Francis Wade | When big, hairy, audacious goals produce poor performance

If you lead an organisation, you may have asked yourself about the effect of setting big goals.

Most leaders know that such objectives can be empowering in some circumstances but produce the opposite result in others. If so, some recent research might help the next time you sit down with a subordinate to set performance targets.

The management bestseller Built to Last by James Collins and Jerry Porras coined a phrase that is now used widely: BHAG - a big, hairy, audacious goal. Most Jamaican executives have heard the term in the past and try to use stretch goals to awaken their organisation from stale, static patterns. Once enlivened, breakthroughs become possible.

As a result, managers who have accepted the idea encourage employees to commit to difficult goals. Some push hard, using the force of their personality to get direct reports to acquiesce.

Sales managers, for example, try to inspire their people to leave their comfort zones to accomplish big revenue targets, sometimes refusing to take 'no' for an answer. Their occasional success leads them to repeat the tactic as often as they can, especially with fresh recruits.

However, new studies show that there are actually two different kinds of goals which should be set. Gary Latham from the University of Toronto has studied the question for the past three decades, concluding that it's easy to set goals which end up doing more harm than good. Here are the strategies he recommends to avoid this problem.

 

Strategy 1

 

Create targets which are not too hard, but not too easy: Scientists call it the Goldilocks effect. The most effective goals need to be challenging enough to get someone's attention, but not so difficult that they believe it's impossible and therefore give up. Leaders must calibrate targets carefully.

For example, in the 1930s, Manley and Bustamante didn't immediately strive for the objective of complete independence. While they probably saw it as the ultimate objective, they took their time. The Jamaican people were shepherded through a long struggle, which started with earning the right to form trade unions. It continued through the formation of political parties and the fight for Universal Adult Suffrage, which eventually led to self-rule.

In retrospect, their strategy of taking one step at a time was probably best. It's a lesson for all managers who want employees to produce extraordinary results, and it happens to be supported by empirical research. Don't ask for 'too much, too soon' or its opposite, 'too little, too late'.

 

Strategy 2

 

Distinguish outcomes from learning: In Latham's work, he further distinguishes between 'outcome targets' and 'learning goals'. The former relate to end-results, such as a salesperson's total sales per month. They are easy to understand and define because in the end, measurable accomplishment counts the most in any business.

However, managers are not usually aware of his major finding: outcome targets are only suitable for employees who have mastered their jobs.

By contrast, most employees are still developing critical abilities. His research recommends a different approach for this cohort: the use of "learning goals". These are defined as targets which are linked to the acquisition of new knowledge or skills. They focus employees on "discovering, mastering, or implementing effective strategies, processes, or procedures necessary to perform a task".

For example, new salespeople barely understand their product, the market, or required sales tactics. They should concentrate on setting learning goals related to mastering the fundamentals of their specific craft.

Latham's work shows that managers who fail to make the distinction court failure, producing frustration and anxiety. In the worst case, people end up blaming themselves, then quitting, experiencing a drop in self-esteem. They have no idea that their manager should have explored an alternative.

 

Strategy 3

 

Shifting expectations: The above finding indicates a level of nuance most organisations don't realise. Instead, those who employ salespeople often kick-off the year with over-the-top 'rah-rah' sessions. They are entertaining but do little more than produce hype.

What's a better choice if you are a manager? Skip the use of such blunt, short-term instruments, and train yourself to understand the two different kinds of targets. With this skill, you can set learning goals, look for the early warning signs of employee maturity, then shift your approach to targeting outcomes at just the right moment.

If you commit yourself to developing these surgical skills, you won't get stuck on the one-size-fits-all thinking which permeates companies and demotivates employees. Instead, it may be the key to moving each of your direct reports to higher levels of performance.

- Francis Wade is a management consultant and author of "Perfect Time-Based Productivity". To receive a Summary of Links to past columns, or give feedback, email: columns@fwconsulting.com