Goal distortion is an extreme form of goal displacement. It implies misunderstanding or misapplication of organisational goals. In an organisation, there may be several cases of goal distortions particularly when the official goals are transformed into the operating goals.
In organisations, where means- ends relationship is there, which suggests that the ends of each lower unit are means for the higher unit, is distorted if it is extended to a large extent; because the relationship is carried out by a large number of people, each aware of the limited aspect of the organisational goals only.
Some major factors responsible for goal distortion are overemphasis on certain aspects of goals, blockage in communication, sub-unit goal internalization, and remote view of overall goals at lower level.
For example, in banks, while allocating the budgets for various branches, each branch is being allotted a particular amount for giving loans and advances. The success of the branch is measured in terms of the loans disbursed by it, not in terms of the effectiveness of these loans or earnings to the bank out of these loans.
Another example can be training imparted to the managers of an organisation. The particular department of the organisation may measure its success on the basis of the number of the training programmes and not on the quality of these programmes. The goal may be to train the managers for effectiveness.
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