Employee discussions 2023: Why annual goals do more harm than good

Many companies are currently facing their annual employee reviews. In these reviews, managers and specialists usually set goals for the year. However, this is not a good approach, as many companies are not aware that goals harm them more than they benefit them. Goals restrict the employees' scope for action, often demotivate them, and promote selfish ways of thinking. A significantly more successful approach has proven to be rather unconventional in practice: focusing on problems instead of goals in annual reviews. Motivation and employee relationships benefit much more from this. Undoubtedly, goals have positive aspects. For example, they can help staff to focus, serve as guidance, or inspire greater performance. However, these effects are almost never achieved in practice. What hundreds of leadership trainings have revealed: Many supervisors either set the goals for their team or formulate them so vaguely that employees cannot identify with them. In both cases, the lack of goal alignment is evident. As a result, the positive impact is lost. Furthermore, the effect often turns negative. Because goals are too vague ("Increase customer satisfaction by the end of the year"), too high ("No complaints"), or too low ("Fulfill contract requirements"), they often lead to demotivation, frustration, and anger among many employees in the long run. Setting clear goals that do not overwhelm or underwhelm is a balancing act that many supervisors find difficult to achieve. Goals unnecessarily tie up many resources. What many companies also fail to realize is that working with goal specifications unnecessarily ties up resources. The goal-setting discussion alone takes up time that employees could use more effectively. The same applies to achieving the goals. Although goals provide little benefit, companies invest a lot of time and money in monitoring them and in getting employees back on track if they struggle with them, feel under- or overburdened. Many professionals and young talents also perceive the goals set by their superiors as a vote of mistrust. They feel restricted in their freedom and pressured when they fail to meet certain targets. This is especially true when a portion of their salary depends on goal achievement. Managers expect increased motivation from this. In reality, selfish behaviors are promoted, focusing on personal bonuses, sometimes without regard for losses to the team or the company. Addressing Problems Instead of Goals In 90 percent of cases, the disadvantages outweigh the benefits of goals, says Clesle. Therefore, he recommends an approach that may seem paradoxical at first: in annual discussions with employees, focus not on goals but primarily on problems. These are not only easier to formulate than goals for both sides, but their solutions also provide immediate, concrete benefits. Employees almost always have a clear answer to questions like "What is your biggest challenge at the moment?", "Where do you currently see the greatest need for action in your work environment?", or "What demotivates you?", while they often struggle with goal and motivation questions. Experience shows that concrete problem areas that can be easily and directly resolved, such as outdated hardware, a noisy work environment, or lack of information, emerge directly in the conversation. Increasing Motivation and Employee Engagement Solving such difficulties usually involves minimal effort. At the same time, collectively addressing problems creates an immediate, tangible benefit for both sides, which goals often lack: an immediate, tangible added value for both sides. Instead of feeling patronized, employees feel taken seriously and respected. Many managers who practice this approach quickly notice that motivation and willingness to perform increase within the team. Additionally, the relationship improves sustainably. Employees increasingly feel comfortable addressing difficulties and obstacles openly - even outside of the annual review. This allows problems to be solved early, long before they escalate and cause lasting demotivation. Communication barriers are gradually broken down and trust is built. This strengthens employee engagement. To enhance this effect, companies should ideally not limit themselves to just one annual meeting. It is better to follow up weekly with the team to see where the problems lie. Feedback, salary, and performance are discussed separately, for example, quarterly. This prevents issues from unnecessarily accumulating, leaving sufficient space in the annual review for the truly important questions.