Setting goals on estimated value vs measured value is the difference between a process goal and an outcome goal.
I guess the idea is you can’t control outcomes, but you can control your process inputs.
In baseball, for example, if you want to be a good hitter, don’t set a goal to hit .300, set a goal to do the things that will make you a .300 hitter. “I want to take 50 swings in batting practice per day. I want to workout once per day. I want to spend 30 minutes watching films of the next pitcher I’ll face…” etc.
In reality, it’s probably a little of both. For example, Sales teams are often compensated on revenue generated (outcome), but what if you did a good job (process) but didn’t hit your numbers because the market was just really bad in your vertical? A good leader will recognize this and still compensate you (i.e. hold you accountable) appropriately rather than punishing you for the outcome.
If one leader hits their targets in an easy environment, and another misses but comes close in a really challenging environment by being really creative and scrappy and clever, the second leader should be the one with the big reward.
You should be judged on how well you play your hands, not solely whether you win the game.