Whether Fortune 500 CEO or founder of a tiny startup, capable leaders use goal setting to focus their teams on the outcomes that are most important.

But goal setting is a complex responsibility, with a host of neurological effects that must be taken into consideration. Here are five very common pitfalls that I've seen leaders encounter as they create and pursue objectives with their teams.

1. Overdoing stretch goals

Goals should be challenging, but not unattainable. If all the company goals are moonshots, goal achievement will be unpredictable and employees may become demotivated.

And as I wrote in a previous post:

If it becomes part of your culture for people and teams to set multiple, difficult goals and not be held accountable when they are missed because, hey, they were really ambitious anyway, you may end up like the hare, overtaken by competitors who prioritized steady, predictable achievement.

2. Linking goals to pay

If you link salaries and bonuses directly to goal achievement (except for some roles where it is appropriate, such as sales), you risk:

A better approach? Analyze market rates, pay competitive wages across the board
based on role and experience, and reward A-players not with cash but with learning
and growth opportunities.

3. Trying to capture every task

Company and team goals should reflect priorities--the activities and outcomes that are vital for success. They are not meant to capture everything everyone does across the company day to day.

Hone your goals down to one or two initiatives and one or two ongoing processes you need to improve. Save the tasks for your to-do list.

4. Getting tunnel vision

Goals are important because they focus your team's efforts. However, this focus must be balanced with openness to new opportunities and approaches. As they say, no plan survives first contact with the enemy. Go into execution mode knowing that your goals will likely need to be adjusted to fit reality, and don't let strict adherence to established goals blind you to new possibilities.

5. Setting goals just to say you set goals

This is a subtle but vital point. I've been in so many conversations where goals are discussed as an end rather than a means--they're set just because people knows they need to set them. (And since everyone senses the goals are arbitrary, they are usually promptly forgotten.)

The whole point of creating goals is to drive performance, clarity, and collaboration. Good goals articulate real, burning priorities. Good goals drive the daily actions and decisions of the whole team.

If you're setting goals as a rote task or as an exercise in rating people's performance, it's time to step back and ensure that your objectives are tied to the actual priorities of the business.

Published on: Sep 29, 2017
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.