I have aggressive targets. So why have stretch targets as well?

Aunty B is on leave. This article first appeared on September 2, 2010.

Dear Aunty B,

I have been asked by my board to set stretch targets. This seems complete nonsense to me as I have set quite aggressive targets and communicated those targets to my staff. We have a firm plan in place and if we make those targets I will be quite happy.

I also don’t want to demoralise my team by setting unrealistic targets. How can I say thanks but no thanks?

Stretched enough,
Vic

Dear Stretched enough,

Gee. I think you could do with a good stretch… of the brain. What is wrong with a stretch target? Lots of entrepreneurs set stretch targets. The reason? They are ambitious but lack resources. To grow, a company must create very clever strategies that leverage their scarce resources in very smart ways. One smart way is to get employees focussed not just on what they can achieve but achieving beyond their wildest expectations. A stretch target stretches them, your management team, you and your board.

Entrepreneurs have different names for their stretch targets, which take a bit of the sting out of them for employees. The Good to Great guru Jim Collins coined the term BHAG (Big Hairy Audacious Goal) for stretch targets. Others call them “man on the moon targets”. We like to call a spade a spade at SmartCompany – or maybe we lack imagination – but we call a stretch target a stretch target.

So if I were you I would go back to the board and share the stretch targets with them. You will be surprised at the difference they can make.

Good luck!
Your Aunty B

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