The Dysfunction of Goals

My organization's HR department recently initiated a top down requirement that 100% of employees create and manage to their own SMART goals. The SMART goals need to directly tie to the the company objectives. Managers were asked to follow up on these goals with the individuals they manage. For those of you unfamiliar, SMART stands for Specific, Measurable, Actionable, Relevant, and Time-bound.

As an agile coach, I felt pangs of anxiety and trepidation around how this initiative may affect behaviors in ways that were not intended.

I'm guessing the expectations regarding the goals is that it will help the workers focus. It will help them stretch and grow. They will now have something to measure their performance against. At the annual review, management has a SMART goal metric to see if they were met and compensate accordingly. It's the right thing to do right? It's been touted a 'best practice' for some time now.

But what about the darker side of this approach?

What if personal goals contradict team goals? What if team goals contradict another team's goal? What if instead of collaboration, personal goals encouraged silos of behaving that do not think of the big picture. Just because a goal as a 1:1 relationship with a company vision, does not mean that the effect of pursuing the goal will have a 1:1 relationship. It may, in fact, create dysfunction up and down the organization.

Also, what if I set goals to increase some metric (they have to be measurable right?) and the organizational system is the largest impediment for me to improve that metric? Am I as an individual worker going to be held accountable for not meeting my goal?

Deming spoke in very strong terms about the dangers of using metric goals as a management tool. He even goes so far as to suggest it is management by fear.

The Problem with Goals

It's hard to write good ones - It's easy to write lazy goals (I plan to show up 80% of my scheduled work time). It's not easy to write a SMART goal that will have a meaningful impact on both you as the individual and on the org as a whole. In reality I've noticed most people write 'just enough' to meet the requirement. One person described their goals as "don't hit me" goals. Another group decided that everyone in the team would have the same goals. Lot's of gaming the system to get through the requirement.

Goals feel finite - you accomplish it and you are done. You don't have to think about it again. It has a similar psychological effect of a project. It has a beginning, middle, and end. You complete it. Move on. Instead of a feeling of continuous flow you have just stunted yourself by the sheer act of putting an end date to your improvement.

You are less likely to pivot - once you've laid out your plans vis a vis goals, you feel compelled to finish them and wait to measure the effect or impact until after you have accomplished your goals. Once they are set, you know that you will be evaluated by them, so changing them will require additional effort and hoops through management.

They don't take into account systems thinking - As stated above, it's rare that an action will have a 1:1 relationship in terms of impact on the whole. Systems thinking also requires us to account for delay. The 'T' in SMART requires our goals to be time-bound. You might have noted a short term gain through your actions to reach a goal, but there may be longer term consequences. A good example is Wells Fargo measuring employee performance by how many accounts it opens. Measuring by that goal ended poorly for that organization. Another high profile example is the Volkswagen Emissions Scandal. Whenever there are hundreds or thousands of employees acting poorly, I suggest the system is the problem. Not the people (i.e. workers). Leadership has a responsibility for setting up an environment that allows their users to behave ethically and be successful.

Some other examples of bad practices around measurable goals:

• A company wants to reach x% profit margin for the shareholders this quarter. So they lay off their staff and lose institutional knowledge and slow down the entire productivity chain of the org
• A company wants to increase productivity/output by x%. Teams are driven to produce more, but do so with lower quality. They end up slowing down due to rework and defect fixing.
• A manager measures team members performance based on how many stories they complete. Team members start hoarding stories, stop collaborating, and won't assist other members because that might reflect poorly on them if they aren't completing their own work.

So if goals are not the way to manage, what should be the focus of management?

Deming would say stop managing and start leading. How do we do that?

First off, you need a vision. Everyone needs to know which mountain we are climbing. Everyone needs to understand what the desired destination should be. Deming calls this "constancy of purpose."

Once you know the mountain you are climbing, you can start making attempts at progress. Teams and individuals can try experiments. Did trying something get you closer or further from your purpose? Learn. Pivot. Try something else.

Focus on the system, not the individuals. What is it about the system that is hindering progress? Is it lack of education? Lack of shared learning? Lack of empowerment of teams and individuals? Are there too many controls and red tape around progress?

In systems thinking, this is equivalent to opening the valve on what you want more of, or increasing the capacity of the reinforcing loop. As managers, instead of focusing on goals, focus on enabling the system to help teams achieve the vision.

Or as Goldratt (father of Theory of Constraints) puts it:

"Build enablers over acheiving targets." ~ Eliyahu M. Goldratt

In Summary

Stop managing by goals and metrics.

Instead amplify the vision and make sure it is front and center across the entire organization.

Enable the team to try things and improve. Get rid of red tape and constraints to allow for faster learning and progress. Turn up the good.

And finally, if you are going to have goals, take Deming's advice:

I'm curious to hear feedback and thoughts on this article. Let's have a conversation.