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.
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.
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.
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.
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