Overallocating to Meet Your Goals

Overallocating is a strategy that can help you meet your goals by aiming higher than you need to.

When you’re breaking department goals down and allocating portions of that goal to different teams, you can take an approach that’s known as overallocating the goal. This means, when you add up all the subteam goals, they amount to more than the overall department goal. This approach can improve your chances of hitting your high-level department goal, but this approach can also put unnecessary pressure on your teams to deliver more than they have to.

I saw one division that had a $200 million revenue goal. They had five regions. Each region was given a goal of $42 million of revenue. When you add that up, that $210 million. Within those regions, they overallocated too. Each branch in the region got goals that totaled up across the division to $215 million. Then, in the branches, they actually overallocated to their salespeople. The individual sales reps’ goals were added up, and that came to $220 million, so they were 10% over what their commit goal of $200 million was.

The behavior that resulted was some sales reps exceeded their individual goals. Some met their goals. Some fell short. The primary goal of hitting that $200 million of revenue was hit. Everyone was focused on sales, and the division achieved that goal because of this overallocating process. If they hadn’t overallocated, those sales reps who fell short would have cratered the overall division’s goal.

Now be careful about overallocating too much. When you do so, you might be breaking the rule of making a goal achievable. This can also lead to behavior of sandbagging. And if everyone knows you’re going to overallocate, they’re going to take on this sandbagging behavior during the budgeting and goal-setting process. That’s not productive.

Assess whether or not overallocating is appropriate for your organization. If you do it, make sure, when you overallocate, you don’t create that dysfunctional behavior of putting too much pressure on the team. But if you do the overallocation well, it increases the likelihood that you’re going to hit your goals.

Want to learn more about setting business unit goals? How about taking an entire course on it? Check out the video below to learn more about the course and get started. Or you can go directly to the course and start learning how to set business unit goals. The entire course is available at LinkedIn Learning. Enjoy!

Did you enjoy this post? If so, I highly encourage you to take about 30 seconds to become a regular subscriber to this blog. It’s free, fun, practical, and only a few emails a week (I promise!). SIGN UP HERE to get the thoughtLEADERS blog conveniently delivered right to your inbox!