Question

How does financial target setting motivate employees within an organisation?

Answer 1

Financial Targets will motivate employees only when such targets are SMART:

• Specific
• Measurable
• Aggressive
• Realistic
• Time Bound

The Targets should not be unrealistic,should not be vague,should not be unmeasurable,should be aggressive,should not be for a very long time.

The targets has to be set in an Participative approach, that means the employees should also be involved in fixing targets.

By doing so, employees will feel that the targets are there responsibility as they have fixed them & thus motivating employees in acheiving the targets.

If the targets are acheived within the time & that awards them an incentive then also targets will motivate employees.