• Marketplace, Friday, January 15, 2010 10:41 AM

About 10 years ago, General Motors initiated a program to reverse the direction of its market share, which was hydroplaning southwards. It set an ambitious goal of 29%, which it had not realized in several years. It goosed things along by offering enticing incentives to buyers, and it kept the share of market goal in the hearts of employees by issuing gold lapel pins with the numeral 29.

But as good as goals may be for keeping people focused on a target, they can also backfire, Sean Cole reports. In this case, General Motors itself seems to regret that it unleashed the incentive wars in the first place. "There's lots of things I'd like to be a leader in," says Susan Docherty, GM's new vp of sales for North America, "and it certainly isn't in incentives."

Cole talks to Lisa Ordonez, a management professor at the University of Arizona, who co-authored a paper that maintains that goals can get you into trouble and GM is a case in point. Lowering prices to sell a certain number of cars, she says, took employees' focus away from profitability, customer service and product quality. "I'm not going to say that that goal was the entire downfall of GM," says the professor, "but obviously strict adherence to goals can cause these kinds of problems."

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