Page 220 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

206 The Complete Guide to Executive Compensation

Executive A Executive B
Goal Weight Score Goal Weight Score

A 20 4 A 20 4
B 25 3 B 25 3

C 10 3 C 10 3
D 20 3 D 20 3

E 15 3 E 25 3
F 10 3

Total 90 290 110 350
Average 2.9 3.5

Table 5-24. Adjusted-goal total impact
an objective, or qualitative target; for the CEO, this might be “restructure the company to
emphasize core business.”
The goals, or quantitative targets, are a subset of the objective, and must be defined next.
In this case, a goal might be “divest business A before end of year.” The key is to express the
quantitative target in sufficient detail to determine the extent to which it was or was not
achieved.
In reviewing the performance management process, it is appropriate to use a template
with questions such as these to determine whether it needs adjusting:
• Is there sufficient discussion in setting the goals and objectives?
• Are objectives and goals clear?
• Are developmental expectations specified for behavior and competencies?
• Are objectives and goals appropriately linked vertically and horizontally to others?
• Are the right people involved at the right time?
• Are there milestone dates with specified deliverables?
• Are the metrics appropriate for measuring both quantitative and qualitative targets?
• Are multiyear targets set where appropriate?
• Is there sufficient discussion in reviewing the results?
Linking Goals and Objectives. In setting the objectives and goals, the CEO will want to
ensure that his or hers are also reflected in the direct reports. This is the vertical link, some-
times called the line of sight, which the direct reports will also parcel out to their direct
reports. Directly or indirectly, these are financial goals. For line executives, the targets would
obviously include revenue, net income, return on assets, percentage of market share, and
other similar goals and objectives. Staff executives may have some of these same targets in
their own write-ups to promote cross-functional collaboration. However, most of their tar-
gets will be nonfinancial in nature, although linked to improving performance on financial
targets. In categorizing goals and objectives, they are probably one of three types: initiatives
(new), maintenance (continuing), and development (personal growth).