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Goals Gone Wild!

Posted February 17, 2009 2:42 PM by Ted Jackson

This is the title of a new working paper at Harvard Business School. The paper, found here, is the result of some great research being conducted by Lisa D. Ordóñez, Maurice E. Schweitzer, Adam D. Galinsky, and Max H. Bazerman, all professors at various business schools. The premise is that goal setting may cause more damage than benefits. This may be cause for concern if you have been creating personal scorecards or otherwise been working to link your employee performance to the Balanced Scorecard.

I won't attempt to rewrite their 28 page working paper, but their findings are quite interesting. They find the following problems:

  • Narrow Goals – employees are blinded to acting in the greater interest of the organization
  • Too Many Goals – some will be ignored
  • Inappropriate Time Horizon – may cause abnormal short term behavior, like stopping hard work after a goal is met
  • Too Challenging – may cause employees to stop trying
  • Risk Taking – the other effect you get with too challenging, may cause employees to take unnecessary risks (see the banking industry of 2007-2008)
  • Unethical behavior – may cause employees to cheat
  • Dissatisfaction and failure – lower employee morale may be an unintended consequence
  • Inhibit Learning – employees may not take the time to learn from each other
  • Culture of Competition – goals focus on individual performance
Well, this is a sobering list. I think this list should make you consider the effects of linking individual performance to the appropriate goals. This white paper should be required reading for professionals responsible for setting goals. But does this mean that you should not set performance goals?

I think not. You should certainly think carefully about the goals you set and think about whether your organization culture supports goal setting and has the capability to manage some of the above risks. For example, can your organization manage competition and learning throughout the organization? What is your tolerance for risk taking and ethical behavior? Taking a good look at some of these questions will allow you to think about how quickly you can implement individual performance goals. You might also use this list to assess whether individual goals are helping or harming your organization.

I am very interested in comments and hearing from people about their organization's experience