Relative Targets: Why you should stop annual planning and put an end to target-setting – for good

In the 1960s, organizations from all backgrounds and of all kinds of sizes began grooming and perfecting management practices such as fixed target setting, target negotiation, planning, budgeting, forecasting, plan-actual variance reporting, incentives-setting, and performance appraisal. These performance management techniques were often combined under brands like Strategic Management, Management by Objectives, Cost Management, Merit Pay, or Pay-for-Performance. Then, in the 1990s, things slowly started to change. More and more of the old-style performance processes and tools came under scrutiny: With markets and work becoming ever more dynamic, how could static, annual command-and-control rituals remain effective, and appropriate for improving performance or value creation?

By Niels Pflaeging