By Tim Askew via inc.com Article
The Slippery Slope of Goals and Incentives
“While historic studies point to the positive impact of goals on increasing business performance, more recent research, including by many of the attendees and presenters, pointed to the the fact that overemphasis on goals encourages unethical behavior. The symptoms of this include increased moral disengagement, decreased individual self-regulation, and hazardous risk-taking.
Put another way, setting and pursuing ambitious corporate goals appears to incentivize employees to cheat, lie, and flimflam. It encourages short-term thinking. It undermines healthy process and culture. …
The case against the over reliance on metrics was summed up neatly by Lisa Ordonez, Vice Dean at the Eller College of Management at the University of Arizona …
Specific organizational effects Ordonez warns of include systemic problems from narrowed focus, unethical behavior, risk taking, decreased cooperation, and decreased intrinsic motivation. “Goal setting is management by numbers,” states Ordonez, and institutional incentives need to be assigned very carefully and in the context of principles.
She cites several episodes of goal-setting culminating in corporate disasters. For example, she points to this year’s compliance calamity at Volkswagen. Volkswagen had set two demanding goals for itself: to comply with and effectuate mandated environmental standards and to become the biggest car company in the world.
It did not work out well. As employees and managers at Volkswagen started work on the aggressive company goals, they quickly realized they could not easily meet the strict American (EPA) and European standards. Rather than admit that, they decided to cheat. And cheat massively and systemically.”