The hidden dangers of goal setting by Philip Delves Broughton, Management Today, June 2009

This article is of relevance to current debates in both the public and private sectors; for instance do targets make doctors and teachers focus on the wrong patient priorities to massage the figures? Are managers in the private sector too focussed on short-term goals and is that at the root of the banking crisis?

This article suggests an important shift in attitudes might be taking place and quotes the announcement by the new CEO of Unilever, Paul Polman, that he will abandon quarterly financial targets, as a potential watershed in attitudes at the top. Certainly those of us who remember the days of Unilever’s ‘Path to Growth’ and the impact of failing to meet the ambitious publicly declared goals, will sympathise with this view. Polman states that ‘consistent delivery over time’ is what matters and that ‘we need new habits and to avoid chasing our tail’.

The article quotes the police force and rail network as examples of public sector operations where common sense and customer interests have been forgotten in the interests of targets; to quote his words - ‘managers become target setters rather than implementors’. The author’s view is that both public and private sector bodies are far too complex to be judged by one or two quantitative goals and it is inevitable that there will be adverse, unintended consequences. These pose unnecessary stress and create a fear of failure, reduce cooperation and decrease motivation in the long-term.

Broughton suggests that slavish adhesion to short-term targets was a major factor in the demise of both Northern Rock and Enron; he also believes that this was exacerbated by the fact that they set revenue rather than profit goals as their number one priority. This may apply to Northern Rock but I do not agree with that assessment in the case of Enron. The key factor as that they were fraudently manipulating profits; the problem was not revenue or profit targets but ethics.

This view is confirmed later in the article when the author changes his stance to say that in fact targets are not the real problem; they do have benefits because most people perform better when they have clear goals. The problem is the ethics of those who pursue and monitor them. It is the lies and the bad behaviour shown by those who are being measured - and tolerated by those who manage them - that is the real problem. And if this is the way that most competitive managers behave, it would be better not to have targets, or at least to set goals that are more flexible and easily achievable.

One recommended answer in the article is to create learning goals rather than performance goals, which sounds sensible but is never fully explained with examples and guidance. It would have been good to hear more on this; without such a follow-up the article veers too much to the negative side. It would also be interesting to hear more about how those like Unilever’s Paul Polman, who are ditching targets, are replacing them with other more effective motivational tools.

To access this article go to:

http://www.managementtoday.co.uk/search/article/908158/why-excessive-goal-setting-bad-business/