Leadership Exchange - Summer 2009

When Goal Setting Goes Bad

It is the rare manager who does not participate in quarterly or annual goal-setting exercises. And woe to those who do not make their goals SMART (Specific, Measurable,

Attainable, Realistic, Timely).

But do these goals really work? Researchers from four top business schools have collaborated to show that in many cases goals do more harm than good. Worse, they can cause real damage to organizations and individuals using them. “We argue that the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored,” the researchers conclude. Bad “side effects” produced by goal-setting programs include a rise in unethical behavior, over-focus on one area while neglecting other parts of the organization, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation.

Used wisely, goals can inspire employees and improve
performance, the authors agree. But goal setting must be
prescribed in doses, not as a standard remedy to increase
productivity. When people focus on a
specific stretch goal, and fail to perform
other valued activities that are needed by
the organization, goals are failing. When
employees care exclusively about reaching a
goal, and bad things can happen if they fail,
cheating goes up. Creating environments
where people want to achieve, where they
want to help the organization, and where
they want to do so in an ethical manner can
be greater motivations for employees than
goal setting.

Harvard Business Review, Working Knowledge, March 2, 2009

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