The Bear Trap that Looks Like a Cookie: The Seduction of Goal Setting Part 4 – Practical Experiences or How Not to Succeed in Goal Setting

             Many of you have likely been exposed to goals and goal setting at one time or another. Some experiences may be pretty good but I am willing to bet that many have been either pretty poor or down right dangerous. For a variety of reasons, most people required to set goals either have no training or no knowledge of good goal setting techniques. They may be driven by upper management or team leaders who are themselves ill-prepared to help or even harbor dangerous ideas when it comes to the overall organization mission. Below I have shared a few of the situations I have encountered in my working career regarding goals, goal setting and the results of goal setting. We can see the results of poor goal setting in the Wells Fargo Bank illegal practice of opening unauthorized accounts. The news broke around the first part of September, 2016 and caused significant problems for the bank and is still on-going at this time. Investigations by federal agencies, penalties and fines of $185 million (which some think is small potatoes for Wells Fargo), the CEO, John Strumpf, stepping down and significant headaches for the bank’s legal, ethics, and customer service groups are all causing problems for the bank. All because of bad goals. (Google Wells Fargo unauthorized accounts, for a list of several news organizations and articles on this.)

In my early career days I worked for a utility company in their finance group. We were different from the accounting department but still under the company treasurer. One of our main functions was to estimate future  weather (temperatures) and the effect it would have on revenues. We were very interested in average temperatures. Since our product, natural gas, was used by retail customers mainly for heating we tried to gauge the impact of varying weather scenarios. This was especially true for how cold we thought things would get. We would start with general cold weather estimates and based on historical data, which we had quite a bit of, we would estimate average per customer usage in various areas throughout our service territory. Then during the year I would compare actual sales to our projected sales and see how we did. It was especially helpful when the differences in average temperature vs. actual temperatures supported the difference in usage and revenue generated. Sometimes the differences were opposite the expected impact and we had to look for other things that might affect usage and revenue.

             One year the treasurer asked me to prepare the forecast usage (weather impact) and the corresponding revenue generated for the annual budget. I spent several days going over the historical data and making adjustments I thought were reasonable and justifiable. When done I took the forecast and revenue generated to be reviewed. The treasurer didn’t look at my model or assumptions or discussion but at the bottom line, the revenue. He said “Bruce, this total revenue number needs to be $1.0 million higher” and handed it back to me. I started to explain how the average temperatures and regional adjustments had been developed and that I felt very confident that there wasn’t an error. The treasurer gently stopped me before I got very far and commented that he wasn’t concerned about the model or assumptions but that the model needed to generate $1.0 million more revenue. It took me a little while and a couple of trips back to him but I finally caught on and added an “other revenue” line to the budget that contained $1.0 million. It was then signed off. During the year I would compare the actual weather vs. the average weather forecast to see where revenue differences could be explained and I used the “other revenue” line to absorb changes I couldn’t explain.

             That was one of the first experiences I had with goal setting and reaching the goal. The treasurer either had set a goal or had been given a goal to generate so much revenue. It was not as important that the forecast model was right or wrong as it was to have the correct revenue generated. This illustrates how goals can impact in ways and places we might not normally expect. Who would have suspected that weather manipulation was so important. It wasn’t of course but it was a means to an end. No one knew what the weather was going to be but we had established, over many years, a process that had been well vetted and well received. That particular year the process was changed because of a goal.

             Some time later I was a manager in the public finance group of a large financial services company. I managed a group of very highly trained professionals with unique skill sets and knowledge. In an organization of over 100,000 employees my group of 4 to 6 people were the only employees that did what we did. They were not clerical people but like most professionals knew and could perform some clerical functions. At one point I was approached by a new HR representative asking about the performance reviews I had prepared for my people. She had reviewed my performance reports and had prepared new performance review reports she wanted me to use. The new forms were a series of statements with check boxes I was to use to show if my people were under, at or above performance levels as contained in the statements. The HR person was concerned that I had not set enough goals  for my people. Her main concern was that I did not have sufficient concrete goals to see if my people had “performed” fully. The performance reports I had been using were ones used for several years and I had thought, adequate. HR decided to “update” the process. I was not involved in writing or helping create the new reports that would be used for my people who were the only people in the company that did what we did. I was not given the chance to review or comment on the new reports. I was told to fill out the new reports by a date specific and return them to her. It was a mess. The reports were essentially a modified clerical position performance review report. Since some of my most junior people were on a similar pay level as some of the most senior clerical people, it appeared the HR person had just modified  clerical performance forms. As you would suspect it didn’t work, at all. It took me about 4 months to get things straightened out. In the end I was able to get goals that allowed my people enough flexibility to do their varied jobs and some freedom to try new things and ideas.  But I still had to include some goals with check boxes. I have trouble understanding the need for checkboxes.

             Sometimes a company wants to make drastic changes to its business model. New goals can be an effective way to implement changes quickly. During the great recession of 2007 – 2009 the organization I was working for bought out a competitor. In my business area the purchased firm was given control of the operations not the buying firm. The people who had been bought out by our company convinced executive management that extreme changes needed to be make which would make division look more like the bought out company. There was a lot of difference between the two division (old division and purchased division) philosophies. The bought out division was able to quickly make changes through establishing new goals. Many people who didn’t fit the new look or mold were fired, several quit because they didn’t agree with the new direction and goals and the change was completed fairly quickly but with a fair amount of disruption to the new combined division.

             This concludes the series of blogs on goal and goal setting. Don’t give up hope on goals but don’t be snowed under by them either. As the authors of the Harvard Business study on goal setting I referenced in part 1 of this series, goal setting should be used judiciously and with much thought and regular, consistent review. It is not something to take lightly.