The Dark Side of Goal Setting: Pitfalls to Avoid

Goal setting, if not carefully managed, can lead to unethical behavior, dishonesty, and detrimental outcomes. The pressure to achieve goals may prompt individuals to resort to unethical means or misrepresent their performance. It is essential to strike a balance between setting ambitious goals and maintaining ethical conduct. Organizations must recognize the potential pitfalls associated with goal setting and implement safeguards to ensure that the pursuit of goals does not compromise integrity or lead to negative consequences for individuals, teams, and institutions.

Josh Ether

8/6/20212 min read

While goal setting can have positive effects, it is crucial to be aware of the potential pitfalls and negative consequences that can arise. Examining real-world examples helps shed light on these drawbacks and emphasizes the need for careful consideration when implementing goals.

The case of Wells Fargo in 2016 serves as a cautionary tale. The company introduced the Great Initiative, setting a goal for employees to sell a minimum of eight financial products to each customer. However, this goal-driven approach led to unethical behavior. To meet the target, employees opened two million fake accounts without customer authorization. Ultimately, 5,300 employees were fired, and the company faced $185 million in fines. This incident demonstrates that the problem lies not solely with a few individuals but rather with the systemic flaws of the goal-setting process.

One danger of goal setting is that it narrows focus and attention too narrowly, potentially ignoring other crucial factors. For instance, General Motors (GM) became fixated on achieving 29% market share. To motivate executives, they distributed buttons and pins adorned with the number 29. However, this narrow goal pursuit led GM to offer interest-free loans and no-money-down incentives, resulting in losses on a per-car basis. The singular focus on market share blinded them to the broader picture, and GM eventually filed for bankruptcy.

Another pitfall is the propensity for increased risk-taking when pursuing goals. Fannie Mae and Freddie Mac, institutions supporting mortgages for lower-income individuals, set a goal to raise the percentage of mortgages for low or very low-income families from 14% to 20%. In their pursuit of this goal, they made risky and ill-advised loans, ultimately leading to their bankruptcy and requiring a government bailout.

Research confirms that people are more likely to engage in risky and unethical behavior when pursuing goals. Negotiation studies reveal that goal-oriented individuals often reach less profitable agreements and make larger demands. Examples like the Mt Everest disaster and the Stafford Hospital in the United Kingdom, where excessive focus on specific targets resulted in catastrophic outcomes, further underscore the risks associated with goal setting.

Furthermore, setting narrowly defined goals can lead individuals to engage in dishonest practices. Employees at the Jolly Green Giant intentionally carried insects in their pockets to meet insect collection targets. Similarly, employees at MiniScribe shipped bricks along with products to meet quarterly shipment goals. Sears automotive staff overcharged customers and performed unnecessary repairs to achieve billable hour goals. These instances illustrate how goals, when taken to the extreme, can incentivize harmful behavior and damage reputation.

The Atlanta School Superintendent Beverly Hall was recognized with the National Superintendent of the Year award in 2009 for boosting student performance. However, it was later revealed that cheating had occurred in more than half of the districts. Teachers, driven by the pressure to meet performance goals, engaged in cheating on standardized tests, tarnishing the achievements and integrity of the education system.