Performance Goals: A Paradox – Part I

Background for the paradox

Performance-based goals are not always appropriate, especially when an employee faces a new and complex task. In such a case, only after the employee masters a particular task, performance goals need to be assigned.

Traditional goal setting theory 

Edwin Locke, Professor of Organisational Effectiveness and Gary Latham, Dean of Motivation and Leadership have propounded the most effective motivational theory on goal setting. It can be summarised as follows:  

1. Specific, challenging goals result in better performance than abstract goals. Specific goals define an acceptable level of performance, whereas, abstract goals, prejudice employees self-evaluation of their performance. Abstract goals make them believe that their performance is better than it actually is. Therefore, they refrain from giving optimal performance. Specific goals have set quantitative terms and defined deadlines for goal achievement.

2. There is a linear relationship between the difficulty level of the goal and performance - the higher the goal, higher the performance. This linear relationship levels off, once the employees reach the limits of their abilities. For example, General Electric encourages its workforce to set extremely ambitious goals, because of their organisational potential. However, goal setting fails, if the goal is beyond one's reach. Goals need to be realistic to have a positive impact on performance. Personal commitment from the employee’s side, too, becomes hard to obtain with increased goal levels.

3. Though feedback is necessary, it is not sufficient to set goals or affect performance. Effective feedback allows employees to make adjustments for their personal growth, skills enhancement and effectiveness. On the other hand, when employees lack commitment to specific goals, feedback loses its effect. Thus, providing employees with accurate feedback can be a challenging exercise.

4. Employee participation is not a method for gaining commitment to goals. It is more an information exchange process. Incentives, too, would affect performance only to the extent of goal setting and fail to elicit commitment.  

Affect of goals on performance 

Goals have two kinds on affects on performance – motivational and cognitive.

Motivational 

The three motivational mechanisms upon which goals have an impact on performance are:  

1. Choice: Specific goals facilitate choice by encouraging ‘relevant’ activities for goal achievement.

2. Effort: Goal-setting produces the appropriate effort, as employees need to adjust their effort to the level of the goal.

3. Persistence: When employees set a specific goal, they tend to make persistent efforts until they attain their goals.   

Cognitive 

Goal setting influences cognitive processes like stimulating the development of specific strategies for goal achievement. Formal planning, creative thinking and problem solving are some such cognitive processes that are precipitated by specific goals. For example, Latham and his colleagues, during their studies on goal setting and performance came across a group of truck drivers. These drivers were assigned specific goals in terms of an average number of trips from logging sites to the mill. They used radios to co-ordinate their efforts so that there was at least one truck at the logging site. Consequently, performance improved substantially and employees forced to think outside the box. They were challenged to create new ways of attaining goals as the old, routine ways had become obsolete.  

Enter, Paradox 

The fundamental belief of the traditional goal-setting theory was that the specific goals result in higher performance. However, Ruth Kanfer and Phillip Ackerman, Professors of Psychology at the Georgia Institute of Technology challenged this. A study conducted by them revealed that air cadets, performing a complex air traffic control task, did worse when they were assigned a specific goal compared to when they were instructed to do their best. 

This led to the conclusion that when a task is novel or complex, where employees are going through a learning process, specific goals bring down the performance levels. Complex tasks, when assigned with specific goals demand greater concentration and attention. This distracts attention from the development and evaluation of task-relevant strategies.  

When employees are in a learning mode, the mechanisms of choice, effort and persistence are not sufficient to ensure high performance. This suggests that there might be a flaw in the traditional goal setting theory and caution is essential while setting ambitious goals in organisational settings.  

More on the ‘flaw’ next week.  

Related reading:

1. “Setting goals: When performance doesn’t matter”; Seijts, GE., Ivey Business Journal, Feb 2001.
2. “Group pay-for-performance plans: The role of spontaneous goal setting”; Hollensbe, EC., Guthrie, JP., The Academy of Management Review, Oct 2000.
3. “Global most admired: Measuring people power”; Fortune, Oct 2000.