Targets can have a profound impact on individual behavior – potentially with significant performance benefits. However, they can also have some unintended and undesirable consequences. These effects may be particularly strong when coupled with incentives – if your pay is on the line, the feelings that you have towards the goals are heightened. This article explores some of the dysfunctional behaviors that organizational targets and incentives can result in.
Disappointment if targets are not achieved
One of the dangers of targets when set too high is that it may result in disappointment (or frustration) should the target not be achieved. Rather than being able to celebrate the goal’s achievement, untainted goals have a danger that they result in a loss of morale.
Targets may be particularly likely to drive frustration if they are perceived to have never been attainable. Unless there are plausible ways for employees to meet the goals – and the path to increasing performance is in some ways in their control – it may feel like you are penalizing the employees for behavior that they don’t have control over.
Over-focus on the goal
Another danger of targets is that it can result in an over-focus on the goal, to the detriment of other parts of the employee’s work. While the goal may be achieved, the consequences of achieving it may outweigh the advantages, if for example there is a lack of focus on other areas of the business.
Dysfunctional or illegal behaviors encouraged
Another danger of targets is that it may incentivize behaviors that are dysfunctional to the firm (actively making the firm worse off in some way, even if the target is achieved), or at the extreme, encourage behaviors that are illegal in nature. Putting huge pressure on employees to achieve targets, without caring how they achieve those targets, can lead to employees devising ways for how to achieve the goals that are not in line with ethical standards.
Resentment between different individuals
Another danger with targets is that it may create resentment between employees, who perceive that the expected performance levels are not equal across roles. If people feel that their own goals are impossible, while the goals of others are very easy, it can create feelings of annoyance about the perceived inequity.
Such frustrations may be further heightened if payments are involved – having an unrealistic target, while seeing others achieve easier goals may be particularly frustrating when there is a direct association with pay or bonuses.
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