Goal Setting: How CIOs Can Avoid Pitfalls

CIO — "Give me a stock clerk with a goal and I'll give you a man who will make history," James Cash Penney, founder of the now-famous chain of eponymous retail stores, is reported to have said. "Give me a man with no goals and I'll give you a stock clerk."

For decades, business schools have extolled the virtues of goal setting—the more audacious the better. Entire corporate cultures have been built on the merits of setting towering targets for performance. After all, throughout history, setting lofty goals has led to landmark success. What was the moon landing 40 years ago if not a stretch goal amazingly achieved? But contrary to popular opinion, goal setting does not always yield positive results. Quite the contrary, in many cases, says Maurice Schweitzer, associate professor of operations and information management at the University of Pennsylvania's Wharton School of Management.

Look no further than today's more besieged American industries, cars and financial services. Many of their problems can be traced not to goals met, but to "goals gone wild," Schweitzer says.

Take GM, which once held 28.2 percent of the car and light truck market in the U.S. when management raised the bar to 29 percent. "In trying to reach this goal, employees at GM made a series of very costly mistakes," says Schweitzer. "They started to sell cars with no money down to risky buyers. They sacrificed profitability—and prudent management—in the pursuit of a narrow goal."

Setting goals is not inherently bad. When tasks are routine, easy to monitor and easy to measure, it can work. But in other instances, goal setting can degrade employee performance, corrode office culture and motivate risky or unethical behaviors, says Schweitzer.

CIOs can be tempted to set goals for easy-to-measure outcomes alone—number of hours devoted to a project or lines of code written, for example—or to use stretch goals for their up-and-comers. But such goals may have no intrinsic value. And what happens if the future leader doesn't make the mark? "My broader concern is what bad goals do to the organizational culture," says Schweitzer. "If employees routinely write inefficient code or misrepresent the number of hours they worked, these behaviors may [be harmful]."

Employees that think they'll fail may be tempted to misrepresent their performance and "once misrepresentation starts," warns Schweitzer, "It may spread."

Dee Waddell, Group CIO of Amtrak calls goal setting "the key intersection point between strategy and execution," but even he admits there's a risk in IT of aiming too high. "The reality is, IT sometimes sets—or agrees to—overly aggressive time lines in delivering new projects, then finds out too late that either quality must suffer or time lines must expand."

One strategy Waddell employs for better goal setting is involving his team in the process. "A favorite question of mine is what they would like to achieve to leave their legacy in their role," he says. "This provides the open environment for my staff to envision the great outcomes they would like to achieve, and then use this as the foundation for creating clear, realistic and measurable goals."

Schweitzer doesn't advise abandoning goals altogether but do think about what you'd like them to resolve, and get employee buy-in. Avoid overly specific goals or those with inappropriate time lines and monitor the process, not just the progress. "Goals work best if people believe they are realistic."

Stephanie Overby is a freelance writer based in Massachusetts.