Using SMART goals is OK, but SMARTEST is best

Daniel, my nephew, is well into a Business Studies degree at Aston University. A while back, he asked uncle Bill to review his assignment, which was to compare and contrast the workplace motivation theories of Vroom on one hand, and of Locke & Latham on the other.  Skillfully I avoided looking too ignorant about who Vroom, Locke and Latham were and promised to get back to him.

Vroom, it turns out, propounds Expectancy Theory, in which the employee’s motivation is an outcome of how much an individual wants a reward (Valence), the assessment that the likelihood that the effort will lead to expected performance (Expectancy) and the belief that the performance will lead to reward (Instrumentality). This ties more into “engagement”, and may be the subject of further musings.

Locke & Latham would appear to be the architects of Goal Setting. That has come down to us as the MBO system: SMART (Specific, Measurable, Attainable, Realistic and Timebound) goals, rolled down from above. However, a little research quickly raised some yellow flags.

  • Locke stipulates that the employees should set their own goals
  • Likewise, Locke also requires that goals should be challenging
  • Locke’s own research showed that goal-setting had the greatest effect for tasks such as keypunching and loading trucks.

Further research led to papers by Suvarov, Deci and others, indicating other negatives arising from goal-setting, such as addiction (Suvarov) where the coupling of achievement and monetary reward becomes ineffective over time, and short-termism, where the goal system is “gamed” to maximise the immediate monetary reward, at the expense of sustainability or growth. Interestingly, one paper (McCullagh, P. (2005), cited by Wilson) contained an amusing account of deliberately using a monetary goal to drive the superficial goal to its opposite effect, by withdrawing the initial monetary reward over time! Another documented effect is that using money to reward achieved goals implies that the task is intrinsically unpleasant – “you have to pay me extra to do this” – like kids who have to be paid to do the washing up or mow the lawn.

As managers, therefore, we need to think very carefully about how we use goals to drive the behaviours we want, and avoiding the pitfalls of goal-based rewards.

Before moving to recommendations, however, I want to look briefly at our purpose as managers: where do we really bring value? And what do managers do that others do not? Do managers simply enable others by picking up the administrative tasks that nobody else wants, for example?

Certainly in any corporation managers can end up spending significant time in “book-keeping” activity – resource plans, project plans, other metrics. The value of this is not that it relieves others (such as team leads) from the task – which could be done even by ordinary administrative staff – but that understanding the resource and project situation is the cornerstone of our decision-making. I suggest that the purpose of management is to Evaluate, to Challenge and to Change. In evaluating, we understand the current state, in challenging we investigate whether there is a better state, and in changing we bring about that better state. That applies equally to our people, our projects, our products and our processes. As a manager, any of us should be happy to be evaluated on the changes we have brought about, and the consequences of those changes.

If we use goals, they should assist us in bringing manager-value to our projects and to our staff. That is, goals should assist us in our function of bringing about change. The literature of business and psychology is cautious about the automatic use of goal-related payment – there is significant evidence that inappropriate use of goal-related payments is a demotivator. Certainly, they should not be simply to recognise normal performance of the job – that is the purpose of salary. Rhetorically, why should the business pay twice (once through salary and once through MBO) for somebody who is just doing their job? The purpose of MBO payments needs to recognise something else.

So if goals are to assist in bring about change, how can we justify the use of MBO payments if not as a direct reward for task accomplishment (and avoid the demotivating or addictive effects of such payments)?   One positive way to view MBO payments is as an “advance” or as a “taster” of the salary that we would pay, if the changed behaviours were incorporated into an expanded role.

Thus we need to remove any suggestion that goals are a sweetener for the performance of a dull job. The assumption is that, in a creative company, our jobs are intrinsically worth doing. If you suspect they’re not worth doing, adding a performance bonus is treating the symptom, not the disease.  Goals like “ship Project X on time” need to be removed.  Rewarding the automation of the dull, repetitive bits of Project X is probably what you should be driving.

Instead, our goals need to reflect some aspect of changes that we’re trying to bring about.

  • There may be a learning goal that we want to reinforce.
  • There may be an element of risk-taking that we want to encourage

Is there any other motivation case not covered above?

  • We need to reward exceptional drudgery or inconvenience – the case where we’ve asked somebody to do something boring and unpleasant – and outside the normal scope of the job. Examples might be someone giving up a public holiday to work on an urgent customer support case. In this case, the tool should be the spot bonus, rather than the MBO, and should never be of the form “if you work through the weekend, I’ll pay you a bonus”. (At higher grades, there’s a case for making the default tool time off in lieu, time often being more precious than money.)
  • We need to reward innovation, at least at the lower grades where innovation is not routinely expected. Again, the spot bonus – after the fact – should be the tool. This should not be used to reward successful completion of a planned assignment, but only something that has been “squeezed in” over and above assigned work.

My own opinion is that the MBO system, with its coupling of goals and rewards, is inappropriate for a creative organisation, and I would urge reform wherever MBOs are encountered.

However, if we’re stuck with an MBO system, what can we do? Can we make better use of it, to drive better behaviour?

One constraint is that we shouldn’t make changes that will radically affect peoples’ incomes.  Nor should we rush into change.

Nevertheless, we should remove goals that insult the intelligence of our staff – “I don’t need a goal to tell me to do that” or “Duh? That’s just my job”.

We need to change the messaging around the goals. Above SMART, we need to add:

E – educational. What is the learning / development point that this goal supports? This is the hook on which we can hang the “advance” or “taster” messaging.

S – self-generated. While goals will still be rolled down from above, how is this goal a personal response from the employee? What is the employee expecting to do this quarter that will contribute to the higher-level goal?

T – tasty, tempting. What is it about this goal that characterises it as worth doing for its own sake? This reinforces the message that we’re not paying people to do boring work.

Caveats:

  • I have deliberately avoided adding R for risk – ‘what is it about this goal that pushes it into the risk/reward zone?’, for no better reason than it breaks the acronym.  However, most worthwhile tasks do involve a measure of risk, of pushing into the unknown.  So by all means choose to use SMARTER goals.
  • There are many for whom the MBO process is and always will be no more than the rubber-stamp process that goes with claiming an extra 10% of salary (or whatever). Setting goals makes no difference to their behaviour. It’s not worth sweating over re-phrasing those peoples’ goals. Where’s the value in knocking them out of their sweet spot, so long as we do value what they do, goal or no goal?

Conclusion

There is evidence in the literature of Business and of Motivational Psychology that the MBO system as implemented in many organisations has flaws, at least for the creative parts of an organisation, such as engineering / product development. Decoupling goals and reward should always be the long-term aim.  Rewarding short term effort can be done after the fact, but non-bankable rewards (such as time off, or team jollies) may have greater effect than cash. Don’t break the bank trying to motivate the folks who love their job.  Don’t break your back using goals to motivate the folks who don’t love their job – instead, change the job or change the people.  If you have to use goals and MBOs with creative people, change the messaging to help drive learning and development.

Further Reading

Deci, E. (1971) .Effects of Externally Mediated Rewards on Intrinsic Motivation., Journal of Personality and Social Psychology, 18: 105-115.

Deci, E., Koestner, R. and R.Ryan (1999) .A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation. Psychological Bulletin, 125(6): 627-668.

Deci ,E. and R. Ryan (1985) Intrinsic Motivation And Self-Determination in Human Behavior, New York: Plenum Press.

Delves, D. (2011) Is Incentive Compensation a True Motivator? http://www.forbes.com/sites/donalddelves/2011/02/16/is-incentive-compensation-a-true-motivator/

McCullagh, P. (2005). Sport and exercise psychology lecture. Cal State University East Bay.10/27.

Pink, D. (2009). Drive – the surprising truth about what motivates us. Cannongate Books.

Wilson, G (undated). The Effects of External Rewards on Intrinsic Motivation. http://www.abcbodybuilding.com/rewards.pdf

Suvorov, A. (2003) “Addiction to Rewards,” presentation delivered at the European Winter Meeting of the Econometric Society, October 25, 2003. Mimeo (2003) available at http://www.cemfi.es/research/conferences/ewm/Anton/addict_new6.pdf and updated at http://www.nes.ru/public-presentations/suvorov_js-08-12-03.pdf

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s