An excerpt from Nine Lies About Work: A Freethinking Leader’s Guide to the Real World by Marcus Buckingham and Ashley Goodall. One of the three best business books of 2019.

Goals are everywhere at work — it’s hard to find many companies that do not engage in some sort of annual or semi-annual goal-setting regimen. At some point in the year, the organization’s senior leaders set their goals for the upcoming six or 12 months, and then share them with their teams. Each team member looks at each of the leader’s goals and sets a mini-goal that reflects some part of the leader’s goal. This continues down the chain, until you, and every other employee, has a set of goals that are mini-versions of some larger goal further up in the organization.

As the year unfolds, you may well be asked to record what percentage of your goals you’ve completed. This “percent complete” data is then aggregated into bigger and bigger groups so that the company can, at any point during the year, say things like, “65% of our teams have completed 46% of their goals. We need to speed up!”

And, at the end of the year, you’re asked to write a brief self-assessment reflecting how you feel you’ve done on each goal, after which your team leader will review this assessment and add her own, in some cases also saying whether she thinks each goal was actually met, or not. She’ll input all this information into the company performance management system, whereupon it’ll serve as a permanent record of your performance for the year, and will guide your pay, promotion opportunities, and even continued employment.

And, in the era of the smartphone, once-a-year goal-setting has been deemed Not Enough, and so your phone will soon be dramatically upping the frequency of all this goal-setting, assessing, and tracking, if it hasn’t done so already — all because we have come to believe that the best companies cascade goals.

The names we give these goals have changed over the years. We started with MBOs, or Management by Objectives, first popularized by Peter Drucker in his 1954 book The Practice of Management. Then came SMART goals, goals that are specific, measurable, actionable, realistic, and time-bound, followed shortly by KPIs (Key Performance Indicators) and BHAGs (big hairy audacious goals, in Jim Collins’s memorable framing). The latest incarnation, OKRs (Objectives and Key Results), originated at Intel and is now used by much of Silicon Valley for defining and tracking goals and measuring them against your “key results.”

Across all the different technologies and methodologies, massive amounts of time and money are invested in this goal-setting. To give you a sense of the scale of the investment, the consulting firm Deloitte estimated that it spent $450 million on goal-setting, tracking, and evaluating every year, while Accenture, its consulting cousin, with more than 500,000 employees, spent more than twice that. When companies like these shell out close to $1 billion on something every year, there must be some truly extraordinary benefits.

What are they?

Well, every company is different, of course, and each makes its own calculus, but the three most common reasons put forth for all this goal-setting are, first, that goals stimulate and coordinate performance by aligning everyone’s work; second, that tracking goals’ “percent complete” yields valuable data on the team’s or company’s progress throughout the year; and third, that goal attainment allows companies to evaluate team members’ performance at the end of the year. So, companies invest in goals because goals are seen as a stimulator, a tracker, and an evaluator — and these three core functions of goals are why we spend so much time, energy, and money on them.

And this is precisely where the trouble begins.

Goals don’t stimulate performance

In terms of goals as a stimulator of performance, one great fear of senior leaders is that the work of their people is misaligned, and that effort is being wasted on activities that don’t yield desired results. The creation of a cascade of goals calms this fear, and gives leaders the confidence that everyone is pulling in the same direction.

Pressure to achieve company-imposed goals can induce fear. Fear-fueled employees can resort to inappropriate and sometimes illegal tactics in order to meet their goals.

Of course, none of this alignment is worth very much if the goals themselves don’t result in greater activity. As it happens, the weight of evidence suggests that cascaded goals do the opposite: they limit performance.

Let’s look at what happens with sales quotas. Leaders set quotas because they want to stimulate the performance of their salespeople. But quotas don’t actually work like that. The very best salespeople hit their quota months before the end of the year, whereupon they start to delay the closing of their deals so that they can “bank” them and ensure that they begin the next year with a head start. Sales goals actually degrade the performance of top salespeople — they function as a ceiling on performance, not a catalyst for more of it.

But what about salespeople who are struggling, or middle-of-the-road? Won’t goals serve to stretch them upward toward their quota? In reality, what happens to middling or struggling salespeople is that their imposed quota increases the pressure on them. And unlike self-imposed pressure that comes from attempting to achieve something we feel is important, this pressure to achieve company-imposed goals is coercion, and coercion is a cousin to fear. In the worst cases, fear-fueled employees push and push and, falling short, resort to inappropriate and sometimes illegal tactics in order to meet their goals.

This is what happened at Wells Fargo with its cross-selling goals for each branch: If someone came in to open up a checking account, the Wells Fargo personal banker was also supposed to sell them a savings account, a credit card, a demand deposit account, and a loan. But having these goals didn’t lead to more cross-selling, or at least, not just that. Instead, it led to the creation of more than 3.5 million fake accounts.

None of which is to say that sales quotas are useless. In fact, they can be an excellent forecasting device. Senior leaders can use them to estimate what the company’s top line is going to be for any given period, and then announce this to the board and the investment community so that all interested parties can get a sense of the expected revenues, against which costs, investments, and ultimately cash flow can be assessed. The best executives are good guesstimators — they have a sense, born of long experience, of what the median quota should be; the “line of best fit” around which the variation of salespeople’s performance will cluster. Some will outperform their quota by 10%, others will fall short by 10%, and thus at year’s end the sales goals, when guessed well, will be hit.

But these sales goals don’t beget more sales; they just anticipate what the sales will be. Sales goals are for performance prediction, not performance creation.

Goals don’t track performance

How about tracking performance — do goals allow companies to do that? Hardly. Even though so many companies ask employees to write down their yearly goals and track their progress using some sort of software; and even though, in the last few years, we have seen more goal tracking and not less; none of this tracking does what it is intended to, for the simple reason that your progress toward a goal is not linear.

With all goals, at least in the real world, you are either done, or you are not done: goal attainment is binary. You might want to set some intermediate goals along the way, and tick these goals off as they are done (or not done). But you won’t ever be able to assign a “percent complete” to your bigger goal as you tick off these mini-goals. And if you attempt to, or if your company asks you to, you will only be generating falsely precise data about the state of your progress.

Goals aren’t good at evaluating employees

Finally, what about evaluating employees? Can we evaluate a person based on how many goals he or she has achieved? Many companies do, for sure. But here’s the snag: unless we can standardize the difficulty of each person’s goals it’s impossible to objectively judge the relative performance of each employee.

Let’s say we have two employees we’re evaluating, Victoria and Albert. Each is aiming to complete five goals, and at year’s end Victoria has achieved three goals and Albert has achieved five. Does that mean Albert is a higher performer? Not necessarily. Maybe one of Victoria’s five goals was “Govern an empire” and one of Albert’s five goals was “Make a cup of tea.” For us to use goal attainment to evaluate Victoria and Albert, we need to be able to perfectly calibrate each and every goal for difficulty — we need each manager, with perfect consistency, to be able to weigh the stretchiness or slackness of a given goal in exactly the same way as every other manager.

And as it happens this sort of calibration is a practical impossibility, so we can’t. Sorry, Albert.

In the real world, there is work — stuff that you have to get done. In theory world, there are goals.

Work is ahead of you; goals are behind you — they’re your rear-view mirror.

Work is specific and detailed; goals are abstract.

Work changes fast; goals change slowly, or not at all.

Work makes you feel like you have agency; goals make you feel like a cog in a machine.

Work makes you feel trusted; goals make you feel distrusted.

Work is work; goals aren’t.

But it doesn’t have to be this way. Goals can be a force for good.

The only criterion for what makes a good goal is that the person working toward it must set it for him- or herself, voluntarily. The only way a goal has any use at all is if it comes out of you as an expression of what you deem valuable. It doesn’t have to be SMART, or big, hairy, and audacious. It doesn’t need to contain key performance indicators or be built from objectives and key results. If a goal is going to be useful, if it is going to help you contribute more, then the only criterion is that you must set it for yourself, voluntarily. Any goal imposed upon you from above is an un-goal.

This doesn’t mean, though, that there is nothing we should cascade in our organizations. Since goals, done properly, are only and always an expression of what a person finds most meaningful, then to create alignment in our company we should do everything we can to ensure that everyone in the company understands what matters most. And so the truth:

The best companies don’t cascade goals; the best companies cascade meaning.

The research into the best teams, outlined in our book, gives us the first clue to this.

The best leaders realize that their people are wise, and that they do not need to be coerced into alignment through yearly goal-setting. These leaders strive instead to bring to life for their people the meaning and purpose of their work, the missions and contributions and methods that truly matter. These leaders know that in a team infused with such meaning, each person will be smart enough and driven enough to set goals voluntarily that manifest that meaning. It is shared meaning that creates alignment, and this alignment is emergent, not coerced. Whereas cascaded goals are a control mechanism, cascaded meaning is a release mechanism. It brings to life the context within which everyone works, but it leaves the locus of control — for choosing, deciding, prioritizing, goal-setting — where it truly resides, and where understanding of the world and the ability to do something about it intersect: with the team member.

Our prevailing assumption is that we need goals because our deficit at work is a deficit of aligned action. We’re mistaken. What we face instead is a deficit of meaning, of a clear and detailed understanding of the purpose of our work, and of the values we should honor in deciding how to get it done. Our people don’t need to be told what to do; they want to be told why.