CEOs Weigh in on Stretch and Specificity in Goal Setting

H&R Block CEO Mark A. Ernst, ’86, may believe there is no “general philosophy” to goal setting, but he was willing to discuss his own experiences alongside Morningstar CEO Joe Mansueto, AB ’78, MBA ’80, in a Management Conference panel at Gleacher Center.

In a discussion moderated by dean Edward A. Snyder on May 19, Mansueto favored specificity. “The more you can articulate and be clear about what a goal is going to be, the better, the more effective it’s going to be,” he said. He later added, “For goals to be effective it should be controllable somehow for the person whose goal it is.”

Yet Ernst said he was vacillating on the issue. He tends to believe specific targets and metrics are more successful than financial outcome goal setting, yet he had seen this approach “backfire in a very big way” when his company’s mortgage unit met level and cost of origination targets by becoming the low-price leader. Goals were met but shareholders best interests were forsaken, he said.

Ernst said he wants goals to be a challenge, setting them “so there’s enough stretch and enough kind of angst in the target that people will really work to find new ways to try and accomplish whatever it is we’re trying to do.”

However, Mansueto was reluctant to set high stretch goals in areas affecting people’s bonuses as it can impact retention and motivation. “I just want to make sure those goals are realistic,” he said. “The key thing for me is just that people are working hard.”

Nevertheless both speakers were enthusiastic about aggressive time-bound goals. Ernst said, “you can get amazing things done very, very rapidly and, with the speed of change, you almost have to do that because your competitors are likely going to do it if you don’t.”

 —Jenn Q. Goddu