Goals Gone Wild

In 2009 Harvard Business School published a draft paper entitled “Goals Gone Wild“, and its abstract is quite concerning. For example:

“We identify specific side effects associated with goal setting, including a narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation.”

Are we doomed? Is all goal setting harmful? Interestingly, I came across this paper while reading Measure What Matters, which argues the exact opposite point — that OKRs provide a meaningful way to improve the productivity of an organization.

The paper starts by listing a series of examples of goal setting gone wrong: Sears’ auto repair in the early 1900s over charging customers to meet hourly billable goals; Enron’s sales targets based solely on volume and revenue and not profit; and Ford Motor Company’s goal of shipping a car at a specific target price point which resulted in significant safety failures.

The paper then provides specific examples of how goals can go wrong:

  • By being too specific and causing other important features of a task to be ignored — for example shipping on a specific deadline but ignoring testing adequately to achieve that deadline.
  • By being too common — employees with more than one goal tend to focus on one and ignore the others. For example studies have shown that if you present someone with both quality and quantity goals, that they will fixate on the quantity goals over the quality ones.
  • Inappropriate time horizon — for example, producing quarterly results by canibalizing longer term outcomes. Additionally, goals can be percieved as ceilings not floors, that is once a goal has been met attention is diverted elsewhere instead of over delivering on the goal.
  • By encouraging inappropriate risk taking or unethical behaviour — if a goal is too challenging, then an employee is encouraged to take risks they would not normally be able to justify in order to meet the goal.
  • Stretch goals that are not met hard employee’s confidence in their abilities and impact future performance.
  • A narrowly focused performance goal discourages learning and collaboration with coworkers. These tasks detract from time spent on the narrowly defined target, and are therefore de-emphasised.

The paper also calls out that while most people can see some amount of intrinsic motivation in their own behaviours, goals are extrinsic motivation and can be overused when applied to an intrinsicly motivated workforce.

Overall, the paper urges managers to consider if they goals they are setting are nessesary, and notes that goals should only be used in narrow circumstances.