They assume that employees won’t fulfill their capabilities unless they’re continually challenged and that stretch goals are just the way to do that.
It’s common leadership thinking that raising the bar to challenge employees will jump-start performance. However, the preponderance of research and my company’s own experience show the opposite is true. Contrary to their purpose, studies demonstrate that merely elevating targets doesn’t guarantee success, and that stretch goals often kill motivation. In particular, behavioral research shows that unrealistically high targets discourage people, while smaller, incremental goals, coupled with positive reinforcement, drive better performance.
Because research is clear that positively reinforcing behavior toward a goal is far superior to only celebrating when the goal is reached, a stretch goal limits the occasions for such reinforcement and therefore limits effort. Also, the more often employees hit a target and are reinforced, the faster they improve their performance, which means the smaller the goals, the better. Success breeds success.
Applying these principles, here are seven steps to share with your direct reports to make goal setting throughout your company more effective.
- Set many mini-goals. Break annual targets into smaller, more easily achievable goals to increase the probability of success. But don’t just divide the year-end target by 12; consider that progress will accelerate during the year. For example, if your sales department’s goal is to increase sales by $12 million this year, set a January target of less than $1 million.
An insurance claims call center used mini-goals to improve accurate and expedited claims processing and service representatives’ availability. In just a few months, the center’s team showed a 50% decrease in the number of customer complaints and a 13% increase in the number of calls answered, even during inclement weather and the holidays.
- Focus on one or two improvements at a time. Trying to make too many improvements in a given time frame will diffuse efforts, preventing optimal success in any one area.
- Define clear, actionable behaviors. Consider what needs to be done to accomplish the goal, and break the steps into concise actions. Such pinpointed behavior allows everyone associated with the goal to see whether the person is working toward the goal and to provide the appropriate recognition.
- Frequently reinforce improvement. Combine specific, measurable goals with recurring feedback and positive reinforcement to shape behavior toward the final goal. Chart progress and provide input day-to-day, week-to-week and month-to-month. We have found that performance can double or triple when effective feedback and positive reinforcers support goal setting.
In one example, a Dollar General distribution center manager set a goal of reducing the number of misdirected cartons—which eventually reached their destinations but required rework to deliver—from an average of 550 per week to 165 per week within seven weeks. Employees far exceeded the target, lowering the number to 85 in the very first week and 25 by the seventh week.
- Let people at all levels participate in determining their own goals. Instead of telling employees what they need to do, seek their input to increase their sense of owning accomplishments. For a model of the supervisor-to-coach shift in the U.S. Navy, read Turn the Ship Around! by Capt. David Marquet.
- Don’t reward performance that falls short of goals. Doing so sends the message that the goals aren’t important. Rather, be willing to reset targets if they prove to be too high.
- Celebrate achievement. Publicly reward and recognize every achievement of a mini-target. The more reinforcement, the more likely the desired behavior will be repeated and long-term goals will be met.
Following these steps will help boost productivity and performance considerably above what will be accomplished with stretch goals. While many executives and managers may not be as comfortable with this practice, it is clear that positive reinforcement accelerates behavior and, therefore, produces the fastest and highest improvement.
On the other hand, if your company needs to stretch performance beyond current processes, goal setting alone will not suffice. You and your leadership team also will need to nurture creativity, but the process is basically the same. Reinforcing employees for providing even the simplest idea for improvement can lead to an increasing number of productive changes in a process or to new processes altogether. If the organization values improvement through reinforcing small advances toward a goal or through ideas for doing something different, the results can be amazing.
In any case, stretch goals aren’t the answer to improving performance. Mini-goals will carry your company further, faster.
For more information on why stretch goals don’t work and what to do instead, see this podcast.