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Are stretch goals for all employees the best strategy to measure and reward performance in our open source era?

Times are changing. In the current open source era, people are now empowered to opt for free agency rather than traditional fulltime employment. In our digital gig economy, where knowledge is free and abundant, does traditional thinking still work? Specifically, how does one motivate and reward performance? Should all employees still be given stretch goals?

Perhaps it’s time to empower employees instead and turn them into entrepreneurs who will stretch themselves according to their respective individual goals and circumstances. Because assuming every employee has the ability to achieve stretch goals sets both the individual and the organisation up for failure. By setting minimum rather than stretch goals for all employees, people are empowered to self-manage, freeing them up to decide how much they want to be rewarded, liberating managers from the burden of motivating their employees.

In the open source era, rewards may no longer be solely financial for some, but may tend also toward fulfillment of a better work-life balance. The point is that if employers can empower employees so that they are able to choose their main purpose and how much reward they are after, they will then have the freedom to choose when and by how much they want to stretch, if at all. In today’s world, different people have different life goals. And that’s okay. Not everyone needs to stretch themselves all the time, and those who choose not to due to individual circumstance and capacity, are not necessarily bad performers. They have simply chosen to do less at a particular time in their career.

The prospect of setting minimum rather than stretch goals may be daunting to most employers, who fear this may spell doom for the enterprise. But traditional research actually backs this up. The bell curve theory actually proves that, time and again, only 20% of all employees will be top performers, with the majority 60% being average. What this also means is that there will always be that remaining 20% at the bottom of the bell curve. What this does not mean is that these employees are bad performers or failures. Companies like GE are already discovering that, counter-intuitively, employee motivation and productivity actually increase rather than decrease when the onus of enabling performance is placed upon employees themselves. So the truth is that with or without a system involving stretch goals, performance will distribute itself along the 20:60:20 curve anyway. By acknowledging this, you set the right expectations and let people contribute as much as they want, without stress or stigma. And it is this kind of freedom that actually begets success, for it liberates employees to perform at their best, thinking and acting as owners.

These perspectives and insights were extracted from concepts in the upcoming new book, Open Source Leadership: Reinventing Management When There’s No Business As Usual, written by our CEO Rajeev Peshawaria.