Although you want your employees to strive to achieve as much as possible, setting goals that are too ambitious could hurt productivity, market performance and employee morale, new research finds.
A study from researchers at the University of Buffalo in New York, the Georgia Institute of Technology and the University of Georgia discovered that employees are motivated more by small, challenging, incremental goals, rather than goals that seem impossible to achieve.
Jim Lemoine, the study's lead author and an assistant professor of organization and human resources in the University of Buffalo's School of Management, said employees are turned off by goals they see as unrealistic.
"Some managers attempt to rapidly improve their organization's competitive position by adopting goals for impressive achievements that will excite staff and stakeholders," Lemoine said in a statement. "But if those goals are unrealistic because of current resources, employees may lose confidence in their performance and the organization."
For the study, researchers analyzed 219 substance-use-disorder treatment centers. The investigators chose this type of organization because these centers are known to use stretch goals almost as frequently as they use more constructive, challenging goals because of resource uncertainty and fiscal instability. [See Related Story: In a Career Rut? 4 Tips to Achieve Your Goals]
The study's authors discovered that overly ambitious goals were most harmful in those centers that had recently experienced success.
"In organizations with a strong record of efficiency and growth, employees may become burned out or de-motivated by being asked to perform at even higher levels," Lemoine said. "In fact, we found [that] centers with relatively abundant resources became inefficient when managers set unrealistic expectations."
The researchers did acknowledge, however, that whether a goal is realistic or difficult to achieve is subjective. Lemoine recommended that managers consult with employees to gain better insight into how achievable their goals and objectives are.
While the study focused on treatment facilities for substance abuse, Lemoine said the results have implications for all types of organizations.
"For those without prior experience in managerial goal-setting, establishing high-reaching goals might seem like a harmless exercise with potentially huge payoffs," Lemoine said. "Our research should serve as a cautionary tale for organizations in all industries and encourage managers to take a thoughtful look at their short- and long-term goals."
The study, recently published in the Journal of Substance Abuse Treatment, was co-authored by Terry Blum, a professor at the Georgia Institute of Technology, and Paul Roman, at professor at the University of Georgia.