Key words: organization, performance targets, supervisor, employees

In almost all organizations, supervisors set performance targets and budgets for their employees. This research shows that supervisors who have worked on the employees’ task themselves before, overemphasize their own experiences and tend to discount other relevant information. Furthermore, it was shown that by increasing targets based on past performance, supervisors can make sure that employees invest more in future productivity improvements. Finally, when employees are responsible for different tasks such as short-term production and also creative tasks, performance targets around the routine task can provide the necessary cognitive closure to achieve a free-mind and hence use the available time for creative work most efficiently. Thus, by setting performance targets on short-term output tasks companies can increase the efficacy of the growing practice to allow certain amount of time for creative work.