When an organization’s incentive system uses objective performance measures, it also must include performance targets. Targets are the baseline against which actual performance is evaluated and compensated. Specifically, targets are management-approved expressions of the performance thresholds or requirements that an employee must meet to be appraised at a particular level of performance. Targets facilitate performance in two primary ways. First, performance targets enable employees to assess their own performance. People generally are not receptive to feedback unless they are able to interpret its meaning. For employees, comparing actual performance to targeted performance is essential to that interpretation. Failure ...
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