When you choose your own targets, you can’t blame anyone else if you miss.

people to forecast accurately, week in and week out. That’s how people learn and how cultures change. It’s commonsense business management, and it works.

It isn’t the generation of wealth that we should hate. What’s wrong is the distribution of wealth. Our real problem is that we have not taught people how to share in that distribution.

In many cases, of course, the real challenge is to figure out how to quantify a target that everybody agrees is worth going after. The process is the same one described in Chapter 6, when I discussed the art of quantifying as it applied to developing standards and benchmarks. That’s exactly what you’re doing here. Once you know what people are

SKIP THE PRAISE—GIVE US THE RAISE There is no more powerful tool a manager can have than a good bonus program—which is why some companies will pay a consultant tens of thousands of dollars to design one. That’s not necessarily a stupid investment. If a bonus program works, it can be an incredible motivator. It can get people producing at levels

“Okay, I get it. What is our threshold?” asked Dan. “Sam and I worked through the plan and determined what cash ‘buckets’ need to be filled next year. Aside from tax, there’s accounts receivable, or money we’ve earned, but customers haven’t sent us the check. Another bucket is debt. In our case, we have to pay off some of the loan I took out to buy

general rule, however, we make a point of taking the second goal off the Balance Sheet—to make sure people also pay attention to generating cash. (I’ll talk more about the process we use to select goals in the next chapter, “Coming Up with the Game Plan.”)

We almost always base one of our annual goals on pretax profit margins—to ensure people stay focused on making money. The other goal has varied from year to year, depending on what we’ve seen as our biggest vulnerability at the time.

In our case, pretax profits have to be greater than 5 percent of our income before we pay any bonus on the income-statement goal. Above 5 percent, we start sharing the additional profits with people in the form of bonuses based on a percentage of their regular compensation. For simplicity’s sake, let’s assume that everybody gets the same percentage