If I had a nickel for every organization I’ve worked with where we talked about setting company goals, stretch goals, KPIs, individual goals, OKRs, SMART goals, big hairy audacious goals, etc., etc., I’d still be writing this blog, but would probably be doing it from an epic beach house in Bali. Every organization is obsessed with goals. Goals make us feel safe. Goals make us feel organized. Goals make us feel successful. Goals make us feel like we're heading in the same direction. Goals make us feel like there is a tiny bit of order amidst our typical chaos.
Yet, we’ve all experienced the wacky effects of goals too. Have you ever set a goal, achieved it, then been rewarded with…more work? Which then meant the following year, you made sure you didn't achieve the goal until the very end? Or, set a goal, achieved it earlier than expected and then coasted along because you already hit the mark? Or, scrambled to achieve a sales goal by the end of the year, even though it really wouldn’t matter if the sales were closed on January 1st? Or, set a goal around revenue, but ignored profit or operational efficiency?
As a manager, you are undoubtedly going to set or help set goals for your employees. Goals help to motivate your team members, guide action, and encourage persistence. Goals are an important part of expectation-setting and an important part of individual development planning, two topics we know are important in being a great manager. But, despite the use of goals pretty much everywhere, goal-setting is a nuanced tool that can harm as much as it can help. Goals, when poorly used, can overly stress employees, drive unethical behavior, and induce the opposite outcome of what you actually want. So, to be a great manager, you need to help your employees develop effective goals and help them to understand when goals just don’t matter.
Well, what makes a great, effective goal? Much research has been devoted to this topic, and to sum it up, great goals are difficult but not impossible (your team can achieve the goal, but is challenged in doing it); great goals are specific ("do your best" is less effective than "hire 6 qualified engineers"); and great goals have commitment (when your employee sets her own goal, there is greater buy-in to achieving the goal).
Given how much many of us use goals in our day-to-day work, I feel awkward even writing the above statements. Half of you are probably thinking, “Duh – I’ve been setting these types of goals since kindergarten.” The other half of you probably have your SMART goals (“Specific, Measurable, Attainable, Relevant, Time bound”) as your screen saver, constantly reminding you to work towards them each day.
But, what’s the downside of goals? I mean, they’re just notes on paper or on a power-point slide…how bad could they be? Well, goals have been shown to increase unethical behavior as organizations and individuals may get so focused on hitting a goal that they push ethics aside. (See Wells Fargo and Uber as recent examples of organizations caught up in this phenomenon). But where else is there a risk in goal-setting? What makes a goal scary?
The Super-Overly Simplified Ways That Make Goals Really Scary
1. Goals that are too specific: when we put together a goal that’s too specific and focus on trying to narrowly achieve that goal, we may lose sight of the bigger picture. I see start-ups do this a lot – we put a goal for our employees to sell ‘x’ number of contracts, yet we miss the bigger picture of building a sustainable organization. We sell the contracts, but fail to think about profitability, operating efficiencies, or other important attributes of growth.
2. Not seeing additional opportunities or areas of innovation because they are outside the bounds of our goals – it’s important to allow ourselves the flexibility to pivot, try something new, and take a risk, despite a goal in place. In fast growing organizations, I find it crazy that we set annual goals (and insist on sticking to these annual goals) despite the fact that the organization is going to change drastically in the next few months. The serious risk for a start-up is when our goals prevent us from changing course in order to respond to a competitor or a shift in the market.
3. Having too many goals – when we end up overloading ourselves with goals, we do this very human thing of focusing on the easy goals and ignoring the harder ones. I call this the 'to-do list' phenomenon: we write up a long list of things to accomplish and immediately focus on the really easy ones we can cross off (e.g., 'brush my teeth') and feel a sense of false accomplishment when we cross them off.
4. The really stinky feeling that comes when you just miss a goal – goals are meant to be motivating, but when we just miss a goal we set out for ourselves, they are very demotivating (think how bad it feels when your revenue target is $20mm and you end the year at $19.5mm). This is the idea of loss aversion. In the goal setting world, loss aversion means that coming in right under a goal hurts a heck of a lot more than the positive feeling of coming in right over a goal (now think how no one really cares if you come in over your revenue target at $20.5mm).
As a manager, you have a goal of helping your team members be motivated, grow, develop and be challenged in their jobs. Often, to do that, you’ll help your team members set goals and help them to achieve those goals. So, as you use goal-setting as another tool in your managerial tool belt remember to:
1. Think really hard about what behavior the goal will encourage and what will happen when the employee hits the goal.
2. Give lots of feedback along the way as folks look to achieve their goals.
3. Don’t set stretch goals then punish failure, especially if there is a chance that your team may use behaviors (including things like working too much(!) as well as unethical behaviors) to achieve those goals.
4. If you're setting a goal, make sure it's specific, your team has bought-into it, it's time-bound, and it matters.
5. Think about goals as being dynamic, encourage goals to change, and celebrate when an employee bails on a goal that needs to be bailed on!
Enjoy the goal-setting!
TLDR
Goal-setting is a powerful tool that can help motivate teams and drive productive behavior
But, goals can also create unintended consequences, including unethical behavior, a myopic view of the organization, and a failure to innovate.
Furthermore, in start-ups, annual goals are often wildly mismatched with how the business operates: static goals don’t align to a dynamic and quick-changing environment.
When setting goals with your team members, make sure you are aware of the upsides and downsides of goals, and be okay with not using goals to help motivate and guide action.
Want to read more about “bad” goals in a variety of settings? Here are some of my favorites on the topic!
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