Goal Setting: Negotiation Goals Before You Get to the Bargaining Table

Before you engage in goal setting, consider the following real-life disasters from the past: Under the leadership of turnaround expert Q.T. Wiles, quarterly earnings goals became a company-wide obsession at disk drive manufacturer MiniScribe in the 1980s.

In just one example of the unethical behavior inspired by the race for higher earnings, employees shipped bricks disguised as hard drives. Rampant fraud was revealed, and MiniScribe went bankrupt. In the early 1990s, Sears, Roebuck and Co. gave its auto repair staff the goal of achieving $147 per hour in sales. To reach this challenging goal, staff overcharged for work and made unnecessary repairs. The scandal broke, and Sears’s reputation suffered for years. In the years leading up to its collapse, energy-trading company Enron promised its salespeople large bonuses for meeting challenging revenue goals.

This focus on revenue rather than profit contributed to widespread fraud and, ultimately, to the firm’s downfall. Far from being a cure-all, negotiation goals can trigger a variety of destructive behaviors, write professors Lisa D. Ordóñez (University of Arizona), Maurice. Schweitzer (University of Pennsylvania), Adam D. Galinsky (Northwestern University), and Max H. Bazerman (Harvard University) in an article in the Academy of Management Perspectives. What’s wrong with goals? Hundreds of research experiments suggest that setting specific, challenging goals can inspire employees and improve organizational results. But these findings, achieved in controlled settings, fail to account for the pressures and temptations of the real world.