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Performance Reset

Performance Reset

Goal Setting 101: Stretch Goals Might Kill Employee Motivation

January 19, 2012
Related Topics: Strategy and Management
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The year-end numbers are in, and for many organizations last year’s performance seems to demand big improvement in the new year. Now is the time to set stretch goals, right? Not so fast! If your company takes part in the annual ritual of setting stretch goals, be sure you know what you are getting into if it is indeed improved performance you seek.

There are typically three reasons managers go through the formal practice of establishing stretch goals, but all three are not without contention. The first is that managers mistakenly believe setting stretch goals will motivate employees to achieve more than they would by only setting reasonable goals. The reality is, it doesn’t. It is more likely to produce unhealthy tension or apathy.

Secondly, managers are under pressure from their managers to achieve significant improvement, and more times than not, those numbers are quite high. As a result, they turn to employees and push them to reach higher than they even think they can, with the hope that it will motivate them to hit those unattainable goals. The research shows that 90 percent of the time it doesn’t.

The final reason can be linked to the fact that "it’s just how things are done around here." For many organizations, right or wrong, it’s just part of their organizational culture to employ and reward those hard-nosed and demanding managers.  The truth is they may get results that way, but they aren’t the right kind of results, as people will often do whatever it takes to reach them and some of the behaviors used may not be acceptable. Over time the organization will pay a price in employee attrition, slow growth, poor customer service and competitiveness. One saving grace for companies that use stretch goals is that almost all of their competitors use the same goal-setting methods so it doesn’t create an advantage or disadvantage. The real advantage comes to organizations that break the “stretch habit” and use small shaping goals instead. Researchers define stretch goals as goals that are attained less than 10 percent of the time. If it’s specific behavior you want (in the form of improved performance), then why use a tactic that will only get you there one out of 10 times?

For any behavior to continue, reinforcement must be present. When goals are set too high, there is no opportunity for positive reinforcement and therefore the behavior will undergo extinction over time. But, when there is a concerted effort to apply positive reinforcement for small accomplishments, discretionary effort is the likely result.   Under this goal-setting process, people will do much more than is required and the results can be astounding.

Goals can be very useful in business when they are clearly, logically and frequently connected to positive reinforcement for productive employee behavior. By setting many mini-goals you increase the probability for success as positive reinforcement accelerates performance -- the more reinforcement, the faster and greater the improvement. As the saying goes, success breeds success. It’s also important to chart progress toward goals, as this makes them visible. By using short intervals (e.g. daily vs. weekly or monthly), employees can see how their progress is linked to the ultimate goal. Lastly, be sure to plan positive reinforcement for improvement. Small, specific measurable goals combined with frequent feedback and positive reinforcement for improvement creates a powerful combination for dramatic and quick improvement. Although it seems counterintuitive that small goals outperform larger ones, it is true. Try it for yourself. It will make a believer out of you.

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