What is a common consequence of setting unrealistic standard costs?

Setting unrealistic standard costs can lead to unintended behavioral consequences within an organization. When employees perceive that the standards are unattainable, it can result in feelings of frustration and demotivation. This can manifest in various ways, such as reduced engagement with work, lower productivity, and even increased turnover rates as employees may feel that their efforts are futile.

Unrealistic standards may also drive employees to engage in unethical behaviors to meet those standards, such as manipulating data or cutting corners in quality to avoid repercussions. Moreover, this can foster a negative organizational culture where fear of failure replaces collaboration and innovation. Understanding how these dynamics play out helps organizations set more realistic and attainable goals, which not only align with operational capabilities but also support a healthy workplace environment.

In contrast, improved employee morale, encouragement of cost-cutting initiatives, and increased production efficiency are potential outcomes of setting realistic and achievable standards, but they do not typically result from setting standards that are perceived as unrealistic.