The art of setting goals

Not long ago, we talked about the importance of measuring what really matters, to avoid taking measures of irrelevant issues, to avoid making wrong decisions based on incorrect information and, above all, to avoid obtaining results contrary to expectations.

Curiously, these days I was reading about the book Measure What Matters by John Doerr and I ended up in a paper from Harvard Business School called Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting, that I recommend reading, even more now that we are starting a new year and we have to set goals and objectives in the teams.
This paper explores how goals in organizations can be a powerful tool, but dangerous if not handled correctly, something very much in line with the post mentioned above. So much so, that the paper includes a warning similar to the one found in some medicines.

Disclaimer from Goals Gone Wild

And unintentionally, goals can clearly work against us. For decades, goal setting has been promoted as a better solution for improving employee motivation and performance. Since the 1990s, studies have shown that setting specific and challenging goals can significantly boost the behavior and performance. True, they have many advantages, however, like any tool, goal setting has a dark side that is often overlooked.

Let’s look at some cases where goal setting may not go as expected:

Too narrow a focus means goal blindness

One of the main problems with overly specific goals is that they can cause employees to focus too narrowly on certain objectives, ignoring other important aspects of the job. This phenomenon, known as “goal blindness,” can have disastrous consequences.

Working for a subsidiary of a chain of computer repair and assembly companies, we were paid per computer assembled. In order to finish first, the cables were placed in any way with no care and very often ended up touching the processor fan, which meant that customers had to return to the store because the fan rattled or even stopped when it hit the cables, which was a nuisance for the customer and a bad image and cost for the company.

Increased unethical behavior causes goals to encourage fraud

Pressure to achieve goals can lead employees to take shortcuts or even commit fraud. The need to meet specific goals can cause employees to justify unethical behavior.

During a dinner party, I recall a conversation with a person who was explaining to us how he achieved his monthly goals. He worked at a bank and had to acquire a certain number of new customers. In the metric, he was monthly counting the number of new customers he was getting across his product portfolio. It turned out that he had found a product that had no permanence and no set-up fee. His technique was to sign up people in his family and friends for this product and then unsubscribe them again, so he would count the number of new customers for his objectives, and since he did not count the total number of customers, he would unsubscribe them again for the following month. In addition to achieving his goals, he was very proud of having found this flaw, of having beaten the system, and he told about it.

Distorted risk preferences leading to dangerous decisions

Challenging goals can lead employees to take excessive risks. Pressure to achieve specific goals can distort risk preferences and lead to unwise decisions.

In this regard, the Ford Pinto case is well known. It was 1971, at that time Lee Iacocca was CEO of Ford and the US was falling behind in the automotive war against Japan and Germany, who were making cheaper and more efficient cars. Then Iacocca launched a very ambitious plan to make a car with the following characteristics:

That it would be a subcompact

Low cost of ownership

Clear product superiority in terms of comfort, handling and performance.

Ford Pinto

What was the problem? Safety was not on this list of preferences, so it was sacrificed. The Ford Pinto was designed with a very soft rear bumper and near it, the fuel tank was placed. The consequence was numerous deaths and injuries from rear-end crashes and Ford had to recall 1.5 million cars to fix the problem. In the end the cost in reputation and money was enormous.

Corrosion of organizational culture, resulting in competition instead of cooperation

Goal setting can erode cooperation and foster a culture of excessive competition. This can reduce helping behavior among colleagues and damage team cohesion.

Long time ago, I worked for a consulting firm where the salary was rather low, but was supplemented by a variable for hours worked assigned to a customer. If the company billed 50€/hour, the consultant earned 5€/hour of variable and if the company billed 100€/hour, for the consultant it was 10€/hour. The idea was good, if a consultant was not assigned to a client, he was paid little salary and also encouraged to study new technologies. If he knew of a very strange technology for which a company could bill more for consulting hours, then the consultant also earned more, which encouraged him to be learning new things.

The reality is that there are clients who pay much more than others, that after-hours hours are more expensive, and that certain consulting tasks can be done in parallel and spread out as long as you want.

There were consultants refusing to share information from those higher paying clients, so that other consultants could not get in on it (or purposely giving wrong information). They would even put the lid down on their laptop when you passed behind them, so you couldn’t see what they were working on. Consultants who praised the tasks in those projects that were better paid or who made low quality interventions in those clients who paid little, who charged the variable and when it was necessary to repair, (logically the repair was free) the consultant who had to go to fix it was usually another one, and he did not charge the variable (the client did not pay). There was even a consultant who “curiously”, almost all his interventions had to be done at night so as not to disturb the customer, so he charged more for being out of hours and often did several services at the same time.

Reduction of intrinsic motivation, giving way to external rewards

Goals can decrease intrinsic motivation, causing employees to focus more on external rewards than on the enjoyment of the work itself. This can lead to a decrease in engagement, job quality and long-term job satisfaction.

It is not uncommon to set goals for publications or courses taught, especially in academia to get permanent positions in some centers. Also in companies to promote the expansion of knowledge. Thus, it is common to set goals to write X articles per year or to teach X courses. In these tasks there is a part of research and analysis, of learning also on the part of the person who performs them. When the number of articles or courses is very high, or it is not something that interests the author, usually the part that is reduced in this task is the preparation and research, resulting in poor quality articles or courses where the teacher simply gives a speech and leaves without answering the students’ questions. Quantity is not quality.

Recommendations for the cautious use of goals

Given the potential dangers of goal setting, it is very important to use them with caution. Both in the mentioned paper and in multiple publications, they point out some recommendations to minimize the negative effects:

Evaluate the need for goal setting: Before setting goals, managers should consider whether they are really necessary and whether the benefits outweigh the risks.

Include learning goals: In changing environments, learning goals may be more effective than performance goals. These goals encourage exploration and skill development.

Avoid goals that are too specific: We have already seen the problems that can result. Goals should be broad enough to include all important aspects of the job, avoiding too narrow a focus. Avoiding blindness.

Monitor ethical behavior: It is essential to establish safeguards to ensure that goals do not encourage unethical behavior. This includes adequate oversight and an organizational culture that values ethics. Even if it means sacrificing some performance, it is far more beneficial in the long run.

Encourage cooperation: Instead of individual goals, team goals can be set to encourage cooperation and cohesion.

Consider Intrinsic Motivation: Be aware of how goals can affect intrinsic motivation and try to balance external rewards with the enjoyment of the work itself.

Combine quantity and quality goals: In many cases, setting a goal that combines quantity and quality achieves the necessary balance to minimize unwanted side effects.

Quantity Goal | Quality Goal | Result
Attend 100 customer calls per day | Maintain a customer satisfaction score of 4.5 out of 5 | Ensure that calls are effective while ensuring a minimum number of calls are made, increasing customer satisfaction
Hire 20 new employees this quarter | Ensure that 90% of new employees pass the probationary period | Efforts made to complete the workforce will not be undermined by attrition due to poor staff selection
Publish 5 articles on the company’s blog each month | Achieve an average of 1000 visits per article per month | Achieve a number of articles that are interesting to the reader, to achieve the desired impact

This is not to say that goal setting is totally inadvisable, but simply to emphasize that although it is a powerful tool for improving performance and motivation in organizations, it has its dangers. We have seen that it can also have detrimental side effects if not handled properly.
Having knives in the kitchen can be dangerous if not handled well, but clearly useful if you know how and when to use them.
We must be aware of these potential dangers and use them with caution, making sure to minimize their risks and that they do not turn against us.