A man leaves work on a stormy afternoon, only to find that he is unable to catch a cab. This is because all the cabs have been taken by the many other commuters who don’t want to walk home in the rain, right? One group of researchers argues that while this DOES reflect increased demand, it is also the result of decreased supply, and exemplifies the potential de-motivating effects that goals can have. The researchers found that cab drivers would set daily wage goals. On sunny days, one would have to drive a full shift in order to reach those goals. But with the increased demand on rainy days, the drivers would find success much more quickly. As drivers reached their daily wage targets, they would end their shifts early, calling that day a success. This would leave an increased number of soggy commuters to battle over a ride home (Camerer, Babcock, Loewenstein, & Thaler, 1997).
This represents a challenge that companies face as they approach and eventually achieve the goals they have set for themselves. Authors Ordóñez, Schweitzer, Galinsky, and Bazerman point out that people tend to view goals as “ceilings” rather than “floors.” They suggest that an employee who has reached his assigned goal is one who, in his own eyes, has earned the right to slack off for the remainder of the associated timeframe. A natural remedy might be to set a higher goal once the original is achieved. This IS a recommended approach when dealing with short term goals designed to incrementally make progress toward a lofty long-term result. In other cases though, this approach can get you into trouble.
Consider, for example, any metric that is represented as a percentage. You may start by setting a goal of 85%. Once that is achieved, you might choose to raise the bar to 90%. But as performance improves, further progress becomes more and more of a challenge. There may even come a point when the next targeted score is actually impossible. Remember that there is often a limit (in this case, 100%).
This brings me to what is undoubtedly the most important component of goal-based management: the desired business outcome (discussed in Parts 2, 3, and 5 of this series). Never lose sight of WHY you set a goal in the first place!
If there is no more room for improvement in the target metric and the desired outcome has not yet been realized, you’ll need to determine why that is. Maybe the indicators of that ultimate outcome have shifted, or perhaps the originally-targeted metric is simply one of multiple contributors to that final indicator of success. If, on the other hand, achieving your goal has already led you to that business outcome, then congratulations are in order. It’s time to kick back and let your business run itself.
Director, Marketing Sciences
Ordonez, Lisa D.; Maurice E. Schweitzer; Adam D. Galinsky; and Max H. Bazerman (2009). "Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Settings" Harvard Business School Working Paper.
Camerer, C., Babcock, L., Loewenstein, G., & Thaler, R. (1997). Labor Supply of New York
City Cabdrivers: One Day at a Time. The Quarterly Journal of Economics, 112(2), 407- 441.