Jun 24, 2010

Three Big Assumptions Leaders Should Question

In an article in the Washington Post, John Boldani points out Three Big Assumptions Leaders Should Question

  1. It is important for organizations to set firm goals
  2. Quick wins are essential to managers in transition
  3. Senior leaders believe in their CEOs
Many organizations I have seen suffer from too much focus on goals.  One widely known example of this is in "Stuffing the Channel" at the end of the measurement period to meet sales goals and get bonuses.

It is important for organizations to set firm goals. People need to have direction so it is important to point them in the right direction. But such a single-minded focus on goals may end up damaging individuals and the organization says a study conducted by Maurice Schweitzer of Penn's Wharton School. Relentless pursuit of goals tempts managers to cross ethical boundaries and abandon 'sound business practices.' Unreached goals may then end up frustrating an organization rather than helping it to succeed.
However, if the goals are not firm than organizations tend to not really perform anyway.   If one enforces a culture that goals need not be met, how does one motivate and reward the organization?  I think a better approach would be to set up a tiered goal structure: An (exponentially) increasing reward for meeting or exceeding goals.  It is even more important to make these tiers somewhat achievable - encouraging teams to try to reach the next level (Remember the Lincoln Electric case in business school?)

Another key with goals is to have balanced goals: opposing goals that make sure that behavior does not become too goal focused.  In an R&D world for example, successful R&D projects are a goal most organizations have.  A success driven goal alone will encourage managers from hiding failures and impede risk taking.  A balancing metric would be wasted development effort: tying some fraction of bonuses to projects that fail - 90% of bonus for success and 10% for failures...  This would encourage R&D managers to take risks and encourage acceptance of failures.

The other recommendations are similar.  Senior leaders clearly should not always believe in the CEO.  However, a show of solidarity might be good for encouraging and motivating R&D teams.

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