How Goal Creation and Management Can Be Counterproductive

Updated: December 22, 2009

Background

I am a huge fan of goals and metrics; I have used them to drive many businesses to levels of performance they previously believed were unattainable.

I teach them, I preach them and I practice them. I practice them in my business and in my spare moments I am a high school soccer coach for a young men's team. I can tell you with certainty that my players know what is expected of them. In terms of fitness, they need to run 2 miles in less than 12 minutes; then they are cardio-vascular fit and ready to play. Furthermore, every one of them can tell you his personal best time and the best 2 mile time on the team, year to date. Also, they know they need to be able to do 100 pushups, plus timed skills like 200 ball hops in one minute and 250 pendulums in one minute. They also know our goal is to get 70% of our shots on goal and proceed from defense to attack and get the ball in shooting position in 7 passes maximum, all on the ground. Yes, I am a fan of metrics and they work.

Not only do they work, they work well. You see, our little Catholic school of about 400 students must play the big city schools with enrollments of over 3000. We used to regularly get trounced, never really in a game. Now we are ranked in the top ten. I attribute a lot of our sucess to the clear goals and objectives we have.

Goals and goal execution are like a lot of processes we use, they have a lot of variation and I find in many plants the metrics and the management of the metrics are not at all effective. At times, I even find the metrics are counterproductive. Through the use, or rather, misuse of goals and goal management, companies end up creating -- precisely what they do not want.

This may sound odd, but quite frankly it is all too common; it is explainable; and it is correctable. So let's explore this a bit.

WHY DO WE HAVE GOALS?

First, let's go back to the basics. Just what is the purpose of goals? (For the purpose of this article I will use the terms goals and metrics interchangeably). Goals have many purposes and benefits as well, but the primary purpose is to guide behavior.

Let me repeat that, the primary purpose of goals is to guide behavior.

So what behaviors do we want? Well, we want those behaviors which will best support the business in its battle to become a better money-making machine and a more secure work environment.

SOUNDS SIMPLE ... SO WHAT'S THE PROBLEM ?

Let me give you an example of a plant I recently visited.

It was a well run, neat, organized and, as I later learned, a marginally successful plant. In today's economy, that is a pretty good endorsement. They had some proprietary skills which helped them become profitable as a tier one automobile supplier to American, Japanese and European firms. Yet on my short visit I found several serious weaknesses. First, rework was commonplace, over 5% on many products. I was familiar with their technology and 5% rework was certainly a high defect rate. Second, quality was controlled by test, sort, rework and retest; an old philosophy which should have been changed years ago. In short, it was obvious they had room to improve on their quality system.

However, during our tour, the thing that caught my eye was the huge volume of charts, tables and graphs in the plant. They had information centers for each production line and each plant function such as Quality, HR and Maintenance with dozens of charts at each information center.

While we visited one of the production lines, I asked Francisco, the Production Manager, to explain the charts in the information center at the end of the line. It was a board 12 feet long by 4 feet high literally wall-papered with data. He took us through some of the charts but we clearly did not have time to review them all. Two things were abundantly clear to me. First there was simply too much data for anyone to absorb in any reasonable time, I lost count at 27 charts, tables and graphs. Second, nothing stood out as being more important. They were drowning in data but starving for information.

If this was the data they wanted to use to guide behavior, I could not see how they would be successful. They had posted enough data to confuse anyone; I certainly was.

At lunch I sat with Miguel, the Quality Manager and asked him about quality metrics. He took me to the metrics posted on the floor at their information center. There were 34 charts listing all kinds of measurables from response time on customer complaints to PPM Field Failures and Zero Mile Returns. All the corrective actions were posted with due dates; % Customer Responses On-time; PPAP submittal targets; TS audit scores and actions needing follow up; Rejects at incoming; etc. The list went on and on and on; this board looked like the board in production at the end of the line in that it had tons of metrics yet nothing stood out. I had no idea if the quality system was working or not. Nor could I tell you the key areas which needed attention. I visited HR and the Maintenance Dept and their presentations were the same. Lots of charts with tons of data but nothing really stood out. So again, I could see no focus for these groups either.

I then went to the floor and asked line personnel, maintenance techs, materials handlers, lab techs, line leaders, group leaders and engineers, "What are the most important things we need to focus on to make this factory successful? I could enumerate the answers but the overriding issue was there was absolutely no consensus; not even close. Production people responded with production metrics, maintenance personnel with reliability data and quality people responded with things to do with the customer. It was clear that each group suffered from "goal myopia" but worse yet, with just a cursory review it was clear that some of the local metrics could easily be at odds with the plant's overall goals. In addition I spent a little time with some of the workers to determine what they were working on. And guess what? They were working on the vary things they just told me were important. No surprise here, as I had suspected the workers were well motivated, as they usually are.

Later the Division General Manager spoke with me. He wanted my opinions on what I had seen. As is normally the case, I usually try to ask a few questions, the first one was, "What do you see to be the opportunities here?" He was clear, the plant, although making money, was not reaching anyone's expectations. He volunteered that the VP of Manufacturing, he and the Plant Manager all agreed that the plant was capable of much better performance. Specifically, they were having great difficulty improving quality and were under great pressure from several customers to improve the in-plant quality. He also cited teamwork as a critical weakness and he was not sure they had the best organizational structure to facilitate high levels of teamwork.

I told him Idid not hve enough information to answer the organizational structure issue but it was clear tha low levels of teamwork were an issue. I did feel there were some things whch could be done to address the first two issues of financial and quality improvments. I told him, "the system of goals, goal deployment and goal management was far from effective and probably a serious problem." He was interested so I went on. "In looking at the goals, it is not clear at all to me, which are the important metrics. I have interviewed your people and it is not clear to them either. Waht I see is a group of hard-working folks doing their best without knowing what to focus on and clearly not doing it together. I not thingk that lack of teamwork is a problem; rather I see it as a symptom of your system of goals and goal deployment." At this he was visibly upset and he rather sternly explained to me the arduous effort they had expended to create the goals they now had including the routine updates and reviews. I went on, "your goals need to be more focused and more integrated. You have 32 plant level goals; no one can remember 32 goals. I know, I asked your people, they can not, not even close. Reduct it to 5-7 goals. Probably something like:

  • On-time delivery,
  • some measure of internal overall quality such as first time yield. With 32 plant metrics, this one is missing, this is a critical flaw which needs correcting,
  • maybe Zero mile and Field Failures for external quality,
  • Inventory turns or a lead time metric,
  • a key measure of safety maybe days since last lost time injury and
  • possibly employee turnover.

You may have others but at the plant level, you don't need much more. The key point is that if the rank and file can not understand and remember them, they can not support them through their daily actions. This is what I found on my interviews and you have expressed the same concern. It is clear you are not getting the behaviors you wish to see. Your goals are way too complicated; simplify them. The other measures are important but not at the plant level, keep those goals but use them at the group level, and even those can be simplified".

So he asked me, "Simplify the goals and integrate the goals -- is all we need to do to achieve better quality and higher levels of teamwork?" And of course the answer to that is no. But until people understand them, it is not possible for them to achieve them; if they do not have a common understanding, it is not practical to expect them to work together. It is just a first step, a critical first step.

IS THERE MORE TO THIS STORY?

Yeah, there is.

First, the father of system dynamics, J. W. Forrester wrote about system dynamics applications to corporations and he listed four "surprising things" they learned early on in their work.

  • "First, most difficulties are internally caused, even though there is an overwhelming and misleading tendency to blame troubles on outside forces.
  • Second, the actions that people know they are taking, usually in the belief that the actions are solutions to the difficulties, are often the cause of the problems being experienced.
  • Third, the very nature of the dynamic feedback structure of a social system tends to mislead people into taking ineffective and even counterproductive actions.
  • Fourth, people are sufficiently clear and correct about the reasons for local decision making—they know what information is available and how that information is used in deciding on action. But, people often do not understand correctly what overall behavior will result from the complex interconnections of known local actions".1

Certainly it is not too difficult to see many of the real issues of the plants performance explained by Forrester's findings. The disappointing aspect was that the management and the hourly workers alike were both highly engaged in the work at hand but the results were not forthcoming. So motivation was not an issue, nor was intent; the problems went deeper than that.

Second, C. G. Jung in his studies popularized a concept that things taken to their extremes tend to become their opposites, he called it ‘enantiodromia'2. Take freedom for example. One of the benefits of freedom is to be able to do what you want. But if everyone is free to do exactly what they want, then it leads to total chaos at which time you need to worry so much about what others are doing, you can not do what you want. You can also see this in raising children. Parents want their children to be well mannered so the parents teach and discipline them. Well a little discipline will work well, but too much of it can cause the child to rebel and ‘voila' you get precisely the behavior you do not want. Examples abound.

The same holds true of goals. Goals are to guide behaviors to satisfy the needs of the facility, in this case. Well, in this example the number of goals had been taken to such an extreme that people did not know how to act. With so many goals, even if they could remember them, they did not know which ones to support, so they did the best they could. They acted on their local issues, which were sometimes at odds with the plant's overall goals, thus assuring they can not support the business in its battle to become a better money-making machine and a more secure work environment.

So rather than support high levels of integrated activity, which we call teamwork, the system of goals fostered isolated, sub-optimal activities which the Division General Manager so accurately pointed out. In addition, although many of the local decisions worked to improve local conditions many did not translate into improving the financial and quality performance of the facility; yet another observation of the Division General Manager.

What he did not realize was that the very system he developed to create teamwork was in fact destroying it. The very system he implemented to optimize the performance of the facility was guaranteeing that very thing would not occur.

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