Don’t Set Business Goals for 2019….

…Unless you also set ethical goals and goals that are ecological for you, those you care about, those you serve and the wider society. Yes, setting business goals comes with huge responsibility!

The beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting (alone), has been largely ignored. We have identified specific side effects associated with goal setting, including a narrow focus that neglects non-goal areas, distorted risk preferences, a rise in unethical behaviour, inhibited learning, corrosion of organisational culture, and reduced intrinsic motivation” – Harvard Business Review

What’s the Problem?
Business researchers and managers agree: goal setting “works”. It increases employee persistence, effort, and performance. But might goal setting work negatively as well? Recent research has begun to recognise that aggressive goal setting can lead to unethical behaviour in the workplace. Think financial services, banking and care homes to name a few areas. This behaviour occurs for several reasons:

  1. Goals act as mental blinders that keep us from evaluating the ethicality of our behaviour. Thus, we may be acting in unethical ways without our conscious knowledge (until it is too late).
  2. In an effort to achieve a goal (especially with financial incentives and under threats of losing a job), it’s easier to justify our bad behaviour. Who hasn’t heard of situations in which sales managers say, “I don’t care how you do it, just meet your numbers!”
  3. Before we have met our goals, we are in a negative position relative to the reference point (goal), which is known as a “loss”. Once we meet our goal, then we are in a “gain” situation relative to the goal. Research indicates, being in a loss situation leads to riskier decisions than when in a gain situation. Given that unethical behaviour is risky, we may well be willing to take the risk to meet our goal.
  4. Research indicates that ethical behaviour requires cognitive resources; when we are tired, we are more likely to behave unethically. When we strive to reach a goal, we increase effort, persistence, and performance, which reduces our cognitive resources. Thus, the core ways in which goals “work” may lead to unethical behaviour.
  5. Fixed-targets in the sales environment can and often do drive a mindset of ‘achieve at all costs’, with the customer or client losing out.

Instead we should focus upon our thought out and ecologically sound Daily Standards. Daily Standards are the daily Basis, Criteria, Levels, Qualities and Rules that are consciously set from within an organisation. As such they should be ethical and ecologically sound for all stakeholders. These Standards are committed to, monitored and maintained, just today and then one business day at a time. Anyone can maintain great Standards if it’s only until the end of the work day. It’s not about what we’re striving for. It’s about how we strive for it.

Why This is Critical

Many believe that if they only hire good, moral people, they can ensure an ethical environment. However, a great deal of research now suggests that context matters more than personal ethical belief systems. While there are people at both ends of the distribution (i.e., pathological liars or unwavering saints), most land somewhere in the middle – we hope to lead a virtuous life, but the situation can impact our choices.

Consider the emissions scandal at Volkswagen and other motor companies…

Also refer to the Joseph Keogh report and Mid-Staffordshire hospital scandal which cost thousands of lives and highlighted the hugely damaging effect of overprescribing goals in the third sector…

Thus, it is imperative that we take a systemic approach to designing organisations that encourage ethical behaviour. While goals encourage effort, persistence, and increased performance, they may also help create a toxic environment in which ethical behaviour is incongruent with success. For example, the CEO of Wells Fargo, John Strumpf, announced in the wake of their customer cheating scandal that “We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.” By removing sales goals, they aim to create an environment in which employees could be rewarded by a higher-purpose: meeting the needs of customers in an ethical manner.

What Should an Organisation Do instead?

…..Take a Risk!

Take a risk by having systems and processes that adhere to Daily Standards, set by agreement within the organisation and bought-in to by the delivery team.

Daily Standards, and the adherence to them can be used to motivate employees without creating a potential negative impact in the present time, or the future for the organisations and those it whispers to serve. Hence, a better system is a Daily Standards and Values-based ethics program:

  1. Realise that Goals are a compass, not a GPS! – We want goals to guide our behaviour (compass) rather than prescribe the exact time and location of our arrival (GPS). Often goals that are set at the beginning of the year become irrelevant by year-end due to unforeseen factors. Yet, many employees continue to work toward meeting those goals, due to the belief that they must be met, almost at any cost, including the cost to them, their health, their families and reputation. Allow employees to make course corrections while continuing on the right path.
  2. Do not punish employees for not meeting goals – If employees are punished (e.g. demotion or job loss) for missing targets, those and other employees may be more likely to risk acting unethically in order to meet future goals.
  3. Monitor both the what and the how – Merely rewarding those who meet goals (the what), without regard to the way those goals are achieved (the how), communicates that only “hitting the numbers” matters. Evaluation systems that monitor and incentivise leaders to create supportive work environments, will encourage them to think beyond the numbers about how they are meeting their goals.
  4. Don’t only ‘manage by the numbers’ – Goal-setting is more than just numerical targets. Engage with your employees to better understand what motivates them personally. It’s not always about the financial reward. This is just one component of a robust performance management system.
  5. Tap into intrinsic motivation – Reduce reliance on goals by appealing to employee’s intrinsic motivation to perform. This can be done by highlighting the purpose of the work, making work more enjoyable, and offering opportunities for task improvement and advancement in the organisation.

Remember: How we do things is more important than trying to achieve a goal, no matter the cost.