Goal setting is one of the most effective and promising ways of motivating employees and aligning individual effort with department and organizational strategy. At the same time, goal setting can have a serious side effect that suggests the organizations using this strategy should take steps to avoid harmful consequences. In an aggressive culture that emphasizes ends and disregards means, goal setting may be a tool that corrupts employees and harms the company reputation.
Wells Fargo’s experience with goal setting offers a cautionary tale. The company made headlines with the revelation that it had opened hundreds of thousands of unauthorized accounts for its customers, leading to charging of fees for accounts customers did not realize they had. The company agreed to pay $185 million in fines; its CEO at the time, John Stumpf (pictured here), resigned, and more than 5,000 employees were fired as a result.
The way goal setting was used at Wells Fargo illustrates some of the worst practices of goal setting and its consequences. Employees were required to reach impossible daily sales goals to keep their jobs. Managers did not seem to care how employees met the goals as long as they were met. In fact, in some cases, managers encouraged employees to cheat, such as by opening up accounts for friends and family members or even opening accounts for customers without their knowledge and apologizing afterward if the customer realized it. District managers pressured branches by discussing goal achievement four times a day. The company eventually replaced sales goals with a bonus structure emphasizing customer satisfaction.

Questions 

1. How would you advise your organization if top management proposed an aggressive goal-setting policy for employee performance? How might the organization reap the benefits of goal setting while avoiding negative consequences?
2. In your own work, how do you set goals for yourself and measure your progress in attaining them? What have you learned that might help you to gain more benefits from goal setting?