INNOVATIVE HUMAN RESOURCES STRATEGY - The overriding theme of this blog is Human Resources from a strategic perspective. This blog looks at current issues facing Human Resources and offers strategic insight needed to create innovative HR leadership for the 21st Century.
Thursday, March 26, 2009
Why Advanced Search Doesn’t Advance Your Search
Have you ever thought that if you figured out the search techniques, you would be able to find your dream job?
You click on the advanced-search function, fill in the blanks and hit return. But the matches still aren’t what you’re looking for. Despite improved functionality on many leading job sites, advanced-search functions are overwhelmingly under-used.
In fact, only about five percent of job seekers use advanced search functions, says Jonathan Duarte, founder of online job board GO Jobs.
Duarte attributes the low usage of advanced-search functions to several factors, namely that they involve too many steps and that many job seekers are not trained in Boolean searching, the use of “and” and “or.”
“If a job seeker performs an ‘advanced search’ without Boolean training, they are often frustrated with the results, and then leave the site,” Duarte says. “This is the worst case scenario for the job board.”
Job seekers can also get discouraged if the job search becomes too narrow and draws too few results. Another problem, say job board experts, is that position descriptions are not regularly updated and often do not reflect the true job expectations.
Many job boards have an intermediate search function, which asks for zip code, location and job category. This often gets job seekers close enough to what they are looking for.
Still, trolling job boards remains a very time consuming process, contends Richard H. Beatty, author of “The Ultimate Job Search.” There are over 40,000 career websites, including mega job boards, industry-specific sites and listings on company sites.
“Job seekers are faced with the daunting task of somehow screening through this bewildering array to discover those sites that will prove most productive for them,” Beatty says. “Huge amounts of precious job-search time can be completely wasted.”
Even with all of those sites, still only one-third of jobs are found through the internet.
Some, such as Beatty, are starting to advocate so-called job aggregators, a kind of Google for job searches that includes postings from big and small job boards as well as Fortune 500 companies.
Sites like Indeed, Jobster and SimplyHired are quickly winning admiration. These sites also have advanced search functions that have a more user-friendly feel than even the most well-travelled job boards.
And, Duarte points out, “chances are you don’t need to use it, because the programmers and engineers [who] built the intelligent search engine anticipate what you are searching for.”
Advanced search is an active, rather than a passive way of finding the right career opportunities.
It’s worth the investment of time to figure out how to make it work for you.
What Will Human Resources Look Like in 2010
Administrivia will reside fully with managers and employees through self service and HRIS systems will be a thing of the past for HR. There will be no such thing as an HR assistant or administrative assistant in HR.
HR as we know it will become a profit center and be measured on profit success.
Entire benefit packages will totally be outsourced to third party vendors and employees will have an a la carte menu. Health care providers will provide light workout equipment that is ergonomically designed to fit in the workplace so workers can get exercise and work simultaneously.
There will be at least 2 senior HR professionals today that will run companies in excess of $100M by 2010.
All data will flow through handhelds on the go rather than through desktops/laptops and the typical HR department as you know it today will not exist.
You will notice that I did not mention talent management or succession planning. Those topics will be dealt with early in 2009.
What do you think of these changes and do you agree or disagree? I would appreciate your opinions. Please send your comments to wgstevens2@gmail.com.
Now Is the Time for Managers to Step Up
Well, it is really the time for managers to mentor, guide, and depart knowledge so their employees will excel during those hard times. So instead of dinging managers should be helping employees and bring out the best in them. Sure there are always those who are slackers and were hired into the wrong job. Find out where those who were hired into the wrong job may fit into the organization and move them there, for those slackers, get them off your books through performance management.
So I ask the readers what kind of manager are you? Do you take the easy way out and just let employees fail or do you guide them to success?
I would like to hear your thoughts, email me at wgstevens2@gmail.com
Tuesday, March 24, 2009
5 Times To Use Twitter While Your Manager's Talking - Without Losing Your Job...
Lots of things to consider. Here's the big one - How much do I Tweet at work? That depends on your workplace culture. If you can't even access Twitter at work, welcome back to the Death Star. Lando Calrissian is probably in the cube next to you. Tell him I said "hey"...
Here's a rule that is easy to remember - don't use twitter when the boss is talking to you or at you. Actually the rule is "never never never never never never never never never never never Tweet while your boss is talking to you".
Here's my list of times when it's appropriate to tweet in your bosses' presence:
5. When someone's late for a meeting and you want to help- "in da meeting room with Dave G. No DW 2B found".
4. When you need to ask a business question pondered by the boss - "talking 2 Dave G. Who knows when the new Mac is coming out?"
3. To suck up to the boss, but only if you mean what you are saying - "Dave's presenting. Freaking brilliant".
2. To build the brand through visuals - "talking about the non-profit market
1. To let the boss know you got the coaching message - ""In da bathroom, snuck to post with my twitt. We're down to the last days of da fiscal year, tie ball game after 11 months. Dave wants more toughness. I gotta step up."
What are your thoughts?
Monday, March 16, 2009
Data Mining Moves to Human Resources
Using sophisticated mathematics, HR departments are learning new ways to determine the value of each employee .
The chart looks like colorful pop-art doughnuts flying through space. The message, though, is anything but playful. Based on a mathematical analysis of work at an undisclosed Internet company, each circle represents an employee. Those who generate or pass along valuable information within the company are portrayed as large and dark-colored. And the others? "On a relative scale, they don't add a hell of a lot," says Elizabeth Charnock, chief executive of Cataphora, the Redwood City (Calif.) company that carried out the study for a client. The upshot for managers faced with a mandate to downsize: Small and pale circles might be a good place to start cutting.
For most of its eight-year history, Cataphora has focused on digital sleuthing. The company hunts for statistical signs of fraud. But in the past few years, Cataphora has been dispatching its data miners into a new market: statistical studies of employee performance.
The trend, though early, is unmistakable, and it extends far beyond Redwood City. Number crunching, a staple for decades in the quantifiable domains of engineering and finance, has spread in recent years into marketing and sales. Companies can now model and optimize operations, and can calculate the return on investment on everything from corporate jets to Super Bowl ads. These successes have led to the next math project: the worker. "You have to bring the same rigor you bring to operations and finance to the analysis of people," says Rupert Bader, director of workforce planning at Microsoft (MSFT).
Such a mission might have been laughable a decade ago. But as the role of computers in the workplace expands, employees leave digital trails detailing their behavior, their schedule, their interests, and expertise. For executives to calculate the return on investment of each worker, their human resources departments are starting to open their doors to the quants.
Master Burnett, managing director of HR consultancy Dr. John Sullivan & Associates, estimates that only 1% to 2% of large corporations have begun harnessing analytics to evaluate their workforces. They're led by the data-focused tech companies, including IBM (IBM), Microsoft, and Oracle (ORCL), along with finance players such as Capital One Financial (COF). Elsewhere, says Burnett, HR pros often lack number-crunching skills. But as competition grows, he predicts, a new wave of math-savvy managers will do the numbers on "human capital."
A common starting point is to decode the patterns of success. Microsoft, for example, studies correlations between thriving workers and the schools and companies they arrived from. Also, by analyzing communications within Microsoft, analysts can ID "superconnectors" who help share ideas and others who appear to hold them up, so-called bottlenecks.
CAREER NUMBERS
How to hold on to hotshots? New software offers a data-mining approach. An employee retention program developed by software company SAS, for example, crunches data on employees who have quit in the past five years—their skills, profiles, studies, and friendships. Then it finds current employees with similar patterns. Another SAS program pinpoints the workers most likely to suffer accidents.
The eventual goal is to project how much workers will produce over their careers. In a number-driven labor market, the value of their skills will rise and fall. With these figures in hand, companies will be able to carry out cost-benefit studies on recruiting, training, and employee retention (along with its counterpart, layoffs).
IBM leads the way on such studies. Research analysts are charting the skills and experience of the entire workforce. Then, studying technology and economic trends, they're trying to predict the skills IBM will need down the road—and whether the needed knowhow should be taught or recruited.
While tracking the value of a knowledge worker's ideas is in its infancy, social networks provide valuable laboratories. A few giants, such as IBM, build their own social nets. Others implement offerings from software makers such as SAS. These are designed to link workers and to study their ideas and circles of influence.
The challenge, then, is to figure out which workers come up with winning ideas. Cataphora starts by studying communications through a company. Certain employees produce chunks of data—whether words or software code—that later pop up in other messages. The people copied most often, Cataphora concludes, are thought leaders. They get big dark blue circles. Other people spot the valuable content and pass it on. Those are networked curators. Their circles are bright red.
What about the worker who dispenses priceless wisdom the old-fashioned way, through spoken words at the coffee machine? Much of that goes unrecorded by the analytic team. So there are limits to number crunching. Machines may advance in HR, but humans will retain a strong supporting role.
So what are your thoughts on this. Email me at wgstevens2@gmail.com .
Saturday, March 14, 2009
The Information Overload Concern
Due to this juggling tasks has become an inescapable element of work as revealed by a new field recognized as "Interruption Science" (Source: HR Magazine; August 2008). Information Overload often challenges the innovative and creativity aspects of workers when they have to constantly multitask or shift from one task to another or tackling two cognitive tasks simultaneously.
"A study showed that workers on average spend just 11 minutes on a project and, within that time frame, typically change tasks every three minutes" (Source: HR Magazine; August 2008; "Quelling Distraction: Help employees overcome 'information overload'.")
Companies/Organizations are starting to realize the importance of need to allocate some time for employees to be creative and thinking.
So companies are dealing with this new challenge by carving out "Creative Spaces". Some call it "White space" or Creative room or Work-Out sessions or even "Think Fridays". All these efforts try to provide a physical place or a specific time or day for employees to focus on creative thoughts or agenda-free reflection without any interruptions.
For more information read the complete article HR Magazine; August 2008; "Quelling Distraction: Help employees overcome 'information overload'."
So, what has your company done to minimize the information overload employees are feeling? How creative is your organiztion?
Thursday, March 12, 2009
10 Cutbacks You Will Probbly See at Work
With more companies in dire straits, raises, health insurance and 401(k) matches are vulnerable to being cut. If they're not already gone, they could be soon.
Many employers are frantically axing jobs in an effort to improve their bottom lines. Other companies are wielding a scalpel to whittle cost savings from employee perks. About half of companies -- 51% -- expect to increase their cost cutting this year and beyond, according to a recent survey.
Here's a look at where employers are likely to make cuts:
- Jobs, or through attrition
- Vacant positions
- Training - Helping employees to develop advanced skills usually helps the bottom line of a company. But on-the-job training is expensive and time-intensive, and immediate results are not always realized. About 35% of companies have reduced or eliminated training for employees, Watson Wyatt reported, and 15% are planning to. Keeping your skills up to date on your own, however, could help keep you employed.
- Health care - Premiums for employer-sponsored health insurance climbed to $12,680 annually for family coverage in 2008. Employees paid an average of $3,354 out of their paychecks to cover their share of the cost, according to a Kaiser Family Foundation survey of 2,832 companies.
- Travel
- Parties
- Salaries
- Merit increases
- Pension contributions
- 401(k) matches
What has your company done so far this year to reduce operating expenses? Please email me at wgstevens2@gmail.com with your comments.
Wednesday, March 11, 2009
Executives Have No Idea What Customers Want
A new study shows a major, dangerous disconnect.
Andrea Ayre's company recently surveyed several thousand U.S. consumers across 10 major industries to find out what they really think about customer service. We also surveyed executives in each of those industries.
What we learned is surprising.
We learned that we've shifted from a service economy to the experience economy, where customers are in control, unsuccessful brands are commodities and successful brands create consistently superior experiences.
We also learned that company executives are woefully disconnected from their customers when it comes to delivering the customer experience. One result was truly shocking in its implications for consumer-driven businesses: While most company executives say they have a solid understanding of their customers' experience and expectations, consumers vehemently disagree.
In fact, consumers say that companies not only don't know their needs, they also don't care. Where executives would give their companies' customer service "B" grades, consumers give them "D" grades. What's even worse is that executives have no idea how this disconnect is affecting their companies' futures.
Nearly half of consumers (47%) say they don't believe company executives understand their experiences, citing problems such as rude customer service staff or employees who provide the wrong information or never solve the customer's problem. More than one-third (41%) of the customers who take the time to complain don't think companies listen to or act on their feedback.
But that doesn't mean customers are doing nothing. On average, more than half will defect--leaving a company flatly--based on bad customer experiences, without ever telling the company why.
And the problem doesn't end there. Nearly nine out of 10 customers will tell their friends and colleagues about their bad experiences, creating a negative ripple effect in the prospective customer base that has serious implications for a company's future success. Yet the executives we surveyed thought that only 20% of customers shared the news about their bad experiences--a significant mismatch with the customer view.
And the biggest misunderstanding among executives? If customers don't complain to them, it means they don't have a problem and everything is fine. This is the silent but deadly company killer.
Tuesday, March 10, 2009
Outsell: In Five Years, Top Media Companies Will Generate 50% or More Revenue Online
I attended a seminar in Florida in 1996 were Michael Bloomberg said that print was dead and that we would be reading from electronic fabric (later to be ebooks). He opened my eyes and from that day forward professed that we need to move all products to electronic.
In 1999-2000 I worked for an tech hothouse in Cambridge and all we did was test various delivery methods on/for the web and built some really cool ecommerce and search technology. There too I mentioned to the CIO that ebooks and electronic would be the new media and he agreed. So with that intro I thought this article had some real relevance. I had the opportunity to work with Chuck Richard in Boston and I want to thank Chuck for telling us all along what he believed then and still today.
Burlingame, Calif.—International Data Group, Thomas Publishing, Alibaba.com, CNET and Hearst Business Media are among the top b-to-b e-media companies, according to a new report by analyst firm Outsell.
The report, “Market Analysis: Leaders in the B2B Print to Electronic Revenue Shift,” ranks b-to-b publishers and information companies based on their success at growing electronic revenue over print revenue.
“Within five years, all the leading companies will draw at minimum 50% of their revenue from electronic sources, and 0% to 25% from print,” Chuck Richard, VP-lead analyst at Outsell, said in a statement.
Monday, March 9, 2009
Tips for Laying Off Employees in a Social Media World
To the first point. This is not new companies have always used downturns to shed deadwood, not sure why this was even raised by Michael Arrington.
The second point is far more interesting and will have major impacts on employers for years to come. In a world where anyone can publish, and does, how you manage this process is critical.
- Do it quickly, ok this is always the case but even more so now. Use the old carpenter’s rule “measure twice, cut once” the last thing you want to people having multiple chances of publishing about the process.
- Remember the jobs you are cutting have people in them. Treat them that way.
- But also remember humans do not make rational logical decisions based on information given to them. They will instead pattern match with either their own experience, or collective experience expressed as stories. This usually means they will react poorly initially.
- Provide employees some advice about being careful if vent online, make sure if they do it will not lead to nasty legal battles down the track.
- Expect things to be blogged, tweeted, and generally discussed.
- Monitor the internet to see what is being said. Allow people to vent but if needed gently correct the messages if they are blatantly wrong.
- Don’t get into a online publishing war over the smallest of things published, sometimes ignoring it is the best option. The more times search engines find a topic the higher they rank it in the results. Also bloggers tend to react quickly and harshly don’t give them additional fuel to write about.
- Communicate with the employees who are leaving, but do so honestly and openly, limit the corporate BS.
- Communicate with the employees who are staying, again do so honestly and openly, limit the corporate BS.
- Setup a Facebook alumni group (if you don’t have one), automatically invite all of the employees who are leaving. Remember some will be boomerangs.
- Setup an internal wiki to allow the people leaving to document their knowledge in a central location. This way you might collect some of the knowledge that is leaving before it leaves.
Communicate to your customers, suppliers, media, analysts and blogosphere what is going on and why. - Make sure you are not applying double standards with your executive team as this will certainly get people talking.
- Make sure the rest of the organisations is also cutting back on expenses. If you keep people flying first class while laying off employees this will also get people talking.
- Highlight the other cost cutting measures that the organisation is taking to show layoffs aren’t the only thing.
- It is a great time to have the CEO start an blog, this will show them as a real person a factor that should not be overlooked during this period of change.
- Finally make sure you pay severance packages fairly and on time.
Productivity Paradox of Social Networks
Which brings me to two very good articles I read this week.
First up was from the UK’s HR Zone looked at the benefits social network tools provide organizations in reducing the barriers to communication. Organizational behavior research has shown that collaborative Web 2.0 tools are particularly effective where technical knowledge is valued. In complex organizations like multinational corporations, finding someone who possesses highly specific expertise is often difficult. One reason is that expertise remains ‘hidden’ - and consequently unexploited - within organizational structures.
They even go on to quote a UK-based think tank indicating that social networks encourage people to create productive relationships and work the way people do.
The second was from Harvard Business Review on the benefits of social networks, focused around information discovery and sharing. Here we see figures such as 7%, 30% and even 40% improvements in productivity when employees where using communication patterns facilitated by social networks. What CEO doesn’t want 40% more out of their existing workforce!
With all this research being released I hope we will see some more positive articles from the mainstream media.
What are your thoughts on this blog post that was posted on Michael Specht's blog this past month?
Thursday, March 5, 2009
Helicopter Managing Fails With Some Gen-Y & Corporate America’s Pushing Back
Tuesday, March 3, 2009
Creating Advantage
In this climate, people have become the new competitive advantage for business, according to a report by The Boston Consulting Group and the World Federation of Personnel Management Associations. The report, Creating People Advantage: How to address HR challenges worldwide through 2015, is based on a survey of 4741 human resources executives in more than 80 countries as well as interviews with senior executives in 19 countries.
Are you creating advantage with the new workforce dynamics and demographics?
How to Turn Strategy into Action
What’s more, leaders often get in the way of their strategies and don’t prepare the ground enough for a new strategy to take root. So how can you ensure you turn your strategy into action?
What are your thoughts and ideas on this topical issue? Email me at wgstevens2@gmail.com .
Saturday, February 28, 2009
Ways to Know When It’s Time to Get Out of Human Resources
- You actually look forward to firing someone
- You have a 20-year collection of SHRM tsotschkes displayed in your office
- You don’t think that anyone can get a 5 in a 5-point rating scale
- Your phone rings less and less each day, and not from managers either
- You’ve never been seen at the table, and there is one empty seat
- You think that it’s just a matter of the right forms, no exceptions
- You can no longer say no to management, even when it’s the right thing to do
- You spend more time talking about employee engagement than talking to employees
What are your thoughts on ways to determine when it is right to get out of human resources?
Thursday, February 26, 2009
10 Steps to a Successful CRM Implementation
- Calculate the value. Exactly how will CRM benefit your business? Strive to answer this question in terms of measurable ROI (return on investment). Don’t focus too much on how the software will help customers — what will really improve your bottom line is how CRM helps your employees use customer data more effectively.
- Work closely with key departments. Good planning is critical to your success. Use members of the call center, sales force and marketing departments as parts of your CRM planning team, because these departments can be affected to the greatest extent by a new solution. Let them tell you the business processes that need improvement. Then hammer out agreeable objectives mapped to new business processes. It’s often a good strategy to place some easy ones on top of the list so you can celebrate some victories early on.
- Budget realistically. Be a bit pessimistic when it comes to the budget to avoid the painful process of increasing cost estimates. CRM customization and integration with existing software present two big expenses. It can cost two to three times the price of software for implementation and ongoing maintenance. Make sure you factor in all of these expenses from the early stages of your CRM deployment.
- Organize customer data. The underlying customer data is the backbone of a CRM solution. Most companies store duplicate and outdated data in multiple locations. Putting this data in a unified database, scrubbing it and making it available to the entire organization Copyright © 2007, Tippit, Inc., All Rights Reserved before implementation will make for a smooth rollout. If necessary, get help from vendors who offer data-cleansing software and deeper customer information.
- Lead the project from the top down. Experts agree that the No. 1 reason implementations don’t work is that senior executives fail to lead. After all, if managers don’t work hard to ensure CRM success, why should employees? It’s not just about signing paperwork and attending meetings. Executives must adopt CRM as a corporate-level initiative, dedicate significant time and energy, motivate stakeholders and keep everyone on track.
- Find a reliable vendor and select functionality conservatively. Shop for a financially secure vendor with proven ability to expand the solution as your company grows. Beware of providers that rely heavily on partners for key functionality. When considering industry-specific software, make sure to find out if it really delivers on its promise. Talk to other corporate users in your field, try out the software and choose enough functionality to meet your business needs without sending your IT department on endless quests for the Holy Grail.
- Implement gradually. Change is never easy, especially for employees who may fear the accountability that comes with posting data that can expose their true performance. Start your CRM initiative in a single department that stands to benefit the most in the short term; then follow with a zealous, companywide CRM proponent. When others witness the initial success of that department, bringing them on board will be much easier.
- Market CRM to employees and deliver ongoing training. It may sound obvious, but it’s important to remember that employees have to use the solution in order for it to work. Clearly communicate how it will help them succeed, and start CRM training early on. This way, you’ll chip away faster at the 18 to 24 months it typically takes employees to adopt new business processes.
- Actively manage the implementation. Technical difficulties, management turnover, employee resistance and adjustments in company direction will happen. Managers need to stay on their toes and quickly address changes to maintain momentum. Experts agree that the No. 1 reason implementations don’t work is that senior executives fail to lead.
- Develop a culture of continuous improvement. CRM solutions should be adjusted to deliver a sharper competitive edge as a company and its business evolve. Be sure to keep employees in the communication loop, and they will help supply the information needed to continuously improve the way the system leverages customer information. Not all companies will achieve CRM success because many fail to take into account the items listed above. Then again, for the ones who do succeed, the rewards are great.
Monday, February 23, 2009
Cost Effective Strategies for Retaining Your Top Employees
To help keep your best workers around, consider implementing some of the initiatives found below:
- Find out what your employees want. Pay isn’t always most important. For many employees what is most important at work is the satisfaction that comes from a job well done, being recognized and appreciated for one’s efforts, and having the flexibility to balance work with personal obligations. Get a feel for what your employees want before implementing a new reward system. All that may be necessary are some simple changes, such as putting more effort into recognizing your employees or providing your workers with the autonomy that they desire.
- Extra time off. Providing extra time off is a simple way to offer a desired benefit without cutting into your bottom line. The extra time off is a win-win; it provides employees with an opportunity to catch up on personal business or just get some much needed R&R. And when your employees return, they’ll come back with a renewed commitment to their work and a feeling of rejuvenation.
- Bonuses for meeting targets. Offering employees a bonus for reaching certain sales targets is a simple motivator to ensure an employee’s hard work is rewarded. With the revenue made from reaching company sales goals, you can afford to share the reward with the employees who made it happen – and who will likely make it happen again.
- Flexible schedules. Most employees desire a work schedule that easily enables them to balance work with their personal life. To meet these demands, consider offering options such as telecommuting, flextime, job sharing, and shift swapping when appropriate. Employers that fail to offer their employees the flexibility to leave work early to care for a sick child or to attend a parent-teacher conference are not likely to keep quality employees around for very long.
- Increased responsibilities. Most employees are interested in performing work that is challenging. Whereas, work that is repetitive or requires little thought often results in disengagement. Increase job responsibilities and you will likely see an increase in dedication and commitment.
- Make advancement opportunities known. Employees that work toward a personal goal, such as career growth are motivated to work hard. So, let your employees know they’re doing well, inform them of advancement opportunities, and work with them to help them reach their career goals.
- Just say “thank you”. It’s the thought that counts. So if you can’t afford a pay increase this year, think of other creative ways to show your employees that they’re appreciated. Simple forms of recognition, such as praise, thank you notes, and “employee of the month” awardscan go a long way in keeping your employees happy.
- Tie rewards to performance. When rewards are tied to job performance, employees are more likely to put forth the effort and produce quality results. On the contrary, when employees come to expect pay increases or other rewards “just because”, their performance is likely to remain marginal. It’s important to reward employee performance soon after a job well done so that the employee makes the connection between their hard work and the reward received.
Are you doing any of these things at your company today?
Sunday, February 22, 2009
The Changing Policy Landscapet
- ADAAA - the Americans With Disabilities Act Amendments Act that when into effect on 1/1/09
- FMLA - Family & Medical Leave Act as amended went into effect on 1/1/09 with sweeping changes on how we need to administer leave for employees
- Changes in cost of COBRA to laid off workers means more cost to companies for those individuals who were laid off from September 2008 going forward
- Ledbetter Fair Pay Act on pay for females signed on January 29, 2009
- Employee Free Choice Act will critically define how we as HR practitioners deal with union organizing.
Thursday, February 19, 2009
Goals Gone Wild': How Goal Setting Can Lead to Disaster
In early 1969, just as the U.S. was preparing to reach John F. Kennedy's lofty goal of sending Americans to the moon, the famed Ford executive Lee Iacocca gave a similarly ambitious mandate to his team of engineers.
Faced for the first time with competition from low-cost, high-mileage foreign imports, Iacocca set a specific target: Ford would design a new automobile that weighed less than 2,000 pounds and sold for under $2,000, and it would be on the showroom floor in time for the 1971 model year. What resulted was a mad dash to create the Ford Pinto.
The rush to roll out the Pinto had lethal consequences. Common-sense safety checks took a backseat to meeting Iacocca's deadline. In particular, engineers failed to examine the decision to place the Pinto's fuel tank only 10 inches behind the rear axle. When the Pinto was rear-ended, it often went up in flames. Fiery rear-end crashes caused 53 deaths, numerous injuries and a string of costly lawsuits.
It was a valuable lesson about the hazards of setting goals. In pursuit of such mandates, employees will ignore sound business practices, risk the company's reputation and violate ethical standards. This lesson, however, has not been absorbed by corporate America. To the contrary, ambitious goal setting has become endemic in American business practice and scholarship over the last half-century. Goals have pervaded industries as diverse as automotive repair, banking and information systems, even spilling over to the debate on how to improve America's public schools.
Yet new research by Wharton operations and information management professor Maurice Schweitzer and three colleagues documents how corporate goal setting can cause more harm than good. The paper, titled "Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting," was co-authored by Lisa D. Ordóñez from the Eller College of Management, University of Arizona; Adam D. Galinsky of the Kellogg School of Management at Northwestern University, and Max H. Bazerman from the Harvard Business School. Their work appears in the February issue of the Academy of Management Perspectives.
"We take a strong stand in this article, because we are pushing against the pervasive use of goal setting in practice and a very large body of literature that has endorsed goal setting. We argue that managers and scholars have grown complacent in their endorsement of goal setting ... often [neglecting] the harmful effects," Schweitzer says. "We argue that goal setting is wildly over-prescribed."
The paper is full of cases in which goal setting had negative and sometimes disastrous consequences for a company. Indeed, executives and business experts in those cases frequently failed to realize the prominent role that overly ambitious targets played in causing the eventual problem. One famous case that Schweitzer and his co-authors relate is the storied 2002 collapse of the energy-trading giant Enron. They cite literature noting that the once high-flying Houston-based firm used goals and an incentive system for its salesmen that was based solely on the volume of revenue that they generated -- and not whether the actual trades were sound or profitable -- which became a key factor in Enron's implosion.
The authors found that goal setting has become practically institutionalized in American corporations, backed up by a persuasive body of literature over four decades arguing that employees perform better when challenged to meet specific targets as opposed to asking them to simply "do their best." The leaders of this movement are two renowned organizational psychology experts, Edwin Locke of the University of Maryland and Gary Latham of the University of Toronto, who wrote: "So long as a person is committed to the goal, has the requisite ability to attain it, and does not have conflicting goals, there is a positive, linear relationship between goal difficulty and task performance."
Schweitzer suggests that goal setting has become so ingrained that the practice is greatly overused. "We argue that there are some contexts where goal setting is appropriate, such as when tasks are routine, easy to monitor and very easy to measure. In practice, many domains are ill suited for goal setting."
'Mistakes Did Occur'
One well-known example took place at Sears, which in the early 1990s set a specific sales target for its auto repair staff of $147 per hour. In order to meet management's goal, however, mechanics began to perform unnecessary repairs or overcharge customers, which triggered a major customer-relations crisis for the giant retailer. Edward Brennan, chairman of Sears at the time, later admitted that the "goal setting process for service advisers created an environment where mistakes did occur."
Why does this happen? Schweitzer and his co-authors identify a series of problems that they say are linked to the overuse of goal setting, especially when the targets are either too specific or too challenging. For example:
- Goals that are too specific often lead employees to develop such a narrow focus that they fail to recognize obvious problems unrelated to the target. According to the authors, highly specific goals may cause workers to sacrifice safety for speed -- as in the case of the Ford Pinto -- or pursue misguided end results, as was the case at Enron. A typical problem is the sacrifice of quality in the interest of quantity, they note, citing the example of universities that require tenured professors to publish a certain number of research papers in particular journals, but without careful scrutiny of the quality of the work.
- Likewise, too many goals have what the authors consider an inappropriate time horizon. They refer to the well-known example of managers who are pressured to meet quarterly earnings goals, causing them to ignore long-term strategic problems. The reverse side of this practice is that employees also have a tendency to ease up when goal horizons are set too low. The paper cites a 1997 study of New York City cabdrivers who found that on rainy days, taxis tended to disappear from the congested streets because drivers met their fare target early in the day and went home, rather than working longer hours to make additional income.
- Workers with highly specific and ambitious targets will engage in risky practices in order to meet them. The authors note the case of one of the nation's largest banks at the time, Continental Illinois, where in 1976 the CEO issued a mandate to dramatically expand the loan portfolios to match those of some rival banks. The bank aggressively pursued new loan customers and even bought packages of high-risk mortgages from smaller banks, which eventually caused Continental Illinois to fail.
- Unethical behavior is one of the more obvious pitfalls of overly ambitious goal setting, with potentially some of the most catastrophic consequences. This can happen in a number of ways -- such as the safety shortcuts at Ford or the bilking of auto-repair customers at Sears. The authors also note incidents where employees offered bogus results to claim that a target was reached, such as when employees falsified sales reports to meet their quota at the vision-products company Bausch & Lomb.
The irony, says Schweitzer, is that a lot of this specific goal setting is unnecessary. Research has shown that employees have a stronger intrinsic motivation to do a good job than their managers tend to give them credit for. He points to research by Stanford University organizational behavior expert Chip Heath, who "found that people tend to think that other people need extrinsic rewards more often than they really do.... To us, our work is interesting and meaningful, but we tend to think that other people come to work because of money."
Beware the 'Hedonic Treadmill'
In fact, the authors argue that this failure to recognize the value of simply doing a good job can cause managers to instead set goals and rewards that harm intrinsic motivation and place employees on a "hedonic treadmill." The notion of a hedonic treadmill, says Schweitzer, "is that people never 'get' to where they are going. For example, people constantly pursue happiness, but don't get there. They keep thinking that the next promotion, the new car, the salary raise, etc. will make them happy. They get the promotion, and that makes them happy for a time. Then they adapt and mistakenly think that it's the next promotion that will make them happy.
"People may be motivated by goals. But these goals can crowd out intrinsic motivation, so they will need more goals to motivate them in the future."
Schweitzer and his co-authors point to other negative consequences from overly specific numeric goals. For example, workers tend to lose their focus on learning new skills in favor of using tried-and-true methods to meet their quotas. In addition, companies that set targets for individual workers can create a culture of competition in which workers tend to shun teamwork in problem solving.
Despite all this, the use of goal setting has spread to other areas outside the corporate world. Arguably the best-known example is the federal education program known as No Child Left Behind that was enacted in 2001; it links government aid to highly specific performance targets for students based upon standardized test scores. Critics of No Child Left Behind say the program forces teachers to focus narrowly on what will be asked on those tests, ignoring other critical skills. There have also been several scandals involving falsified test scores and other forms of cheating. Indeed, the allegations in the classroom are quite similar to the problems that Schweitzer and his colleagues found in the business world.
"The 'No Child Left Behind' idea is compelling -- after all, who wants to leave a child behind?" Schweitzer says. "But the reality of this program is that it is fundamentally flawed. It is very difficult to monitor education, and this program narrows the focus of teachers in a domain that requires cooperation, innovation, broad thinking, high ethical standards and, we would hope, intrinsic motivation."
Schweitzer believes one reason that goals are overused is that we focus too much attention on the individual. When things go wrong -- for example, following the collapse of an Enron -- we tend to blame specific individuals rather than look at the broader culture established by top managers. The best-known example of this problem comes from the U.S. military and the well-documented detainee abuse at the Abu Ghraib prison in Iraq, he says. These cases of abuse were blamed on low-ranking soldiers -- "a few bad apples" -- and not on the broader directives from the Pentagon that created the climate of corruption. "What happens is that people neglect to appreciate the importance of the environment."
The authors suggest that goal setting should be undertaken modestly and carefully, with a focus more on personal rather than financial gain. They also make the case that much more research -- and more skepticism -- is needed about the practice of goal setting. "Rather than dispensing goal setting as a benign, over-the-counter treatment for students of management, experts need to conceptualize goal setting as a prescription-strength medication that requires careful dosing, consideration of harmful side effects, and close supervision," the authors write. "Given the sway of goal setting on intellectual pursuits in management, we call for a more self-critical and less self-congratulatory approach to the study of goal setting."
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