Does Goal Setting Do More Harm Than Good for Your Business?

August 22, 2023 • Sales

Setting company goals is a common practice for most who start or run a business. For businesses small and large, goal-setting is as customary and established as budgets and performance reviews. Most pursue this practice with the understanding that clear business goals will motivate your team, increase performance and ultimately drive success.

But does your business truly benefit from your goal setting, or might it be doing more harm than good?

Goals for good

Many high-performing individuals and successful business people set goals. People like soccer star Leo Messi, Olympic champion Michael Phelps and entrepreneurs such as Mark Cuban, Richard Branson, and Elon Musk, have employed goal-setting and attribute some measure of their success to its use.

Organizations, too, regularly implement goals to communicate the wider purpose of a firm and to set an ultimate goal for employees to pursue. These goals provide constant priority checks, help illuminate the ways in which work matters, and help employees find deeper meaning. The successful attainment of these goals demonstrates competence and that has the added benefit of improving confidence within an organization. According to research by McKinsey & Company, when done correctly, goal-setting can help clarify an employee’s role, improve employee engagement, and elevate performance, all of which can benefit organizations overall, according to recent McKinsey research.

Futility of goals

However, whether they are long-term goals (one year or longer) or short-term goals (3-6 months); outcome-based or process-based, setting goals won’t automatically result in progress. While conventional wisdom has it that goal setting is critical to improved performance, there is compelling evidence to the contrary.

Performance management expert Aubrey Daniels argues that ambitious goals are an ineffective practice. Citing a study that shows when individuals repeatedly fail to reach challenging goals their performance declines, Daniels argues that goals motivate people only when they have received positive rewards and feedback from reaching them in the past.

Research completed by the Economist showed 90% of their respondents admitted to failing to reach their strategic goals, precisely because they didn’t implement them well. The executives admitted that senior management did not give these goals the attention and priority they deserved.

And while many will fault the failure to meet goals on the goal setter or on outside or unavoidable circumstances, the real problem may be in the efficacy of goal setting itself.

Sim Sitkin, Professor of Leadership and Management at Duke University Fuqua School of Business, said “Goals are, paradoxically, most seductive for organizations that can least afford the risks associated with them.”

Goals can lead to risky or unethical behavior. Employees overcommitted to achieving a goal no matter what, may be tempted to use risky or unethical methods.

Final goal

So do goals prioritize, motivate, and focus efforts; or are they self-defeating?

Goals can serve to both narrow your focus on a limited and desired set of outcomes or behaviors, while also increasing risk-taking and even unethical or unwarranted behavior. Goal attainment can help build a stronger business and create an environment where you and your employees are happy and productive.

Perhaps instead of giving up on goal-setting, it would be beneficial to use goals to get the entire organization behind you. If you start by involving employees in the decision-making process, it will not only give them a greater stake in your company’s success, but you may also be delighted with the input you get from people throughout your organization that could change the direction of your goals.

Recently, our team at Feury Image Group collaborated to establish a strategic goal-setting process when building out programs for new customers. We needed a speedy turnaround in creating fully-branded web portals for new customers who required them for uniform apparel kitting. The refined strategy they developed enabled what used to be a significant undertaking into a fast and efficient development process. The team felt empowered, was given a clear and practical goal, and was equipped to succeed. Finally, they were recognized for their achievement, which benefited the entire company.

Small. Simple. Sustainable.

The talent that your company has or that you gather is, of course, only a starting point, and goals that require substantial substantive change can be daunting. Nearer targets are easier to hit and may be better choices for you to pursue. Hitting singles and doubles can be more productive than swinging for the fences which results in a lot of misses and the occasional home run.

Instead of dreaming of soccer superstardom as a child, Messi focused on achieving smaller goals, completing one at a time before moving on to the next, he said.

“I fought for my dreams,” Messi said. “After he became a professional player, “I tried to surpass myself and achieve new goals every year.”

Sometimes the best goals are the simplest.