Are Your Goal Setting Strategies A Recipe For Disaster?

Who knew goal setting would be the business equivalent of a Schedule 1 drug, only to be used with extreme caution and professional supervision? While goals are often touted as essentials at both the personal and organizational levels, we may have been abusing them. In the HBR study "Goals Gone Wild," researchers argue that, despite popular opinion, accepted goal setting strategies may not be the best prescription for success and advancement.

Ford Pinto: One of the Worst Cars - and Goals - In History

What does the boxy, two-door hatchback have to do with goals? In the late 1960's, Ford CEO Lee Iacocca had an ambitious goal: creating a car that was "under 2000 pounds and under $2000" and would be ready to roll off lots in 1970.

To meet the crushing deadline, teams skipped safety checks. One of those involved the fuel tank, which had the tiny flaw of being susceptible to ignition upon impact. Engineers should've caught this during the design process - and would have if they didn't have Iacocca's goal hanging over their heads. When they did eventually find the defect, they opted not to fix it. Ford figured the cost of lawsuits was less than the cost of repairing the design... and people died.

Success? Ford did, indeed, produce a car that offered great affordability and fuel efficiency. They just did so with complete disregard for ethics, reputation, and, most importantly, consumer safety.

When Goals Go Up In Flame

What causes goals to crash and burn, much like the poorly-designed Pinto? Dr. Ordóñez and her coauthors argue that while challenging, specific goals can produce great results, those same attributes can make them "go wild."

The Problem with Specificity

Organizations routinely implore employees to create SMART goals: they must be specific. Why, then, is specificity a contributing factor to goals gone wild? To answer this, we need a gorilla.

A famous Harvard study of inattentional blindness asked participants to watch a video. In it, you see three people in white and three in black. You must count the number of passes made by the team in white. As they're playing, a gorilla walks onto the court, thumps his chest, and moves on. He's there for nine seconds. Incredibly, half of the people who watched the video were so focused on the passes that they didn't even see the gorilla.

The point is, goals that are too specific can blind us to problems, other possibilities, or alternative avenues for exploration. We have a hard time seeing the gorilla.

The researchers identified two related problems:

• Too many goals. When confronted with multiple goals, people tend to narrow their focus to just one. And, when they do, they concentrate on goals of quantity - not quality. Those types of goals are easier to accomplish and measure, so quality is left by the wayside.
• Inappropriate time horizon. A tight timeline - such as in the Pinto example - can lead employees to engage in risky behavior or shoddy work in order to meet the goal. Another problem is that they see goals as "ceilings instead of floors." Say a salesperson has a monthly quota and makes it in the first week. She may take the remaining three weeks and hit the greens rather than her leads.

Next, the authors take aim at so-called "stretch goals" - a managerial favorite.

Challenges Inherent in Overly-Challenging Goals

The concept of a stretch goal is predicated on the belief that people will push themselves and reach beyond that which they think they are capable - achieving breakthroughs and increased levels of performance. High enough to stretch, low enough to be attainable.

The problem is that these goals can sap intrinsic motivation, impede curiosity and learning, and create a culture of unhealthy competition. Moreover, they are frequently a factor in unethical and risky behavior. We saw this with the Pinto example, and business is littered with many more.

Enron, for instance, set stretch goals for revenue and rewarded their executives with exorbitant bonuses. By whatever means necessary. The once-mighty energy company was felled by massive corruption and fraud. Sears is another example: to meet ambitious sales goals in the automotive unit, employees charged customers for unnecessary repairs.

Ordóñez and her crew mince no words: "aggressive goal setting within an organization will foster an organizational climate ripe for unethical behavior."

Say "No" to Goals?

Coauthor Professor Max Bazerman says, "When we factor in the consistent findings that stretch and specific goals both narrow focus on a limited set of behaviors while increasing risk-taking and unethical behavior, their simple implementation can become a vice."

Goals can contribute to a host of undesirable behaviors. Or they can inspire employees to achieve better performance and results. The difference is in how they are prescribed - which should be very carefully and with clear oversight. Some tips the authors site:

• Do not set goals that increase stress on employees.
• Avoid punishing failure.
• Provide employees with the tools they need to accomplish the goal.
• Model appropriate behavior.
• Implement appropriate oversight to prevent unethical behavior.
• Ensure the goals are "moderately important, fairly easy, and moderately abstract." Research indicates that "do your best" goals are more effective than highly specified, overly prescribed goals.
• If giving multiple goals, ensure they do not conflict with each other.
• Align the goals with something other than financial gain.
• Create goals that are mastery and learning-based.

Better, though, is to create a culture that encourages and rewards intrinsic motivation; people do not perform well because they are given a carrot or threatened with a stick. They do so because they find satisfaction in their work.

Professor Bazerman suggests fostering "environments where people want to achieve, where they want to help the organization, and where they want to do so in an ethical manner."

The bottom line: goals aren't a "benign, over-the-counter treatment." Rather they're a potent medication that shouldn't be handed out like candy. Only with careful consideration and supervision are they effective. Next time you're tempted to set a goal for yourself, your people, or your organization, take time to consider the side effects and whether alternative treatments would be more effective.