Why sales targets can reduce performance
Can performance targets actually reduce productivity?
In this video, Francisco Brahm, Assistant Professor of Strategy and Entrepreneurship at London Business School, explores how "incentive ratcheting" can unintentionally encourage employees to hold back their performance.
Drawing on research from a large beverage company, Francisco explains how setting future targets based on past performance can discourage employees from exceeding expectations. The findings show that reducing incentive ratcheting increased sales by around 19%, highlighting how poorly designed targets can undermine motivation.
The research offers an important lesson for managers: performance measures don't just evaluate behaviour—they shape it.
Can performance targets actually reduce productivity?
In this video, Francisco Brahm, Assistant Professor of Strategy and Entrepreneurship at London Business School, explores how "incentive ratcheting" can unintentionally encourage employees to hold back their performance.
Drawing on research from a large beverage company, Francisco explains how setting future targets based on past performance can discourage employees from exceeding expectations. The findings show that reducing incentive ratcheting increased sales by around 19%, highlighting how poorly designed targets can undermine motivation.
The research offers an important lesson for managers: performance measures don't just evaluate behaviour—they shape it.