Should You Give Employees Stretch Goals? Here’s What the Research Says

Jack Welch once said, “Set stretch goals. Don’t settle for mediocrity. The key to stretch goals is to reach for more than you think is possible. Don’t sell yourself short by thinking that you’ll fail.”

Is it really that straightforward, though?

If the research on the topic over the last decade is anything to go by, the answer is no; it’s not that straightforward. While stretch goals have the potential to drive results, performance, and engagement in the workplace, the fact is that stretch goals can also do more harm than good when used in the wrong circumstances.

In the following article, we’ll help you determine whether or not you should be setting stretch goals for the employees in your charge. However, before we do that, let’s first review the definition of a stretch goal.

What Is a Strech Goal?

A stretch goal is a type of goal that is highly ambitious and intentionally difficult to achieve. It’s not impossible; it just takes substantially more time, energy, and resources than a typical performance goal would. The purpose of setting stretch goals is to energize, challenge, engage, and motivate employees.

Think of it this way; typical performance goals are a must-have in order to stay in good standing at a job. Stretch goals, on the other hand, are a nice-to-have. They aren’t expected, but if they are achieved, that typically earns the person responsible a reward proportional to the stretch goal's magnitude and significance.

When Shouldn’t You Set Stretch Goals For Employees?

Given that stretch goals have the potential to lead to big wins, successes, and achievements, it’s no wonder leaders like yourself want to set them for employees. Before you do, though, you need to consider the following three things. Based on the research that has been done on stretch goals, you shouldn’t set stretch goals if:

1. Your Employees Are Under-Performing

When your employees are underperforming and coming up short on their regular performance goals, research indicates that likely isn’t the right time to hand them a stretch goal. Researchers from the University of New South Wales Business School in Australia note that is because “those facing large and sustained shortfalls in performance relative to a goal can become discouraged by failure. For them, repeated failure to achieve stretch performance goals erodes self-efficacy and motivation, increases anxiety and stress, and reduces learning, goal commitment, and performance.”

2. You’re Desperate

You know the saying, desperate times call for desperate measures. Sometimes in those desperate times, leaders will set ambitious stretch goals in hopes that they will inspire significant improvements and great results. But, according to the researchers who wrote the HBR article, The Stretch Goal Paradox, the problem with this is that these teams often “lack the capability, momentum, and resilience needed to pursue stretch goals.” As a result, they are “more likely to see stretch goals as a threat, grasp for quick fixes, experience fear, become defensive, and take chaotic and self-defeating actions.”

3. Your Employees Are Already Doing It

A study of over 10,000 service employees from a tech Fortune 500 firm confirmed that stretch goals could contribute to higher engagement, effort, and participation. However, the researchers concluded, "Stretch goals add the most value when a significant number of employees were not already participating in the relevant activity.” In other words, if you set a goal that half of your team is already achieving in their everyday lives, it will not have the same impact as it would if you were to set a stretch goal that no one has achieved yet.

When Should You Set Stretch Goals for Employees?

While the research clearly indicates that there are times when stretch goals can have undesired effects, it also found that the following three things need to happen in order for stretch goals to have a chance of positively influencing performance and results.

1. Your Employees Have Succeed Recently

First, if you’re going to set stretch goals, it will be best to do so when your employees have recently succeeded. According to researchers, if you capitalize on this success and build on their feelings of accomplishment, there’s a greater chance that the employee will rise to the challenge a stretch goal presents them. That’s because “Winning affects attitudes and behaviors positively. When confronting an extremely challenging goal/task, recent winners are more likely to see an opportunity, systematically search for and process information, exhibit optimism, and demonstrate strategic flexibility.”

2. You’re Willing to Accept the Risk

Depending on the nature of the stretch goals you wish to assign, your employees may need to take some calculated risks to fulfill them. You will need to decide upfront if you are willing to accept those risks in return for potentially significant results. Researchers from UNSW Business School explained this in more detail: “Whether individual managers choose to impose stretch goals despite the increase in risk depends on their attitudes towards risk. Those with large appetites for risk may prefer stretch goals. However, for those who are risk-neutral or risk-averse, the results indicate that stretch goals may be inferior to more moderate goals because the increase in performance variance can offset or outweigh the improvement in mean performance.”

3. Your Employees Have the Necessary Resources

Last but not least, if you’re going to set stretch goals, you need to ensure that your employees have access to the resources necessary to make stretch goals a reality, such as budget, technology, and time. According to researchers, this is important for two reasons: “Well-resourced [individuals, teams, and organizations] are better positioned to absorb failures that come with trying new ideas [and ambitious goals] - not just because they have funds to move forward but also because they have emotional reservoirs that increase their resilience.”