: Any resemblance with any organization or practices therein is purely unintentional and coincidental. All of what is stated above is the writers prejudiced views shaped by years of being part of corporate and probably suffering from Cubicle Coma.

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