Goal setting has long been linked to success. But Wharton professor Maurice Schweitze says there is a strong connection between goal setting and unethical conduct by workers afraid of falling short of expectations. In a research paper written by Schweitzer and colleagues Lisa Ordonez and Bambi Douma, the authors write, "We expect people with unmet goals to be more likely to misrepresent their performances than people without specific goals."

Schweitzer and his colleagues believe that individuals with goals, who fail to meet them, are more likely to act unethically than workers who are just giving their best. In fact, experiments by the authors proved that people with unmet goals are more likely to misrepresent their performance than people in a do-your-best environment.

Schweitzer's group expected to find people whose goals were tied to personal financial rewards more likely to cheat than those with general goals. However, because employees "incur psychological costs from admitting goal failure," the authors found that goal setting, even without the influence of financial incentives, can cause employees to act unethically.

This behavior is exhibited in the Win As Much As You Can Game. During the rounds in which teams are allowed to communicate, it's common for groups to reach consensus on how to proceed. They may all agree to hold up a Y and allow each team to win $1.00. But the game rewards deceit with the highest possible payout going to the team presenting an X while all others are displaying Ys. Inevitably, at least one team violates the agreement, holding up an X in order to win $3.00. Hey, the goal is to win as much as you can.

How can you realize the known benefits of goals without breeding unethical behavior? First, make certain that results are easily and accurately measurable. Incentive plans allowing employees to self-report results are vulnerable to abuse.

Next, avoid all-or-nothing reward systems. Schweitzer found that people who fail to reach their goals by a small margin are more likely to cheat than people who miss by a large margin. Says Schweitzer, when promising salespeople "if they sell 30 cars over a set period they will get a trip to Hawaii, you should also have something that is pretty good for the person who sells 29."

Finally, choose what you reward carefully. Organizations often promote values like teamwork and cooperation, but build compensation plans around individual efforts. When rewards are based on behavior matching the organization's core values, leaders and employees can Live By The Values They Profess. Bookmark this post on del.icio.us