Targets and how to assess performance against them

While the need to set targets has been widely discussed in the TQM, benchmarking and re‐engineering literature, guidance aimed at helping management report and interpret performance against targets has been fragmented. Very little literature has appeared that brings together our current state of knowledge on performance targets and suitable methodologies. This paper attempts to compensate for this shortfall by first explaining the three major forms that targets assume and then presenting four methods that are useful when assessing performance in each case. The three forms are first, the target is a single lower limit; second, the target is a single upper limit; and third, the target is a zone between an upper and a lower limit. The four methods to calculate the level of improvement needed to reach target are the counting, distance, histogram and capability index methods. While individually each method cannot be claimed to be new, the contribution of this paper lies in their integration, which has not been presented in such a comprehensive way before.