Goals Gone Wild

Modern management has gone overboard with some popular concepts, leading to some counterproductive results. Consider how the concepts of management-by-objective and goal setting, first popularized by Peter Drucker more than 50 years ago, play out in today’s organizations. Managers — especially human resources managers — have become increasingly obsessed with deconstructing each employee’s expected contribution into a detailed list of measurable milestones. The point of the exercise is ostensibly to provide motivation, but often the result is a paint-by-number work force whose performance may be on target but not what is most needed.

For years, studies and practitioners have generally concluded that specific, challenging goals motivate employees, focus their efforts and provide clear, objective means for evaluating their performance. However, in their 2009 paper, “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting,” four noted professors of management question that view. They present an impressive review of research and a wealth of examples to argue that while goal setting can improve performance, it can also degrade it by overly narrowing focus, weakening interpersonal relationships, corroding organizational culture and increasing risky and unethical behavior.

“For decades, goal setting has been promoted as a halcyon pill,” write Lisa D. Ordóñez, a professor at the Eller College of Management of the University of Arizona; Maurice E. Schweitzer, associate professor of operations and information management at the Wharton School of the University of Pennsylvania; Adam D. Galinsky, professor of ethics and decision in management at the Kellogg School of Management at Northwestern University; and Max H. Bazerman, professor of business administration at Harvard Business School. “We contend, however, that it has been over-prescribed and it has powerful and predictable side effects.” As with any powerful drug, the help it provides depends on the dosage.

When Goals Are Too Specific

Specific goals can be so narrowly focused that they blind people to other factors and concerns that may be equally or more important, the authors say. Precisely defined goals discourage people from looking at a problem from a variety of perspectives and foster a mind-set in which merely hitting one’s marks is good enough.

The authors cite many examples of this, including Ford Motor Company’s attempt in the late 1960’s to compete in the small, fuel-efficient car market. In response to the challenging goals of bringing a fuel-efficient, modestly priced car to market quickly, the Ford Pinto was developed, but at the expense of other important considerations that were not specified as goals, such as safety, ethical behavior and company reputation. In fact, a faulty design in the placement of the fuel tank and omitted safety checks resulted in Pintos igniting on impact and a multitude of lawsuits. Even after discovering the hazards, executives did not correct the design, calculating that doing so would have cost more than the lawsuits that were likely to be filed.

Goal setting can also inhibit characteristics in employees that are essential in today’s organizations — a willingness to learn and adaptability. Because the act of setting specific goals assumes that optimal outcomes are known beforehand, it discourages openness to alternative outcomes, exploration and growth. The resulting inflexibility can sabotage collaboration, an essential aspects of organizational behavior.

When Goals Are Too Challenging

“Goals Gone Wild” cites studies showing that people given highly challenging goals are more likely to adopt inappropriately risky strategies to try to achieve them than if the goals are more modest. There is also substantial evidence that goal setting of any kind can induce unethical behavior, such as that displayed by Sears Brands mechanics who recommended unneeded repairs in an effort to meet their quotas and by Bausch & Lomb sales representatives who “met” their targets by reporting sales that never took place.

The authors write that a healthy organizational culture is probably the best insurance against these kinds of harmful effects, but they point out that the use of goals can damage an organization’s culture. On balance, they say, “the use of goal setting creates a focus on ends rather than means, and aggressive goal setting within an organization will foster a climate ripe for unethical behavior.”

Another problem arising from the use of so-called “stretch” goals is the possibility that the goals may not be reached. This can cause people to unduly question their abilities.

The Judicious Use of Goals

How, then, do the authors suggest goal setting should be used? They say that a crucial first step for managers is to think carefully about whether specific goals are necessary. Most managers “think that others need to be motivated by specific, challenging goals far more often than they actually do,” the authors say. They cite studies showing that although goal setting does increase extrinsic motivation, it can undercut intrinsic motivation — engaging in a task for its own sake — so that the net effect is usually negative.

Consequently, the authors recommend that if goal setting is to be used, the goals should be as comprehensive as possible and take into account all the critical components of an organization’s success, both quantitative and qualitative. It is also critical that short-term goals do not conflict with desirable long-term outcomes and that acceptable levels of risk and ethical guidelines are clearly and explicitly articulated. To reinforce collaboration and cooperation, team goals should replace individual goals when practical.

Perhaps most importantly, the authors say that in complex, changing environments — that is to say, all organizations — what they call “learning goals” are likely to be more effective than performance goals. That means, essentially, that goal setting should be less about achieving specific outcomes and more about optimizing the enterprise.