Target setting for evolutionary and revolutionary process change

Considers the relationship between the types of targets or benchmarks used and reward structures adopted in two contrasting performance improvement strategies continuous improvement and radical change. Hypothesises that the process of target setting and the reward structures adopted mil be different between the two strategies. The propositions are that organisations involved in continuous improvement of a process will base their performance targets on past performance and internal benchmarking, arrived at through consultation and with a mixture of financial and non-financial rewards for achieving targets. For processes involving radical change, targets will be based on external benchmarks imposed by senior management, with financial rewards for their achievement. The findings from a semi-structured questionnaire conducted in 40 UK service organisations reveal that most continuous improvement targets were based on past performance and that processes undergoing radical change made limited use of external benchmarks. In the majority of cases, targets were imposed by managers without consultation, with rewards linked to the achievement of those targets. Financial rewards, particularly financial bonuses, predominated in both improvement strategies. The implications are that the potential benefits of adopting process changes are being constrained. In continuous improvement the lack of participation in target setting could be undermining the team-based empowerment philosophy of the strategy. The aim of radical change is to achieve a paradigm shift involving revolutionary rather than evolutionary change which is less likely to be fulfilled with targets based on past performance.