POLITICIANS don’t follow the principle of managing expectations. Either they overpromise what they can deliver or simply bank on their popularity and not make promises at all. (I’ll know what to do when I get elected.)
As soon as elected, and while waiting to be sworn in, the erstwhile candidate starts to pull back on what he can achieve. (First, I’ll check where the washroom is located.) Politicians, it’s presumed even by the electorate, make all sorts of promises that they are expected to forget right after their oath-taking. There are the usual excuses, like the intransigence of the opposition, even if all branches of government are under a single leader’s control. (Are feuds and split-ups on the horizon?)
Making promises and setting expectations are a different ballgame in the corporate setting. Goals are meant to be met, or even surpassed by a process called “sandbagging.” Annual targets are intentionally set to lower expectations.
The term “sandbagging” is an approach that comes from the game of poker. It requires the one holding a strong hand to put in a low bet to encourage other players waiting for better cards to still stay in the game and help sweeten the pot. A big bet will just scare the other players away and signal a winning hand.
The corporate context of setting modest goals is understood very early in the executive’s career.
The first part of any sandbagging process is to present the challenging state of an industry and maybe even the economy in general. This dire description of external factors like increasing competition, a changing business model, price wars, heavier government regulations and weak purchasing power sets the stage for lowering expectations. The challenges are supported by selective statistics.
Can such a strategy of highlighting difficulties backfire? Can a readiness to start a state of despair result in an out-of-control situation?
If there is light at the end of the tunnel, it is ignored — maybe, it’s an oncoming train? The dire warnings can turn into self-fulfilling prophecies. The crisis described can be so daunting as to discourage any further investment in the company. (Maybe we need another leader who can do a better job?)
A gloom-and-doom scenario being repeated every time an executive report is submitted to the board can be undermined if the other players in the industry are coping. The story of Chicken Little declaring that the sky is falling when an acorn falls on her head is a cautionary tale of spreading panic based on wrong assumptions.
Aside from external factors, some other difficulties can be cited. These include a high turnover of personnel, uncompetitive salaries, the need to upgrade the automation process and a higher capital expenditure budget. The sandbagging process requires a litany of excuses.
Why is management allowed to set its own goals, in the first place? The school of participative management tries to empower those directly involved to manage the whole business process.
The “bottom-up” approach in planning and budgeting has made the method of setting goals a democratic undertaking. Participative management as a principle opens the doors to self-imposed targets that allow expectations to be managed. Such a goal-setting process is even rewarded with incentives based on meeting or surpassing objectives.
How can the board and the CEO mitigate this sandbagging approach?
The risk of targets being managed from below has shifted the goal-setting process to move closer to a “top-down” approach. The targets of increasing market share, improving profit margins, introducing culture change (less whining) and even a major reorganization can also be mandated from the top. The goal posts are set in advance — management needs to improve its game. (Fix it or exit.)
Downplaying expectations can be a risky game too.
What could have been worse for the whole business climate than the recently survived pandemic with its shutdown of businesses and the lockdown of households? There was no need to artificially dampen expectations and move the goalposts closer. And yet there are survivors of that unexpected environment.
Home deliveries, online shopping and payments, Zoom meetings, work-from-home options and other adaptive strategies saved the day. Prophets of doom were proved wrong even when survival seemed the only possibility left.
Even in life, getting through the day is sometimes the only goal to be pursued — and surpassed.
Tony Samson is chairman and CEO of TOUCH xda
