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Create Performance Hurdles for Each KPI...

The next step is to develop maximum stretch targets for each KPI. Once a maximum stretch target is entered into the computer, the software automatically calculates the incremental targets, or performance hurdles, and the impact each hurdle has on earnings.

The idea behind stretching is not the same as goal setting in a traditional sense. We do not expect to achieve the highest hurdle on every KPI, however, we want everyone start thinking of what it would take to move the organization to higher levels of performance.

The first hurdle should be realistically attainable. The second hurdle should represent an optimistic level of performance that is often associated with the effort required to reach budget. Hurdle three should require a change in behavior to reach. Hurdle four should encourage “out of the box” thinking and behavior -- a real break from the traditional way business is conducted. Finally, the last hurdle should be a level of performance that is truly remarkable, a total team effort that is maximizing the potential of every individual in the organization.