With just weeks left until the new year, many managers are setting goals for their employees: how many hours to bill, deals to close, and products to sell in 2016.
Generally speaking, having concrete objectives is a good idea, one that’s supported by years of scientific research. Knowing exactly what you need to achieve and knowing that your performance will ultimately be measured can be highly motivational.
Yet a growing body of research, much of it led by the Wharton School’s Maurice Schweitzer and colleagues, focuses on the potential downsides of goal-setting at work and how it can backfire.
Specifically, when leaders outline goals for their employees without monitoring the processes they use to get there, unethical or unfavorable behaviour can sometimes follow.
For example, Schweitzer said, a manager might tell an employee: “I need sales to be X. Here’s the budget — how you get there is up to you. Figure out the best process.”
On the one hand, that kind of conversation is empowering — there’s no micromanaging, and the employee has a lot of autonomy in her work.
On the other hand, Schweitzer said the manager could be sending the message, “I care about hitting these numbers. How you get there, I don’t care about.” That might leave the employee thinking that she has to do whatever it takes to reach those targets, even if it means cutting some corners.
Schweitzer gave several examples of how this scenario plays out in real organisations.
Perhaps most famously, in 1992, Sears, Roebuck, and Co. abandoned its commission-based payment system after government officials accused the company of defrauding customers by charging them for unnecessary auto repairs.
Presumably, Sears leadership thought they were motivating employees to work harder by rewarding them for hitting certain sales goals. But employees were so set on reaching those goals that they were willing to do anything to get there, even if it meant acting unethically. As a result, the company suffered a tremendous setback.
Schweitzer said this kind of behaviour “happens all the time” at law firms that require lawyers to bill their hours to clients, though he admitted he doesn’t have the data to back up that assertion.
Knowing you need to bill a certain amount of hours every week can be constructive, Schweitzer said, because it motivates you to stay that extra hour on Thursday night when you’re behind. But it can also be highly destructive when lawyers are inclined to round up their numbers in order to make it look like they hit their targets.
The real issue, according to Schweitzer, is that processes are a lot harder to measure than objectives (how do you quantify effort?), and we’re inclined to measure the things that are easier to measure.
So how can managers avoid falling into this trap? How can they convey that they value the effort employees put in to reach their goals, and prevent dishonesty?
Schweitzer said one alternative is to set multiple targets, instead of just one. That way, employees don’t either succeed or fail; there are several ways to measure their contributions to the organisation.
Another option is simply for managers to sit down with employees and review how exactly they reached their goals. “Communicate that you care about the process,” Schweitzer said. Otherwise, it’s possible that leaders could create a “culture of not being ethical with reporting.”
The best managers, Schweitzer said, will find a balance between rewarding efforts and outcomes. “Sometimes the two aren’t perfectly correlated.”
No one’s advocating doing away with professional goals entirely. There’s too much scientific evidence of their effectiveness.
“Goals are great,” Schweitzer said. “They give us direction, so that we know where we’re going.”
The trick to setting goals effectively is finding that balance between micromanaging and giving complete autonomy, between valuing results and valuing efforts. It’s difficult, but it will benefit the organisation and make everyone’s lives easier in the long run.
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