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The Risks of Stretch Goals

The Risks of Stretch Goals
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Now, for a long time we believed that stretch goals unconditionally fueled performance.
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And it turns out that stretch goals can promote superior performance, as we’ve just discussed recently. But there’s significant risks associated with setting stretch goals, or challenging goals.
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I’ll show you a quick video, and as you watch that video, think about, first of all, what is the goal? What is the strategy to accomplish that goal, and when did that strategy turn unethical? » Gentlemen, the word from on high is that felony rates district by district will decline by 5% before the end of the year. » We are dealing in certainties. You will reduce the UCR felonies by 5% or more, or I’ve always wanted to say this, let no man come back alive. » In addition, we will hold this year’s murders to 275 or less. » Christ. » Feeling a little fazed, Colonel Foster? A little dyspeptic? » Dis who? No sir. I’m good to go.
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Here’s a fun fact for you people. If Baltimore had New York’s population, we’d be clocking 4,000 murders a year at this rate. There is no excuse I will accept. I don’t care how you do it. Just do it. » Deputy, as familiar as we all are with urban crime environment, I think we all understand there are certain processes by which you can reduce the number of overall felonies. You can reclassify an agg assault or you can unfound a robbery. But how do you make a body disappear?
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There isn’t one of you in this room who isn’t here by appointment. If you want to continue wearing those oak clusters, you will shut up and step up. Any of you who can’t bring in the numbers we need will be replaced by someone who can.
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That is all.
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As you can see in this video, goals, stretch goals, aggressive goals, can promote unethical behavior. And we now have a rapidly building body of evidence that suggests that stretch goals, aggressive goals, can trigger unethical behavior, can push people, good people, to do unethical acts. Max Bazerman, Maurice Schweitzer, Lisa Ordóñez, Adam Galinsky are among the scholars who all contributed to this line of research. And what they find is this challenging goals can promote first of all, our inflating our performance, overstating our performance or lying about our performance. And it can also promote our engaging in unethical acts to reach a particular goal. Examples, unfortunately, abound.
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Many years ago, Sears Roebuck set very aggressive sales targets for its automotive sales people and service people. And what the regulatory body, when they conducted an internal inquiry into the company, found that in over 90% of the cases the automotive servicemen were conducting unnecessary repairs. Miniscribe set very aggressive shipping targets for its employees.
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physical bricks to customers. Imagine putting an actual physical brick in the box and shipping it to a customer. Bausch & Lomb employees falsified financial statements, responding to aggressive stretch goals for revenue and profitability internally. More recently, Toshiba employees inflated profits by over 1.2 billion, from 2007 to 2015, again responding to very aggressive goals for profitability set internally, and those goals are also endorsed by the financial markets. The world of academia was recently shaken up by a series of scandals where scholars admitted not just to tweaking or faking some of their data but falsifying their entire research agendas. That was during medicine in genetics, in social sciences.
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And one of the culprits here is aggressive stretch goals for tenure and receiving grant support. So as the goals, as the standards get tougher and tougher, they can push some scholars toward unethical behavior. For those of you who are from the United States, you may remember one of the largest cheating scandals in the history of this country. It happened in the state of Georgia in the Atlanta school district, where schools faced stretch goals to improve students’ performance on standardized tests, and what the Georgia Bureau of Investigation found is that 44 out of 56 schools ended up cheating on the standardized test. 178 principals and teachers were found to have corrected students’ responses on standardized tests.
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And if you felt that the video I showed you in the beginning of the lesson was unrealistic and far-fetched, you might wanna think again. There is evidence that at least some police officers downgrade crimes to lesser offences to manage crime statistics. In a 2012 survey of retired police officers, it was reported that 80% of officers reported seeing crime rates being manipulated by their colleagues. So again, one key insight from this discussion so far is that aggressive stretch goals can push good people to conduct unethical acts. These stretch goals can trigger unethical behavior. Now, there’s a second prominent risk that’s associated with stretch goals, and that is that stretch goals can promote dissatisfaction. So think about this for a second.
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I can set an aggressive goal for myself, and I would typically accomplish more than somebody who set a less aggressive goal. But I would be less satisfied. We find evidence for this, in negotiations, for example. Imagine this, I go into a negotiation with a really aggressive goal, and typically I would do better at negotiation compared to someone else who set a less aggressive goal. I would accomplish more, but I would walk out of that negotiation less satisfied compared to this other person. Why do you think that is? Think about it for a second.
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It turns out that if I set very aggressive stretch goals, I’m more likely to fall short of these goals. And that’s what we tend to focus. We tend to focus on the difference between the aspiration level and what we’ve actually accomplished. That’s a tremendous source of dissatisfaction. For people who’ve accomplished their goals, they tend to compare downward, meaning to all of the other folks who didn’t hit a goal. So they’re much happier. Vicki Medvec and her colleagues did some interesting research related to these themes in the context of Olympic medalists.
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And what they found is that if a person crosses a cutoff, if they hit that baseline goal, they tend to again compare downward to all the others that didn’t make it. And what she found is that bronze medalists were consistently happier than silver medalists. It seems like a paradoxical finding, but bronze medalists are just happy they made it to the pedestal, looking at all these other athletes that didn’t even come close. Now for the silver medalist, that’s a different story, because they’re looking up to the gold medalist and saying oh my gosh, I came so close to the gold medal. And I didn’t make it.
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And so I would like for us to walk away from this discussion so far with two key insights. One is that when we set stretch, aggressive goals, they can trigger, they can stimulate unethical behavior. This unethical behavior can come in the form of our lying about our performance, inflating our performance numbers, or we can engage in unethical practices to hit that particular goal, to hit the numbers, so to speak. Now, the second unfortunate risk of setting stretch goals is that these stretch goals can promote dissatisfaction, precisely because they’re much more likely to focus on the difference between aspiration level and what we’ve accomplished. So burnout in organizations.
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Now, it takes in a more precise analytical meaning one of the reasons, one of the causes for burnout, is people consistently being faced with stretch goals, and you have that cumulative effect of dissatisfaction. So keep in mind that by setting stretch goals, you can promote immediate performance results. You can attain superior results. But those results may not necessarily be sustainable.
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