Goals can have both positive and negative effects. Positively, goals can inspire employees and improve performance. However, goals can also have negative side effects such as narrowing employee focus, increasing risk-taking behavior, motivating unethical actions, reducing learning, fostering competition over cooperation, and decreasing intrinsic motivation. To mitigate these negative effects, managers must consider the complex interplay between goals and organizational culture, avoid creating stress for employees through goals, refrain from punishing failure to meet goals, and provide resources to help employees achieve ambitious goals. Careful implementation of goal-setting systems is necessary to maximize the benefits and minimize the harms of using goals.

1. Goals Gone Wild The Systematic Side Effects of
Overprescribing goal setting
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2. Introduction
 To improve/boost the performance and powerfully drive behavior, we need to set specific and challenging goals.
 “So 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”
 Yet, goals outcomes are not always positive. Some negative side effects are associated with goal setting such as:
 A narrow focus that neglects non-goal areas,
 Distorted risk preferences,
 Rise in unethical behavior
 Inhibited learning
 Corrosion of organizational culture
 Reduced intrinsic motivation
 Consequently, goal setting needs to be regarded as a prescription-strength medication that requires careful
dosing, consideration of harmful side effects, and close supervision.
 As such, goal setting has been promoted as an answer to improve employee motivation and performance in
organization.
 Please check examples on pp. 22 (Emblematic examples of goals gone wild – you can focus on Ford’s example)
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3. How Goals Go Wild
 To be successful and have positive outcomes, goals need to be
specific and challenging.
 Specific and challenging goals motivate performance better than “do
your best” slogan.
 Specific and challenging goals provide clear, unambiguous, and
objective means for evaluating employees performance
 Specific goals focus people’s attention; lacking a specific goal,
employee attention may be dispersed across too many possible
objectives
 Yet, and despite the fact that challenging and specific goals render
positive outcomes, these same characteristics cause goals to go wild.
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4. When goals are too specific
 Goals focus attention. Unfortunately, goals can focus attention so narrowly that people overlook other important
feature of a task (example pp. 23).
 Three situations: narrow goals, too many goals and inappropriate time horizons.
Narrow goals
 With goals, people narrow their focus on the specific task required and hence outcome expected. Such
intense focus will “blind” people from other important issues that appear to them unrelated to the goal
 Tendency to focus too narrowly on goals is compounded when managers plan the wrong course by setting the
wrong goal (e.g. setting revenue instead of profit goals). Consequently, setting the correct/appropriate goal is
a difficult process.
 Goal setting may cause people to ignore important dimensions of performance that are not specified by the
goal-setting system
 Example: a group of students are requested to proof read a paragraph that contains both grammatical and
content errors. When students were given instruction to correct either grammar or content (specific goal), the
result was not that satisfying. Many grammar or content errors were not corrected given that the focus was
not general but specific (either on grammar or on content) Yet, when students were requested to correct the
paragraph as a whole with no specific indications (do your best), students were more likely to correct both
grammatical and content errors  when no specific goal is set, people will look at the general image which
might give better results.
 When managers set specific goals, they often fail to determine the broader results of their directives. The presence
of goals might lead employees to focus on short-term gains and lose sight of potential devastating long-term effects
on the organization.
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5. When goals are too specific
Too many goals:
 When multiple goals are pursued at one time, this might cause problem for employees
 Employees tend in that case to focus only on one goal. Some types of goals are more likely to be
ignored than others.
 Example: In a stock selection task, participants are given both quality and quantity goals. When
quantity and quality goals were both difficult, participants sacrificed quality to meet quantity 
Goals that are easier to achieve and measure (in that case quantity goals) may be given more attention
than other goals (in that case quality goals).
Inappropriate time horizon:
 Even if goals are set correctly, time horizon to achieve them may be inappropriate
 Goals that emphasize immediate performance (e.g. this quarter’s profits) prompt managers to engage
in myopic, short term behavior that harms the organization in the long run (for instance,
companies that issued quarterly earnings reports frequently (short term goal) tended to
invest less in research and development (long term goal))  The efforts to meet
short-term targets occurred at the expenses of long-term growth.
 Check example on pp. 25 (New York City cab drivers example).
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6. When goals are too challenging
 It has been demonstrated that a positive linear relationship exists between the
difficulty of the goal and the employee performance. As such, to inspire effort,
commitment, and performance, goal should be at the most challenging level possible
but should not be so challenging that employees see no point in trying.
 Nevertheless, stretch/challenging goals can have serious side effects from shifting risk
attitudes to promoting unethical behavior to triggering the psychological costs of goal
failure.
 Three situations: risk taking, unethical behaviour, and dissatisfaction and the
psychological consequences of goal failure.
Risk taking:
 Goal setting distorts risk preferences. People motivated by specific, challenging goals adopt
riskier strategies (reference the assumption that high risk = better performance and higher
profits) than those with less challenging goals or vague goals.
 Goals harm negotiation performance by increasing risky behavior. Negotiators with goals are
more likely to fail to reach a profitable agreement than are negotiators who lack goals.
 The excessive focus on goals might hence lead to risk-taking behavior (cause of many real
world disasters)
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7. When goals are too challenging
 Example: Continental bank in the U.S. was one of the
most important banks. The bank set a new goal, and
that is to increase within five years the magnitude of
the bank’s lending ability. To achieve this objective, the
bank changed its strategy, bought loans from smaller
bank and pursued borrowers. It could have been the
seventh-largest U.S. bank if its borrowers had been
able to repay their loans; instead, following massive
loan defaults, the government had to bail out the
bank.
 Check other examples on pp. 26 (mount Everest
disaster)
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8. When goals are too challenging
Unethical behavior:
 Goal setting is seen as a powerful motivation tool yet, it can lead and promote
unethical behavior.
 Goal setting can promote two different types of cheating behavior (unethical
behavior):
 When motivated by a goal, people may choose to use unethical methods to reach it. Example: at
sears, and in order to reach the specific, challenging goal set by the administration, employees
charged customers for unnecessary repairs
 Goal setting can motivate people to report that they have met the goal when in fact they fell
short. Example: employees from a certain organization who were driven to reach sales target
reported sales that never took place.
 Goal setting is not the only cause of employee unethical behavior. It is an important
ingredient but other aspects interfere as well:
 Lax oversight
 Financial incentives for meeting performance targets
 Organizational culture with a week commitment to ethics.
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9. When goals are too challenging
 The interplay between goal setting and organizational culture is extremely important.
 An ethical organizational culture can restrain in the harmful effects of goal setting.
 Given that small decisions within an organization can have broad implications for
organizational culture, the aggressive goal setting within an organization increases the
likelihood of creating an organizational climate ripe for unethical behavior.
 Goal setting might motivate unethical behavior.
Dissatisfaction and the psychological consequences of goal failure:
 When problem embedded in stretch goals is the possibility that the goal may not
be reached which will lead to satisfaction. Decrease in satisfaction will influence
how people view themselves and have important consequences for future
behavior. Consequently, perceptions of self-efficacy are a key predictor of task
engagement, commitment and effort.
 In other words, one needs to believe in his/her personal ability and overall
intelligence as to be able to reach the goal.
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10. Goals, Learning and Cooperation
 Organizations need employees able to learn and collaborate with colleagues.
 Goals inhibit (slow down) learning:
 When individuals face complex task, specific and challenging goals may restrain
learning from experience and decrease performance. The narrow focus of specific goals
can inspire performance but prevent learning.
 “Learning goals” are hence recommended to be used in complex situations rather than
“performance goals”. Yet, sometimes it is difficult to do that given that managers may
have trouble determining when a task is complex enough to warrant a learning rather
than a performance goal.
 Goals create culture of competition:
 Organizations that rely heavily on goal setting may erode the foundation of cooperation
that holds groups together.
 Being too focused on achieving a specific goal may decrease extra-role behavior, such as
helping coworkers.
 Goals may promote competition rather than cooperation and ultimately lower overall
performance.
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11. When goals harm motivation
 A goal setting increase extrinsic motivation, yet, it can harm intrinsic motivation.
 This is an important issue, given that managers may overvalue and overuse goals.
 By setting goals, employees might be more interested in extrinsic motivation (such as
bonuses, rewards, etc.) and not in the intrinsic value of the job itself (i.e. they are not
motivated nor committed).
That is why:
 Goal setting can be a challenging task, especially in new settings.
 Goal setting can become problematic when the same goal is applied to many different
people. The goal will be too easy for some and too difficult for others. Tailoring goals to
each individual can lead to charges of unfairness. The latter has important
implications, because employee perceptions of whether rewards fairly match effort
and performance can be one of the best predictors of commitment and motivation.
 Perverse incentives can also make goal setting politically and practically problematic.
 In the real world, managers tend to manage expectations rather than maximize
earnings. They set a combination of goals that appears rational but is in fact not
constructive.
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12. Summarizing
 Goals can have both positive and negative outcomes:
 Positive outcomes:
 Inspire employees
 Improve performance
 Negative outcomes
 Narrow focus
 Motivate risk-taking
 Lure people into unethical behavior
 Reduce learning
 Increase competition
 Decrease intrinsic motivation
 In order to prevent negative outcomes, managers need:
 To consider the complex interplay between goal setting and organizational contexts as well as the
need for safeguards and monitoring.
 To avoid setting goals that increase employee stress
 To refrain from punishing failure
 To provide the tools employees need to meet ambitious goals
 To think carefully about whether goals are necessary and if so about how to implement a goal-
setting system.
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