What You Need to Know about Target Agreements

Negotiation Tips

Jörg Köck | November 2020

Target agreementsare special negotiation situations.

In business life, we often agree on targets. They are a common leading instrumentand are also used to develop supplier agreements.With target agreements, we agree on what is supposed to be achieved and when. Some kind of contract is made. After the deadline, it is commonly checked how well the target was reached. This sounds trivial but target agreements are not without merit.

As a first step, we want to achieve a common understanding for what target agreements are: They are always a kind of bet on the future.Because next to the factors directly influenceable by both parties, we can also influence other developments during the period until the target is reached. It is worth, to look at this context in more detail in order to derive recommendations:
Target agreements are joint decisions made by both partners in unison, so they are the result of negotiations. They can be reached via different routes. This is important for the preparations and the meeting itself.

Between the time of the agreement and the time of achieving the objectives, derivationsmay occur. These can be caused internally or externally. Factually, they do not even necessarily lead to changes. It can be enough if they influence the assessment of reality – for example due to some new information.

The complexity of these contexts make it likely that the agreed targets will not be reached exactly. In the worst case this will lead to unsatisfactionof at least one negotiation party. But how can we counteract?

My tips:
1.With an increasing period of time between agreement and achievement, risks of correct prognosis also increase. Do not set targetsto far in the future but set more short-term milestonesin between so that you can review the progress!
2.As well as keeping time in mind, do the same with the amount of detail! Short-term targets can be more detailed than long-term targets. Less detail,however, does not mean ignoring the SMART-rules* for well-established targets.
3.Define frame conditionsunder which the targets should be achieved and refer to these explicitly during the negotiations. This reduces the risk of miscommunication and enables a better capture of the reality.
4.Power-based decisions have a different effect on the parties carrying the decision risk than majority or consensus decisions. Engage with possible methods on how to achieve agreementsand pick the most relevant for your cause!

In the next negotiation tips we will talk about rules of the games for a good culture on agreements!

*Good targets have to be Specific, Measurable, Accepted, Realistic and Terminated.


Jörg Köck

... has been an independent management consultant, trainer and coach for almost 20 years and has been managing director of BETTER SOLUTIONS Coachingconsulting GmbH for six years. Before that he worked in specialist and management positions in the purchasing departments of mechanical engineering companies. His focus in training and consulting is on negotiating and establishing sustainable agreements – in management, purchasing and teambuilding.

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