20 Feb 2009 in Corporate Culture
New research by Wharton School Management Professor Maurice Schweitzer and three colleagues documents how ambitious corporate goal setting can cause more harm than good. Moreover, he concludes that not only is it overprescribed but it helps to drive destruction of an organization's ethical culture increasing risk and corruption.
Scweitzer uses as an example, Lee Iacocca's 1969 goal for Ford engineers to design "a new automobile that weighed less than 2,000 pounds and sold for under $2,000, and it would be on the showroom floor in time for the 1971 model year."
What resulted was a mad dash to create the Ford Pinto and a lesson about the hazards of setting goals. In pursuit of such mandates, he reports, employees will ignore sound business practices, risk the company's reputation and violate ethical standards.
This lesson, he concludes, has not been absorbed by corporate America. To the contrary, he says, ambitious goal setting has become endemic in American business practice and scholarship over the last half-century. Goals have pervaded industries as diverse as automotive repair, banking and information systems, even spilling over to the debate on how to improve America's public schools.
Schweitzer believes one reason that goals are overused is that we focus too much attention on the individual and not enough on the overall business environment. When things go wrong -- for example, following the collapse of an Enron -- we tend to blame specific individuals rather than look at the broader culture established by top managers. He cites as an example of this problem the U.S. military's handling of detainee abuse at the Abu Ghraib prison in Iraq. He says, these cases of abuse were blamed on low-ranking soldiers -- "a few bad apples" -- and not on the broader directives from the Pentagon that created the climate of corruption. "What happens is that people neglect to appreciate the importance of the environment."
The paper, titled "Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting," was co-authored by Lisa D. Ordóñez from the Eller College of Management, University of Arizona; Adam D. Galinsky of the Kellogg School of Management at Northwestern University, and Max H. Bazerman from the Harvard Business School. Their work appears in the February issue of the Academy of Management Perspectives and while academic is well worth reading.
[http://knowledge.wharton.upenn.edu/papers/1359.pdf]
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