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Stretch Goals: Motivating, Inspiring, and Wildly Misused

Stretch Goals: Motivating, Inspiring, and Wildly Misused

Free Resource

For years, Wells Fargo was considered an industry leader in cross-selling - getting customers to open multiple bank accounts, credit cards, and mortgages was a hugely profitable opportunity. The leadership team set increasingly aggressive cross-sale goals, cascading down to increased quotas for individual employees. In 2013, executives set a stretch goal of eight financial products sold to each household, around five times the industry average.

The result? In the absence of resources, sales representatives facing an impossible task resorted to widespread unethical behavior, leading to more than 3.5 million fraudulently opened accounts and more than $300 million in fines and class action lawsuit payments.

Wells Fargo isn’t the first company to see stretch goals backfire to disastrous ends. Aiming for the stars can drive performance beyond a team’s wildest imagination, but more often than not a company’s stretch goals are so far-fetched, they bring out the worst in employees desperate to make ends meet. In every failure there are lessons, and in this post we’ll explore when, why, and how to use stretch goals to inspire, motivate, and get results.

What is a stretch goal?

Best practices dictate an effective goal is both specific and challenging. Company goals give employees a better understanding of what they're working towards, and how their job contributes to a greater cause. By design, stretch goals are aggressively ambitious, aiming for results radically beyond your current capacity and output. Stretch goals focus on extremely difficult or extremely novel challenges that require innovative approaches; not asking everyone to work harder and longer hours.

Under the right conditions, a stretch goal will inspire a new level of commitment, effort, and performance. But despite every manager's’ wish, improving a team’s performance takes more effort than just raising expectations.

Positive momentum: Teams coming off a series of successful projects are prime for an ambitious next step. Employees coming off recent wins are more resilient and engaged, and energized by new, challenging tasks. Stretch goals are not an over-the-counter remedy for mediocre performance or saving sinking ships. Struggling teams are much more likely to view those same challenges as threats, and display defensive and self-defeating behaviors.
Available resources: An ambitious, motivated team riding a hot streak may not be enough to turn your stretch goals into a reality. Stretch goals require time, money, talent, and equipment to innovate and iterate at scale. Companies operating with a surplus can stomach setbacks and disappointments, instead of dooming their entire operation with an overly ambitious gamble.

It may seem straightforward only to set stretch goals when you have time, expertise, money, and an energized and harmonized workforce, but many managers ignore these signals and push forward regardless. Failure can put decision makers into risk-seeking mindsets when their teams desperately need a steadying presence.

Stretch goals bring greater rewards and greater risks

Setting stretch goals requires a delicate balance of timing, resources, and managerial know-how. Unfortunately, teams poorly positioned to benefit from stretch goals are most likely to use them. In this event, employees tend to exhibit one of three concerning behaviors:

Burnout: Not every stretch goal is going to be a success, and failure comes with risks. Challenging goals are shown to prove performance, but failure can lead to self-doubt, wounded confidence, and lower engagement and future effort. If the initial stretch goal is too outlandish, you may never see employees fully engage with the challenge. If there’s no chance for success and no secondary benchmarks to indicate a job well done, you can sap intrinsic motivation.
Risk-taking: Stretch goals put employees at risk of getting too fixated on the measured outcome and losing sight of what drives the organization forward. This can stem from a stretch goal that doesn’t fully align with the business’ success or is so narrowly focused it prevents employees from looking at the big picture. Leadership teams should aim to improve the process through which the target metric is achieved.
Unethical behavior: Studies have found links between high expectations and cheating in academic, athletic, and professional settings. In a 2004 study, participants were more found to be more likely to” misrepresent their performance level when they had a specific, challenging goal than when they did not,” especially when they were close to reaching the target. High-achieving students are more likely to cheat than others. When employees are up against the wall and stretched too thin, they will try to hit their metrics by any means necessary. Managers need to have regular check-ins with their teams to monitor for misbehavior.

Despite these looming threats, the toughest challenge companies face with stretch goals tends to come at stage one: choosing the right targets. Most managers create goals that are too abstract, irrelevant to what they want to achieve, or use metrics that measure correlation, not causation.

Make goal setting work for your team

Goal setting isn't a one-size-fits-all solution for waning performance and motivation. Instead, managers need to approach goals with thorough planning and consideration of how the goal might go haywire.

Focus on understanding and aligning your team's values and personal development goals with business needs. Most companies can make significant strides with small, achievable goals that boost team chemistry and morale. A recent Gallup survey reported only 33% of US employees are engaged, and increasing that number may yield greater results than a stretch goal.

If the conditions are right and your team is ready to take on a stretch goal, you need to remember that stretch goals, by definition, are extremely difficult and likely to fail. In the OKR framework that is popular within the tech community, teams are only expected to achieve 70% of their stated goal. If your team does fail to meet its stretch goal, it’s important to learn from the experience and focus on solutions, rather than finding someone to blame.

Some people are driven to reach beyond what’s possible, while others rely on consistent achievement and positive momentum for sustained progress. It’s up to managers to understand their team’s capabilities, resources, and resolve, and put employees in a position to succeed. While dreaming big can be thrilling, nothing drives culture and future performance like meaningful, attributable success. Even if it isn’t by a stroke of genius.