What are stretch goals
Stretch goals are a second, additional higher target, in addition to a more attainable goal. They provide a basis for you to stretch – performance that may not be achievable (or at least is less likely than the regular target), but encourage performance to be aimed for that is higher than the regular target.
Advantages of having stretch goals
Sets sights higher
The first benefit of having a secondary stretch goal in addition to the initial target is that it can help set sights higher than the original target. While the target level of performance may be set at a level that is attainable, the stretch goal may help encourage employees to raise their expectations and work out ways to achieve the more ambitious level of performance.
Gives you an additional target to work towards if the original goal is attained
The stretch goal also provides a target to be working towards should the original target be met. As performance approaches the original target, it is possible that the rate of improvement will reach off – the target is nearly met, so why put in the extra effort. Having a stretch goal gives something to step in and take the place of the initial goal should it be met.
Strikes a balance between encouraging higher ambitions without demoralizing for not hitting targets
Having two goals – one that is likely attainable and a stretch goal that encourages higher levels of performance – is one potential way of looking to strike a balance between encouraging higher levels of performance, while still making some level of success achievable.
Of course, the reality need not always play out like this – the stretch goal may be seen as unrealistic, and having any goal (even if it is a stretch one) that employees are not able to get behind may have negative performance implications.
Disadvantage of stretch goals
Multiple goals to focus on
One disadvantage with having a stretch goal in addition to a more realistic target is that now there are two targets to be focussing on. The level of targeted performance becomes more muddied – rather than having one clear objective to be aiming at, now there are two. It can be difficult in such instances to know whether you should be prioritizing a slow and steady approach to increase performance, or whether swing-for-the-fences approach is the better one.
Stretch target may appear unachievable
Goals and targets best encourage performance increases when individuals perceive that they are achievable. Achievable targets help drive improvements – individuals buy-in to a possibility that it can be achieved. Setting targets at a level that is all but impossible to achieve may not drive additional effort – instead, it may cause employees to check out. Rather than driving extra effort, the stretch goals may appear as though they are setting up the employees for inevitable failure – causing reduced, rather than more, effort.
May make underperformance almost inevitable
Beyond the impact that an unattainable goal can have when actually working on the project, stretch goals may also have the unfortunate consequence of causing employees to experience a sense of failure. This can be demoralizing – if the stretch goal is set at a level that is almost inevitably unachievable, you may be setting employees up to feel disappointed, which may cause morale to decline.