Why ‘Management by the Numbers’ Doesn’t Work…

Daniel Markovitz posted a blog called ‘The Folly of Stretch Goals’ in the Harvard Business Review. He outlined the dangers of using ‘stretch goals’ and gives some examples of unwanted behaviours that can result.

He identifies three areas where ‘stretch goals’ can result in ‘off the rails’ behaviours.

Stretch Goals Can be Demotivating

When an employee has to meet a target and some of the contributing factors to the ‘score’ are not under their control, this can be demoralizing. By focusing on hitting a quantitative target, an employee often feels a lack of inner satisfaction. Extrinsic rewards (money, position) can crowd out the intrinsic rewards like learning and growth. People often end up feeling manipulated.

Stretch Goals Can Foster Unethical Behaviour

In the 90s, Sears set a stretch goal for their mechanics of $147 and hour. As a result, many of them installed parts that weren’t needed and billed extra time. You can likely think of a few situations in your own organization where targets were set for your people and unethical behaviour resulted.

Stretch Goals Can Lead to Excessive Risk Taking

A few famous debacles spring to mind: Bre-X and Enron imploded because excessive risk-taking to meet value and revenue targets. And the Volkswagen diesel scandal would have been avoided if the engineers had used their ingenuity to actually improve the performance of their engines instead of trying to trick the emissions testing program.

We are NOT suggesting abandoning setting goals. Just make sure they are well designed and you’ve got all the right motivators in place. Also make sure your people have all the resources in place to meet their targets whatever they might be.

Know Quality, Know Profit…No Quality, No Profit

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