Stretch Targets: What Makes Them Effective

Stretch targets are objectives that force an organization to significantly alter its processes in a way that involves a whole new paradigm of operations (Thompson, Hochwater, & Mathys, 1997). It has been developed to maximize effectiveness and can be used as part of Total Quality Management (TQM) which includes all stakeholders and improvement in quality or Learning Organization which focus on renew and improvement. It is based on virtually unattainable goals which are difficult by nature and enhances motivation, performance and creative decision making.

For its success, stretch target uses two elements namely: structural accommodation and bureaucratic immunity. It must be accepted by the work groups for its effect which results to employees stretching their abilities and changed organization's competitive position. It involves change of employees' attitude and work habits and incorporating a new paradigm of thinking by learning rather than being bound by experiences.

It has been implemented in four organizations namely Motorola, CSX, 3M and Union Pacific. In Motorola, they aimed at reducing the cycle time which demanded the employees to rethink and redesign the entire work process hence calling for long and hard work.  As for CSX, it worked on better asset utilization and basically, the coal cars. 3M targeted increased innovation while Union Pacific was after performance improvement.

Stretch targets have been seen to work due to effective goal setting which includes setting targets. It can be done in three ways which include; absence versus presence of goals, general versus specific goals and easy versus hard goals. Presence of set goals means that there is an aim and the way to achieve it while absence of goals means that there is no objective for existence. Specific goals offer better working terms and result to quality results compared to general goals. If hard goals with specified matrices are accepted, they can give better performance compared to easy goals.

The teams that go beyond setting of targets and accept stretch targets thrive on their challenges because their effectiveness depends on the acceptance. This presents factors like autonomy and empowerment. Autonomy is the high degree over how to reach the goals while empowerment means having power over resources and the power to alter the processes in order to achieve the target. These two factors increase the willingness to accept the stretch targets and the management must show support through structural accommodation and bureaucratic immunity.

Structural accommodation is the modification of the organization structures, policies and practices for purposes of meeting the goals. It calls for empowerment and autonomy. Bureaucratic immunity is a process whereby a stretch team is virtually removed from multilevel review processes and holds responsibility to the top management only (Thompson, Hochwater & Mathys, 1997). In relation to these two, a climate for a successful use of stretch targets should be established. It involves establishing a clear set of stretch targets, team structuring through autonomy and empowerment, modification of the environment to support the team's effort through organizational culture, time and procedures and developing a culture of continuous support and encouragement.

Stretch target has served as a very effective change technique and has been accepted by management and supported. Any leader who is for the idea of stretch target should support it and create an enabling environment for its acceptance. Organizational culture that encourage and support transformational processes should be developed by leaders. There should always be presence of atmosphere and resources that enable change for organizational development.