The myth: A core tenet of modern management is that the ‘setting of ambitious goals and targets, and then unremittingly chasing them, is imperative for organisational success’.
But few people have challenged this myth and examined what the downside of this approach might be. In 2009, a study published by Harvard Business School entitled ‘Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting’ (Ordóñez, Schweitzer, Galinsky and Bazerman, 2009) does precisely this.
In it, the authors argue that ”the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored. We identify specific side effects associated with goal setting, including a narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation. Rather than dispensing goal setting as a benign, over-the-counter treatment for motivation, managers and scholars need to conceptualize goal setting as a prescription-strength medication that requires careful dosing, consideration of harmful side effects, and close supervision.”
The writers identify many organisations’ goal setting for their employees that have often driven criminal and reckless behaviour in their businesses. They quote Sears, Roebuck and Co.’s experience with goal setting in the early 1990s. “Sears set sales goals for its auto repair staff of $147/hour. This specific, challenging goal prompted staff to overcharge for work and to complete unnecessary repairs on a companywide basis (Dishneau, 1992). Sears’ Chairman Edward Brennan acknowledged that goal setting had motivated Sears’ employees to deceive customers.” This case is not dissimilar to the recent Wells Fargo scheme in which sales quotas drove employees to set up phony credit card and bank accounts without customer knowledge.
They identified that with goals, people narrow their focus, taking their concern away from other, relevant and important matters, including ethics and principles. “This intense focus can blind people to important issues that appear unrelated to their goal (as in the case of Ford employees who overlooked safety testing to rush the Pinto to market). The tendency to focus too narrowly on goals is compounded when managers chart the wrong course by setting the wrong goal (e.g., setting revenue rather than profit goals at Enron).”
Even in education this problem surfaced when the award-winning superintendent of Atlanta’s public schools, Beverly Hall and her colleagues, were found guilty (along with 34 colleagues) of massive cheating to reach goals, established by the federal government’s No Child Left Behind Act of 2001.
Their research showed that “an excessive focus on achievement leads to a narrowing of focus that can blind individuals to unethical dimensions of their work and to necessary modifications that need to be made en route to achieving goals.” Moreover, they suggested that many organisations set goals which drive completely the wrong behaviour, often conflicting behaviour to their organisational values.
So, what’s the answer? How can there be a balance between achieving financial and task-measured goals with meeting ethical principles, organisational values and moral alignments of people? Their answer? Providing broader and more generic instructions such as “do your best” lead to far better outcomes, as it allowed people to draw on more of their own intelligence (including personal values, moral and ethical alignments).
If you think about the negative and destructive behaviour of various organisations around the world due to a culture of goals and targets: Banks (financial crisis greed/targets), Corporations (Volkwagen, Enron, Ford) Schools (negative pressure on young children), Financial Services (miss-selling) and Newspapers (phone-tapping) they all direct people’s focus away the personal human judgement that they could use to operate ethically.
For each leader in business, the question that you may ask is, what unintended effect could your ‘goals’ methodology be having on your business today?
Should you consider what might happen if you were to trust your employees more and let their ethical and moral values drive your business, rather than by goals you set?