Goal setting works.
Negotiating goals and letting people have a voice will improve their commitment to the goals, which greatly improves goal accomplishment. Never dump goals on folks – that’s just stupid. As much as possible, define the goals in terms of observable, measurable, rewardable, and specific behavior. Make your measurement system transparent and ensure everyone understands who will measure, when they will measure, how they will measure, and how numbers will be interpreted. Provide rewards that people really value, consequences they understand, and administer both consistently to everyone, every time, and you have the makings of a goal setting process that can be a powerful driver of behavior.
Nevertheless, I have some concerns about goal setting. I learned these concerns from other folks, so they are not new or unique to me, and they are more anecdotal than supported by research. Here are my three biggest concerns:
1. Numeric goals or quotas are often arbitrary. Take last period’s goal, add, oh let’s say, ten percent. Yea, that’s the ticket! Rarely does goal setting reflect an accurate understanding of the capability of the system producing the numbers you are tracking. All results are attributable to individual effort (the fundamental attribution error), when in fact there are significant interaction effects in play that are beyond the individual’s control. Most managers do not understand how variation affects measurement. Anyone that administers quotas or numeric goals should look at W.E. Deming’s classic Out of the Crisis and Brian Joiner’s excellent book Fourth Generation Management.
2. Goals constrain behavior. Done properly, goals will drive people to behave the way you want them to behave; unfortunately, that is often the only behavior you will get. If you need people to cooperate with each other or work in teams for your organization to succeed, but your biggest rewards are linked to individual goals – forget it. Strong incentives linked to goals often produce unintended consequences. Pfeffer and Sutton’s book Hard Facts, Dangerous Half-Truths, and Total Nonsense does an excellent job of explaining why you need to be very careful what you pay for – you just might get it.
3. Goals place a ceiling on performance. Even if your system includes a mechanism to continue to reward employees once they reach their numeric goal, there is something more powerful that will drive them to STOP working. People understand very clearly that numeric goals are arbitrary, and they know that future goals will be based on past performance. You may provide an incremental reward for achieving a current goal, but the punishment for not reaching a goal you might set for them in the future based on their current performance is more salient. People stop when they reach their current goals because they don’t want to be held accountable for higher, unrealistic goals in the future. They learned this behavior from YOU and your goal setting system.
What do you think? Please share your thoughts; I’d love to hear them.
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Good points Bret. Point one has nipped me in the past, primarily due to the interaction effect – my numbers depend on the actions/success of other areas. Developing a good mix of goals that accept that interaction can really help a manager feel in better control. For example, a manager may feel revenue targets are uncontrollable or arbitrary if they are responsible for a product line that lives off of store traffic. Cost containment, innovation targets and other items that are more directly controlled can balance against numbers that are relatively uncontrollable.
And I’ll never forget my Mom telling the story of how concerned she was that all of a sudden our mail was arriving late in the day. She was worried that our long time mailman was ill or something had happened. Then she spoke with him… He was the subject of a time study to determine if routes could be expanded or hours cut. Seemed to take some of the bounce out of his step. Piecework targets can be deadly.
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Fred, your mailman story is hilarious! Sad, but also funny. Thanks for sharing! Bret
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