Stretch goals — are they a motivator or a de-motivator? Stretch goals are the often employed tactic of giving your employees a goal that is just out of their reach. The idea is motivate them to work harder. But does that work?
Daniel Markovitz is the President of TimeBack Management and the author of A Factory of One: Applying Lean Principles to Banish Waste and Improve Your Personal Performance.
Markovitz told Chris Dorobek on the DorobekINSIDER there is a bit of a folly when it comes to stretch goals.
Markovitz 3 Reason Stretch Goals Don’t Work
- Stretch goals can be terribly demotivating: When stretch goals seem overwhelming and unattainable, they sap employees’ intrinsic motivation. The enormity of the problem causes people to freeze up, and the extrinsic motivator of money crowds out the intrinsic motivators of learning and growth.
- Stretch goals have a dangerous tendency to foster unethical behavior: In the early 1990s, Sears gave a sales quota of $147 per hour to its auto repair staff. Faced with this target, the staff overcharged for work and performed unnecessary repairs. Sears’ Chairman at the time, Ed Brennan, acknowledged that the stretch goal gave employees a powerful incentive to deceive customers.
- Finally, stretch goals can also — tragically — lead to excessive risk taking. Enron rewarded its executives with large bonuses for meeting specific revenue goals, irrespective of the profitability or the riskiness of the moves. Although the final book hasn’t been written on sub-prime mortgages and the ensuing banking crisis, we do know that stretch goals played a large role in putting the investment banks in serious jeopardy.
Markovitz tells us why small wins work
- Small wins in combination with process improvement will drive your organization forward without the negative consequences of stretch goals.
- This approach requires a willingness to abandon the “ready, fire, aim” approach to problem solving.
- Requires a subtle — but critical — shift in focus from improving outcome metrics to improving the process by which those outcomes are achieved.