Stretch targets succeed only when employees believe they can meet their goals if they try hard enough and that they will be rewarded if they do. There has to be a chance of failure in order to motivate employees to work harder. But if they expect failure and see targets as unrealistic, they will conclude that they won’t receive a bonus anyway and just stop trying. When their good work earns them little more than endless rounds of ever-harder-to-meet stretch targets, they’re more likely to hold opportunities in reserve—allowing themselves to fall short for one goal in order to improve their chances of meeting the next one. That leads to lower performance, poor morale, and declining trust in management. Expecting this kind of sandbagging, managers set ever more aggressive targets, and a vicious cycle of eroding trust develops.
Authors: Hugues Lavandier, Ken Schwartz, Ryan Davies
Source: McKinsey Quarterly
Subjects: Management, Organizational Behavior
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