Financial Targets - Can we abolish them?

Often, I get involved in discussions about how to motivate people; simply because I believe that in order to achieve excellence, we need people that are excited about what we want to achieve in our company. In this context, it is difficult to avoid the topic of financial targets. In my eyes, financial targets are a contributor to dissatisfaction when handled wrong. When handled right on the other hand, they don't motivate. Why is that?

Here, I want to share some of my thoughts about financial targets; and I am happy to hear your comments as well.

• Financial KPIs are typically lagging indicators; they show us what has happened in the past. It is like sailing a boat by looking at its stern; we don't know if we are leading in the right direction.
• In my observations, they stimulate selfish behaviour; and I am curious if there is a scientific explanation for that. Sales people that have a commission act only for their own benefit; people that are tasked to reduce cost are only focusing on their own benefits - these are my observations.
• More important though, when a company's strategy is to increase revenue or to reduce cost, then they have no distinguishing factor; these targets don't hold a meaning and don't create habits that lead to lasting success; based on that, employees jump to new opportunities very easily.

What are alternatives targets then? In a discussion with my friend Daniel Benes, he has suggested three key factors to focus on:

1. Staff satisfaction & retention
2. Perceived customer value creation
3. Benefit creation for environment and society

Which key performance indicators create success in your teams?