This activity is important because goal setting increases motivation and is an effective way to raise job performance, job satisfaction and organizational commitment. One of the ways goal setting is accomplished in organizations is Management by Objectives (MBO), which bases an employees evaluations on whether he or she achieves specific performance goals. The goal of this exercise is to demonstrate your understanding of goal setting by reading a case and answering questions. Read the following case about goal setting at Kraft Heinz and answer the questions that follow. 3G Capital is a Brazilian investment firm that, with Berkshire Hathaway, bought and merged the Kraft and Heinz companies in 2015. As of February 2019, Kraft Heinz stock had lost 28% of its value, equating to $16 billion in losses, and many in the investment community blame 3Gs cost-cutting mentality. 3G is known on Wall Street for its ability to reach peak efficiencies in acquired firms by applying intense pressure to reach stringent goals. Focusing on cost cutting may have distracted 3G from noticing that the food market was changing to unprocessed and healthier choices. The first action of 3G at Kraft Heinz was to lay off thousands of employees and hire younger employees who were promised their bonuses would be large if they met their goals. Kraft Heinz reported that it paid these employees higher incentives than competitors to motivate them. In order to reach the hard-hitting goals, Kraft Heinz used Management by Objectives (MBO) in the procurement and operations areas of the company. The MBO targets determined employee bonuses for the year. However, Kraft Heinz continually failed to meet its goals. Despite this, CEO Bernardo Hees defended the use of MBO. Kraft Heinzs competitors use MBO and have experienced successful results, as have companies across the Fortune 500. In May 2019, Kraft Heinz revealed that about a dozen of its employees were reprimanded for falsifying procurement records to show more cost savings than actually occurred. This caused the company to refile its 2016 and 2017 SEC financial statements, suggesting the unethical conduct made a substantial impact on the company operations. Employees implicated in the scandal were expected to cut a specified amount of costs in their supplier contracts and spread those savings out over the life of the contract (savings per year, for example, called amortization). Instead, employees counted all of their savings in one period, so it appeared they cut more costs than they actually did. Therefore, employees received higher bonuses. In addition, the high pressures to cut costs may have hurt relationships with suppliers, and these are critical in the food and beverage industry. Fortunately for Kraft Heinz, the market forecast is cautiously optimistic now that the company is implementing some new market strategies and forming new partnerships.

1. According to goal setting theory, the Kraft Heinz goals should have been motivating because they were

-participative.

-specific.

-vague.

-intense.

-easy.