February 6, 2019

Workspan – Raising The Bar of Your Incentive Plan with Automatic Goal Setting

By Marc Hodak

When I was a newly-minted MBA, my boss came to me and said “The Big Guy”— his boss and the head of our division — had suggested I pull together our division budget for the next year. So, I eagerly applied what I had learned in business school about forecasting and planning to create a budget reflecting our aggressive strategy. I confidently placed my handiwork on my boss’s desk, and was soon bewildered by his head-shaking. “The analysis is fine,” he said, “but these numbers are too high. The Big Guy will never go for them.”

“Oh, that’s all?” I replied. The Big Guy was one of those hard-charging, Type-A personalities who walked around the office talking about bear-hugging our customers and crushing our competitors. I could not conceive of him being taken aback by an aggressive budget, and prevailed upon my boss to present my numbers.

The Big Guy immediately began shaking his head. “The numbers are too high.” He went on to explain, “Look, whatever numbers we present, we’re on the hook to make them. Our bonuses depend on it. So, you need to come back with numbers you are certain we can make.” I asked him, a bit cheekily, what numbers he wanted, and he matter-of-factly responded with revenue and profit growth numbers he felt were achievable.

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