Are you planning for mediocrity? Greg Milano on setting aspirational goals

Greg Milano explains how the status quo in incentive target-setting unintentionally leads to destructive behaviors and decisions. From asymmetric risk exposure to a myopic focus on variances to “sandbagging,” typical corporate goal-setting and planning processes incentivize mediocrity and time-consuming target negotiations. Alternatively, setting ambitious, stretch targets can spur significant new sources of value creation. By emphasizing improvement over prior results, deploying incentives that are truly aligned with TSR, and adopting a structured process for setting challenging, yet achievable, goals, organizations can foster more growth and innovation. When managers are rewarded for thinking outside the box, the result is an ownership culture where leaders are always seeking the next catalyst for growth and outperformance.