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Goal setting involves establishing specific, measurable, achievable, realistic and time-targeted (S.M.A.R.T) goals. Work on the theory of goal-setting suggests that an effective tool for making progress is to ensure that participants in a group with a common goal are clearly aware of what is expected from them. On a personal level, setting goals helps people work towards their own objectives. Goal setting features as a major component of personal development literature. The word goal is also one of the most recognizable words in management for motivational endeavors.
It is considered an “open” theory, so as new discoveries are made it is modified. Studies have shown that specific and ambitious goals lead to a higher level of performance than easy or general goals. As long as the individual accepts the goal, has the ability to attain it, and does not have conflicting goals, there is a positive linear relationship between goal difficulty and task performance.
Goals are a form of motivation that sets the standard for self-satisfaction with performance. Achieving the goal one has set for oneself is a measure of success, and being able to meet job challenges is a way one measures success in the workplace.
Edwin A. Locke began to examine goal setting in the mid-1960s and continued researching goal setting for thirty years. Locke derived the idea for goal-setting from Aristotle’s form of final causality. Aristotle speculated that purpose can cause action; thus, Locke began researching the impact goals have on individual activity of its time performance.
Goal setting theory was developed and refined by Edwin A. Locke in the 1960s. His first article on goal setting theory was “Toward a Theory of Task Motivation and Incentives” which was published in 1968. This article laid the foundation for goal setting theory and established the positive relationship between clearly identified goals and performance.
Goals that are deemed difficult to achieve and specific tend to increase performance more than goals that are not. A goal can become more specific through quantification or enumeration (should be measurable), such as by demanding "...increase productivity by 50%," or by defining certain tasks that must be completed.
Setting goals affects outcomes in four ways:
In business, goal setting encourages participants to put in substantial effort. Also, because every member has defined expectations for their role, little room is left for inadequate, marginal effort to go unnoticed.
Managers cannot constantly drive motivation, or keep track of an employee’s work on a continuous basis. Goals are therefore an important tool for managers, since goals have the ability to function as a self-regulatory mechanism that helps employees prioritize tasks. Also Locke and Latham (2002)
The four mechanisms through which goal setting can affect individual performance are:
People perform better when they are committed to achieving certain goals. Through an understanding of the effect of goal setting on individual performance, organizations are able to use goal setting to benefit organizational performance. Locke and Latham have indicated three moderators that indicate goal setting success:
Expanding the three from above, the level of commitment is influenced by external factors. Such as the person assigning the goal, setting the standard for the person to achieve/perform. This is influences the level of commitment by how compliant the individual is with the one assigning the goal. An external factor can also be the role models of the individual. Say if they strive to be like their favorite athlete, the individual is more likely to put forth more effort to their own work and goals.
Internal factors can derive from their participation level in the work to achieve the goal. What they expect from themselves can either flourish their success, or destroy it. Also, the individual may want to appear superior to their peers or competitors. They want to achieve the goal the best and be known for it. The self-reward of accomplishing a goal, is usually one of the main keys that keep individuals committed.
Locke et al. (1981) examined the behavioral effects of goal-setting, concluding that 90% of laboratory and field studies involving specific and challenging goals led to higher performance than did easy or no goals.
While some managers[who?] believe it is sufficient to urge employees to "do their best", Locke and Latham have a contradicting view on this. The authors state that people who are told to "do their best" do not. "Doing one's best" has no external referent, which makes it useless in eliciting specific behavior. To elicit some specific form of behavior from others, it is important that this person has a clear view of what is expected from him/her. A goal is thereby of vital importance because it facilitates an individual in focusing their efforts in a specified direction. In other words, goals canalize behavior (Cummings & Worley p. 368).[vague] However, when goals are established at a management level and thereafter solely promulgated from the top, employee motivation with regard to achieving these goals is rather suppressed (Locke & Latham, 2002 p. 705).[vague] To increase motivation, employees not only must be allowed to participate in the goal setting process, but the goals must be challenging as well. (Cummings & Worley p. 369)[vague]
Without proper feedback channels it is impossible for employees to adapt or adjust to the required behavior. Keep track of performance to allow employees to see how effective they have been in attaining their goals.  Providing feedback on short-term objectives helps to sustain motivation and commitment to the goal and without it, goal setting is unlikely to be successful. Feedback should be provided on the strategies followed to achieve the goals and the final outcomes achieved, as well. Feedback on strategies used to obtain goals is very important, especially for complex work, because challenging goals put focus on outcomes rather than on performance strategies, so they impair performance. Properly delivered feedback is also very essential, and the following hints may help for providing a good feedback:
Advances in technology can facilitate providing feedback. Systems analysts have designed computer programs that track goals for numerous members of an organization. Such computer systems may maintain every employee’s goals, as well as their deadlines. Separate methods may check the employee’s progress on a regular basis, and other systems may require perceived slackers to explain how they intend to improve.
More difficult goals require more cognitive strategies and well-developed skills. The more difficult the tasks, the smaller the group of people who possess the necessary skills and strategies. From an organizational perspective, it is thereby more difficult to successfully attain more difficult goals, since resources become more scarce.
Locke and Latham (2004) note that goal setting theory lacks "the issue of time perspective". Taking this into consideration, Steel and Konig (2006) utilize their temporal motivation theory (TMT) to account for goal setting's effects, and suggest new hypotheses regarding a pair of its moderators: goal difficulty and proximity. The effectiveness of goal setting can be explained by two aspects of TMT: the principle of diminishing returns and temporal discounting. Similar to the expression "the sum of the parts can be greater than the whole", a division of a project into several, immediate, subgoals appears to take advantage of these two elements.
The more employees are motivated, the more they are stimulated and interested in accepting goals. These success factors are interdependent. For example, the expected outcomes of goals are positively influenced when employees are involved in the goal setting process. Not only does participation increase commitment in attaining the goals that are set, participation influences self-efficacy as well. Additionally, feedback is necessary to monitor one's progress. When feedback is not present, an employee might think (s)he is not making enough progress. This can reduce self-efficacy and thereby harm the performance outcomes in the long run.
Goal-setting theory has limitations. In an organization, a goal of a manager may not align with the goals of the organization as a whole. In such cases, the goals of an individual may come into direct conflict with the employing organization. Without aligning goals between the organization and the individual, performance may suffer.
For complex tasks, goal-setting may actually impair performance. In these situations, an individual may become preoccupied with meeting the goals, rather than performing tasks.
Some people[weasel words] feel that goal setting may have the drawback of inhibiting implicit learning: goal setting may encourage simple focus on an outcome without openness to exploration, understanding, or growth.
Self-efficacy, past performance, and various other social factors influence goal setting. Failure to meet previous goals often leads to setting lower (and more likely achievable) goals. Social networking website 43 Things, "the world's largest goal-setting community", seeks to take advantage of these social effects.
There are times when having specific goals is not a best option; this is the case when the goal requires new skills or knowledge. “Tunnel vision” is a consequence of specific goals; if one is too focused on attaining a specific goal they ignore the need to learn new skills or acquire new information. In situations like this, the best option is to set a learning goal. A learning goal is a generalized goal to achieve knowledge in a certain topic or field, but it can ultimately lead to better performance in specific goals related to the learning goals. Locke and Latham attribute this response to metacognition. They believe that “a learning goal facilitates or enhances metacognition—namely, planning, monitoring, and evaluating progress toward goal attainment". This is necessary in environments with little or no guidance and structure. Although jobs typically have set goals, individual goals and achievement can benefit from metacognition.
Framing, or how goals are viewed, influences performance. When one feels threatened and or intimidated by a high goal they perform poorer than those who view the goal as a challenge. The framing of a goal as a gain or a loss influences one’s eventual performance.
Realization of goals has an effect on affect—that is, feelings of success and satisfaction. Achieving goals has a positive effect, and failing to meet goals has negative consequences. However, the effect of goals is not exclusive to one realm. Success in one’s job can compensate for feelings of failure in one’s personal life.
The relationship between group goals and individual goals influences group performance; when goals are compatible there is a positive effect, but when goals are incompatible the effects can be detrimental to the group’s performance. There is another factor at work in groups, and that is the sharing factor; a positive correlation exists between sharing information within the group and group performance. In the case of group goals, feedback needs to be related to the group, not individuals, in order for it to improve the group’s performance.
On a basic level, the two types of goals are learning goals and performance goals; each possesses different traits associated with the selected goal.
Learning goals involve tasks where skills and knowledge can be acquired, whereas performance goals involve easy-to-accomplish tasks that will make one appear successful (thus tasks where error and judgment are possible are avoided).
A more complex trait-mediation study is the one conducted by Lee, Sheldon, and Turban, which yielded the following results:
"Amotivated orientation" (low confidence in one’s capabilities) is associated with goal-avoidance motivation, and more generally, associated with lower goals levels and lower performance.
"Control orientation" (extrinsic motivation) is associated with both avoidance and approach goals. Approach goals are associated with higher goal levels and higher performance.
"Autonomy goals" (intrinsic motivation) leads to mastery goals, enhanced focus, and therefore enhanced performance.
"Macro-level goals" refer to goal setting that is applied to the company as a whole. Cooperative goals reduce the negative feelings that occur as a result of alliances and the formation of groups. The most common parties involved are the company and its suppliers. The three motivators for macro-level goals are: self-efficacy, growth goals, and organizational vision.
The effects of subconscious priming and conscious goals are independent, although a conscious goal has a larger effect. The interaction effect is that priming can enhance the effects of difficult goals, but it has no effect on easy goals. There is also the situation in which priming and conscious goals conflict with one another, and in this situation the conscious goals have a greater effect on performance.
[...] people with unmet goals were more likely to engage in unethical behavior than people attempting to do their best. This relationship held for goals both with and without economic incentives. We also found that the relationship between goal setting and unethical behavior was particularly strong when people fell just short of reaching their goals.