The Bear Trap That Looks Like a Cookie: The Seduction of Goal Setting Part 3 - It's All About the Goals, Stupid

             We have been talking about problems associated with goals and goal setting, especially performance goals. We will continue the process of reviewing and uncovering the pitfalls and traps of poorly worked and implemented goals. Remember, it is easier to create poor goals than good ones, as many of you may experience regularly.

             Many claim that goals set at the most challenging levels create the greatest inspiration or commitment or performance. You have all heard that if we don’t shoot for the stars we will never hit them. The logic is flawed. Many may look at such goals and see the impossible nature and just not try. If employees do try for such goals they may resort to excessive risk taking, unethical behavior or dishonesty in their efforts to reach such goals.

             A problem of risk taking is that it may very well distort the risk preferences of the company or manager. Extreme goals can drive excessive risk taking. It does no good for a manager to claim they didn’t want excessive risk when there are few or limited options to success. Excessive risk can be generated by management and managers who are fixated on goals to the exclusion of common sense. Some managers may associate the goals with the idea of destiny or an idealized future for themselves. Goals then drive the justification for risk taking. Risk taking can also be used to justify face-saving activities if goals are not meet. At Wells Fargo during the great recession of 2008 the company acquired Wachovia Bank. At that time senior management designated Wachovia management as in charge of Wells Fargo public finance responsibilities and other related functions. The new management decided that it was necessary to change the focus (goals) for these related areas to become more like what is called a New York investment house. In order to do that it was necessary to create significant changes in goals and emphasis. Many employees were either let go or quite rather than take on the new goals and requirements which many considered overly ambitious and did not serve the bank’s client base. Since that time there has been significant changes in the type of clients served and not served as well as employee turnover and change.

             As mentioned earlier, overly challenging goals can lead to unethical behavior. If missing the goal contains a high price of failure, it may be easier to “fudge” the difference in the actual performance and the goal by cheating or misrepresenting the performance. Extreme goals can make unethical behavior more likely. Aggressive goals can make unethical behavior more rewarding or increase the likelihood of unethical activities or behavior. With such pressure there has to be greater vigilance to watch for and correct unethical behavior.

             Too challenging goals can cause dissatisfaction and lead to psychological consequences of failure. Missed goals can also affect future performance. Dissatisfaction can lead to employees quitting the organization, creating unfavorable comments and stories or other things that lead to loss of clients and customer and reduction in general company goodwill. Wells Fargo’s current problems including $185 million in fines and review by several Federal agencies was created by employees trying to reach over-challenging goals.

             Performance goals can have a negative impact on complex tasks. As individuals concentrate on specific,  challenging goals, they may learn less from the experience which will degrade overall performance. There may be better outcomes from encouraging one to do their best which allows for innovative thinking and solutions outside the box of the goal parameters. Specific, challenging goals may inhibit alternate solutions by creating a too narrow focus and penalize creative thinking. Narrow focused goals may encourage and inspire performance but at the cost of learning and innovation. If the challenge is to put more widgets together that can be addressed by a specific performance goal. However, the likelihood of finding a better way to put widgets together is greatly reduced.

             Goals can become a means unto themselves. They become their own reward. The final outcome moves from improvement to finishing the goal. Managers are likely to overvalue and overuse goals. Management can also use goals as a cop-out to cover poor management skills. This is particularly true in those situations where managers set a challenging new goal (or just a new goal) and then do not provide training, materials or guidance specific to the goals. The individual is left to “use their initiative” to solve the managers problem. The very nature of performance goals can create their own internal problems and barriers to success.

             Individuals may loose their ability to think creatively and independently, instead looking for the solutions only to the goal. The goals then create the drive and focus and may eliminate the ability to see the greater interactions and overall aims. Such things as mission statements and general purposes can get lost in the rush of reaching for the specific performance goal.

             Goals can create perceptions of unfairness which can be a significant problem. This is especially true when everyone has individual goals. One may feel that their goals are much harder or more difficult to accomplish than another. Allegations of favoritism can easily start which seriously damages team work and team communications. If all aspects of a goal are not thought through then it is easier to game such goals. Creative or productive energy is spent gaming the goals instead of improving the overall activity.

             As a former middle manager I was caught in the middle of goal setting; receiving goals from upper management and having to translate and create goals for my people. It was difficult and frustrating. Part of any goal is the need to monitor and control. Cheating on goals is fostered when rewards are dependent on performance quantity and not on quality outcomes. But quality requires more effort, planning and review than quantity. We may inadvertently put individuals into difficult ethical dilemmas by the type of goals we create thus forcing people to make choices that can and do have profound impacts on themselves and the company. Just look at Wells Fargo’s current problems.