From the Director’s Desk: Keys to Goal Setting for Managers

“Volkswagen AG’s influential works council rejected a proposal to improve productivity by 10 percent as “unrealistic,” setting up a showdown over cost cuts at the scandal-hit carmaker.

Herbert Diess, who joined Volkswagen last year to head its namesake brand, is pushing for efficiency gains as part of an overhaul at the carmaker’s largest unit. His 12-point plan, which includes a call for cultural change and a “New Volkswagen,” has ruffled feathers among labor leaders, who blame management for the current crisis.

“We haven’t agreed to it, and that’s because we consider the targets unrealistic,” Bernd Osterloh, Volkswagen’s top labor representative and a member of the company’s supervisory board, said in an interview on a union web site. “I don’t like it all, when now others act as if everything at Volkswagen needs to be reinvented.”

–Excerpt from Bloomberg’s Business article, “VW Workers Dismiss Chief’s Productivity Goal as Unrealistic

Goal setting is an interesting management challenge. If you set arbitrary goals that can’t be achieved, then workers will dismiss the goal and move on with their daily work. If there is no linkage to competitive threats or market realities, then too your people might set the goals aside. If you include these goals in individual performance metrics, you might find that the processes don’t lead to individual accountability and that one person’s performance is tied in with other people and the process as a whole.

One way of looking at this can be summarized as credible and meaningful goals come from credible leadership. If the leadership has lost credibility, more than likely none of the goals they set will be taken seriously. Setting a useful and credible goal must come from a collaboration between management and the workers:

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