To paraphrase Gordon Gekko, “Goals are good.” At least, most executives would reflexively agree that setting specific, challenging goals can powerfully drive behavior and boost performance. And, as the authors of this critical paper acknowledge, hundreds of studies support that view. How could goals not be good? Goals provide focus, and focus cuts through distractions like a laser, helping us to accomplish work. The authors don’t dispute that goal setting can have beneficial effects, but they convincingly argue that these benefits “have been overstated and that systematic harm caused by goal setting has been largely ignored.”
In an earlier paper (reviewed on ManyWorlds.com), “Goal Setting and Cheating: Why They Often Go Together in the Workplace”, two of the authors of the current piece underscored ethics-related problems of goal setting. This new paper goes further, discussing side effects of goal setting that include a narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation. If we regard goal setting as like medicine, the authors urge us to treat it like prescription-strength medicine “that requires careful dosing, consideration of harmful side effects, and close supervision.”
The standard view has been that goals are most likely to be successful if they are specific and challenging rather than general exhortations to “do your best.” The authors argue, on the contrary, that it is these kinds of goals that make them “go wild.” Plenty of examples exist to show that indiscriminate goal setting can cause predictable and systematic problems. Among those cited here: Sears setting of sales goals for its auto repair staff, leading to overcharging of customers and unnecessary repairs; Enron’s incentive system for sales staff; and Ford’s problems with the Pinto driven by tough goals and a tight deadline.
Making goals too specific is one source of trouble. Goals focus attention but can do so to such a degree as to cause people to overlook other important features of a task—what some call “inattentional blindness.” Managers who set narrow goals focused on specific dimensions of a problem may not foresee the broader outcomes of their objectives. In addition, when individuals are given multiple goals, they tend to concentrate on only one of them. They are likely to focus on goals that are easier to achieve and measure (such as quantity) while ignoring less clear goals (such as quality). Goals that are set for too short a time horizon are another source of unintended consequences, and can “lead people to perceive their goals as ceilings rather than floors for performance.”
Although “stretch goals” are popular with managers, they can cause serious collateral damage, including shifting risk attitudes, promoting unethical behavior, and triggering the psychological costs of goal failure—each of which the authors detail in this paper. For instance, specific, challenging goals can motivate people to adopt riskier strategies and choose riskier gambles than do those with less challenging or vague goals. Researchers have found that goals harm negotiation performance by increasing risky behavior, often leading negotiators to stop at a less efficient position than negotiators who lack goals. In such cases, not only does goal setting have undesirable side effects, it actually harms performance. Goal setting can promote cheating, by spurring people both to use unethical means to reach goals and to misrepresent their performance level.
These serious problems do not exhaust the concerns raised in this paper. Goal setting and pursuit can decrease people’s satisfaction with themselves, reducing task engagement, commitment, and effort in the future. Narrowly focused goals can prevent learning even as they improve performance. It is sometimes a better option to use “learning goals” (even very general ones such as “do your best”) instead of outcome goals). Goals can reduce cooperation and intrinsic motivation. The authors say that “Although people recognize the importance of intrinsic rewards in motivating themselves, people exaggerate the importance of extrinsic rewards in motivating others.”
In the end, managers should be aware that the damaging effects of goal setting often outweigh its benefits. They should realize that setting goals is a challenging process, especially in novel settings and ask specific questions about the value of goals in particular settings. The authors provide some help here, including a table on how to harness the power of goal while minimizing the dangers by considering ten questions.