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It’s the rare manager who doesn’t partake in quarterly or annual goal-setting exercises. And woe to those who don’t make their goals SMART (Specific, Measurable, Attainable, Realistic, Timely).

But do these goals really work? Researchers from four top business schools have collaborated to show that in many cases goals do more harm than good. Worse, they can cause real damage to organizations and individuals using them.

“We argue that the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored,” the researchers conclude. Bad “side effects” produced by goal-setting programs include a rise in unethical behavior, over-focus on one area while neglecting other parts of the business, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation.

One example: the explosive Ford Pinto. Presented with a goal to build a car “under 2,000 pounds and under $2,000” by 1970, employees overlooked safety testing and designed a car where the gas tank was vulnerable to explosion from rear-end collisions. Fifty-three people died as a result.

Used wisely, goals can inspire employees and improve performance, the authors agree. But goal setting must be prescribed in doses, not as a standard remedy to increase productivity. They even offer a warning label and list 10 questions managers should ask themselves before starting goal setting.

Sean Silverthorne
Harvard Business School Working Knowledge