Immoral goals: how goal setting may lead to unethical behavior

• Goals have a positive impact through increased persistence and performance.
• However, goals can have unintended negative impact through unethical behavior.
• Theoretical reasons why goals can lead to unethical behavior discussed.
• Negative impact of financially rewarded goals on performance summarized.
• Impact of managed earnings, analysts’ expectations, and stretch goals explained.

This review summarizes the relatively recent findings and discussion of the immoral impact of goal setting systems. While hundreds of studies show the positive impact of goals leading to increased performance, we focus on the studies showing that goals have a powerful negative impact on increasing unethical behavior. First, we discuss the theoretical reasons why goals lead to unethical behavior in terms of decreased moral awareness, increased moral disengagement, decreased self-regulatory resources, and increase risk taking. Second, we summarize the impact of goal structures and reward systems and discuss the particularly negative impact we when pay for goal performance. Finally, we point out the negative impacts on organizations in terms of managed earnings, meeting analyst expectations, and employing stretch goals.