Did you
follow the FIFA World Championship last month? Even for non-soccer lovers it
must have been quite a show to watch. Heroic actions, crazy supporters, utter
and deeply felt joy, drama. All this makes an event epic. Now imagine
a World Championship without a prize. No World Cup and no
World Champion. All these matches, supporters, trainings, money spent; just for
fun. That wouldn’t be the same, right?
A World
Championships without a World Cup is like a KPI without a goal. The goal is
what gives the KPI meaning. A goal can provide purpose to an otherwise meaningless task. It
is a standard for assessing effectiveness (Locke & Latham, 2009). It is
therefore that goal-setting is being promoted to improve performance in
organizations.
As long as
a person is committed to the goal, has the requisite ability to attain it, and
does not have conflicting goals, there is a positive, linear relationship
between goal difficulty and task performance (Lock & Latham, 2006). In
other words, the more specific and challenging the goal, the better the
performance.
Perfect! As
long as we set one unique, unambiguous and challenging goal, we should be able
to start measuring the performance it boosts. Unfortunately setting goals isn’t
as easy as one might think. One should be careful in defining and implementing
them, especially because they heavily influence our behavior. There are many
pitfalls that endanger setting right goals (and setting the goals right).
Watch out for the banana peels!
I takes
people to achieve goals. Without someone actually doing something (perform),
you know for sure that nothing is achieved. And if you are fortunate enough
these people they pursuit the same goal as you had in mind. Goals “inform the
individual about what behavior is valued and appreciated. This makes the
goal-KPI interaction so special. In the next paragraphs I'll discuss some of
the possible pitfalls. Again, I’m not saying here that we should abandon using
goals. It’s all about being cautious. Setting goals is a difficult and
intricate process.
1. Goals focus
attention, but goals can focus attention so narrowly that people overlook other
important features of a task (called inattentional blindness, Simons and
Chabris, 1999). If you want to experience this effect yourself, search for
“awareness test” at YouTube. Intense focus can blind people to important issues
that appear unrelated to their goal. Combine this with a wrongly choosen goal,
and you have a mixture for disaster (e.g. with Enron the goal was revenue
setting instead of profit).
2. It’s not
uncommon for a company to have multiple goals. Problem is that we humans tend
to focus on one or two goals at a time. Furthermore research suggests that some
goals are more likely to be ignored than others (Gilliland and Landis, 1992).
That why goals in sports are so powerful. It’s most often one single
unique objective: win.
3. If
management focuses only on the long term and ignores the short term, they will
not make it to the long term. If management ignores the long term due to
focusing on the short term, there is no long term either. Goals that emphasize
immediate performance, prompt managers to engage in short term behavior (e.g.
this quarter’s profits). This might result in less investments in research and
development. Goals are in this case interpret as ceilings rather than floors
for performance (Ordóñez et al., 2009)
4. People are
people. Complete with all their emotional ups-and downs. Setting behavior in
motion via goals is useful, but can also lead to unpredictable behavior.
Research shows for example demonstrates that people motivated by specific,
challenging goals adopt riskier strategies and choose riskier gambles than do
those with less challenging or more vague goals (Larrick and others). In
extreme cases it might even lead to undertake unethical actions and immoral
decisions. In the recent crisis in the banking industry there are plenty of
examples where this could have been one of the related factors. . Even the
smallest action can lead to broad implications. More importantly for our KPI
implementation, it might lead people to misrepresent their performance (in a
later blog there will be much more on this topic).
Choose your goals wisely!
There is an
undeniable interaction between goals and the organizational culture. Management
by objectives might lead to focus on the end, rather than the means. Realize
that there is always a possibility that goals might not be reached. Depending
on the culture promoted this could lead to dissatisfied employees, competition
rather than cooperation (silo-thinking) and blaming others. So here are some
tips:
- · Involve the people who have to achieve the goal (they know best!)
- · Create specific goals for different people
- · Ensure yourself that the goals can actually be met
- · Break down long term goals into short term goals
- · Do a pre-mortem: Imagine yourself not having met the goal (what went wrong)
- · Be the bad guy for an hour: Imagine yourself sabotaging the goal (what would someone do that doesn’t believe the goals should be met)
- · Listen! Listen! Listen! Really listen to people involved in setting the goals
This blog
is based on two articles:
“Goals Gone
Wild: The Systematic Side Effects of Over-Prescribing Goal Setting” by Lisa D.
Ordóñez et al. (2009) and
“Has Goals
Gone Wild, or Have Its Attackers Abandoned Good Sholarship” by Locke &
Latham (2009)
Next time Step Two: Choose the KEY performance factor
that influences your success
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