Many business owners and sales managers ask the same question, how do I set sales and production goals? There isn’t a one-size-fits-all answer. The answers typically depend on your industry, work flow, employees, and budget. Some companies have employees organized into work teams and incentives are tied to results generated by the team. Some employees, like salespeople, have individual goals and the incentive program is tied to individual performance.
One school of thought creates goals and stretch goals. The goal is more like a quota and represents the expected performance level. Employees/teams that reach their stretch goal are rewarded. This may look like:
|$25,000 sales/month||$27,500 sales/month|
|100 units produced/hour||110 units produced/hour|
|4 minutes/transaction||3 minutes/transaction|
The incentive for reaching the stretch goal should not exceed the financial benefit received by the company. Goals should be clearly communicated and easy for employees and management to track their progress.
Goals should be fair for all workers. If the company has full and part-time workers, the goal may be converted to an hourly sales/production goal versus a monthly goal that would put part-time workers at a disadvantage. If there is a significant difference in production efficiency of experienced versus inexperienced workers, management should consider a goal that accounts for the learning curve of the inexperienced worker. One program sets sales/production goals against the employee’s three month running average and the stretch goal as a percent increase over the three month average.
Managers must ensure individual/team goals align with the department’s goals which align with the goals of the company. All employees should understand the goals of the company and their role in the success of the organization. Regardless of their role, employees need to know why their job matters. Sales, customer service, shipping, billing, even facilities maintenance all contribute to the success of your company.
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