I was talking to a friend today, and in passing, he mentioned his business partner will like me. I immediately asked why? To which he replied, he likes giving his teams overachieving goal, but his business partner thinks because they are a stretch they may be missed, demotivating their team.
His approach of goal setting was right, he knew what his team had achieved, based on that as input and further planning he knows what goals can be set which pushes the team to give their best.
Unfortunately, I have also spoken to people where their leadership teams put up absurd goals which are unrealistic, people still put their heart and soul into their work and perform better than last year, but then they get nothing out of it when those magical numbers were not met.
The problem in this scenario is that the team, which in most cases would have surpassed stretch goals if they were set, get demotivated as they are constantly reminded that their goals were not met. Such people then move on to other pastures, demotivated.
So what is the solution? I told this friend of mine to make transparent all levels of goals. The minimum baseline would be what was achieved last year, then there is a planned goal for the year/quarter, etc and you can set an Over Achieving goal. Both goals can have varying rewards.
Of course, this problem would not have occurred in the first place if the team had their say in goals. This is easier to get done in small companies rather than large ones. But in such (large company) scenarios, companies need to constantly keep a pulse of how their employees are doing, else they stand on a slippery slope.