Which Is Better—Performance Goals or Results Goals?
Microsoft's recent move to abolish the employee stack ranking way of managing performance seemed to be a welcome move.
For years Microsoft had used stack ranking, which in essence encourages workers to compete against each other rather than relying on teamwork.
When announcing the elimination of the stack ranking system, Microsoft executive vice president of HR Lisa Brummel mentioned that the future system will have no more ratings. Ratings are often seen by employees as the ultimate end-result of their efforts during the performance review period.
The perception that almost all employee benefits—including salary raises and promotions—are based on final ratings often lead to employees giving enormous importance to the ratings, as was observed in Microsoft. And given this importance, it usually drives the behaviors that lead to employees doing all they can to earn higher ratings. One such behavior is employees choosing results-oriented goals—goals that could help them earn more ratings.
In their book, The Winning Way: Learnings from Sport for Managers, Anita and Harsha Bhogle emphasize the difference between performance goals and result goals. As they say, winning a gold in Olympics is a dream, but you cannot really control how others are going to perform. A swimmer, for example, rather than swimming for gold (results goal) swims for timing (performance goal), which is in his control.
Tim Cook once commented on Apple's philosophy, "The only thing we'll never do is make a crappy product, that’s the only religion that we have, that we must do something great, something bold, something ambitious."
Investors are always focused on results goals like earnings-per-share and profitability, but Apple's core beliefs seem to be more aligned with the performance goal of making flawless products. If you consistently strive to achieve performance goals, it improves the chances of achieving results goals. In theory, performance goals are far more realistic and achievable and often take stress out of the result.
On the other hand, too much focus on results can often lead to negative consequences. If while focusing just on end-results and not on day-to-day performance we are faced with some daunting hurdles, it could lead to more desperation and less calmness.
Instagram achieved phenomenal success despite being a small team. Their end-result would have been to win millions of happy users. They would not have achieved what they eventually did by just focusing on the end-results and by not perfecting the day-to-day nuances of building and selling the software.
Both performance goals and results goals are important. An executive with Franklin Templeton, Vivek Kudva noted, "Without results goals, managers will not know what the end objective is. Without performance goals, the end may become more important than the means."
Results are what we strive to achieve at work. But dissociating ourselves from results and focusing on perfectly delivering smaller chunks of performance make us less anxious and increase our chances of winning.
Do you agree?